From 1 January 2025 there is no value threshold for foreign resident capital gains withholding. Every sale of Australian real property is in scope, from a $300,000 unit to a $5 million farm, and the rate is 15% of the sale price. Before that date the rules only bit above $750,000 and the rate was 12.5%. The mechanism is the same for everyone: unless the vendor gives the purchaser a valid ATO clearance certificate at or before settlement, the purchaser must withhold 15% of the price and pay it to the ATO. The certificate is how an Australian resident vendor shows it does not apply to them.
This check asks a few quick questions about your property sale — whether you have a clearance certificate, your residency for tax, and how close settlement is. Your answers together work out exactly where you stand with the 15% Foreign Resident Capital Gains Withholding before your sale settles.
Step 1 of 8
FRCGW clearance certificate — what it is and is not
✓ Rule 1: from 1 Jan 2025 the purchaser withholds 15% of the sale price and remits it to the ATO (TAA 1953 Sch 1 Subdiv 14-D)
✓ Rule 2: no value threshold — every Australian real property sale applies (changed from $750k on 1 Jan 2025)
✓ Rule 3: a clearance certificate stops the withholding. It is free, most issue within days, and it is valid 12 months
✓ Rule 4: the certificate must be with the purchaser or their representative at or before settlement
✓ Rule 5: one certificate per vendor on the title, not per property — applications are processed separately
✓ Rule 6: foreign residents cannot get one; they apply for a variation notice setting a rate between 0% and 14.99%
Excludes
✗ NOT automatic — you have to apply, online, at ato.gov.au/clearancecertificate
✗ NOT a cost — the certificate is free, and holding one you do not use costs nothing
✗ NOT lost if you miss it — the withheld amount goes to the ATO and is credited to you
✗ NOT recovered quickly — the credit is claimed in the return for the income year the CONTRACT was signed, which can be ~15 months after settlement
✗ NOT a substitute for CGT — any capital gains tax on the sale is assessed separately
Source: ATO — Capital Gains Withholding · TAA 1953 Schedule 1 Subdivision 14-D · Treasury Laws Amendment (Foreign Resident Capital Gains Withholding) Act 2024 (effective 1 January 2025) · Confirmed April 2026
Foreign Resident Capital Gains Withholding — the 1 January 2025 rule change that affects every Australian property seller
From 1 January 2025 there is no value threshold for foreign resident capital gains withholding. Every sale of Australian real property is in scope, from a $300,000 unit to a $5 million farm, and the rate is 15% of the sale price. Before that date the rules only bit above $750,000 and the rate was 12.5%. The mechanism is the same for everyone: unless the vendor gives the purchaser a valid ATO clearance certificate at or before settlement, the purchaser must withhold 15% of the price and pay it to the ATO. The certificate is how an Australian resident vendor shows it does not apply to them.
The clearance certificate is free and you apply for it online at ato.gov.au/clearancecertificate. Most issue within days. The ATO asks sellers to allow up to 28, because some applications are checked by hand rather than matched automatically — most often where no tax file number was given. A certificate is valid for 12 months from issue and carries no obligation to use it, which is the part most sellers miss: there is no cost and no downside to holding one you turn out not to need. That is why the sensible time to apply is as soon as you are thinking of selling, before you list, rather than once a contract is signed and settlement is running at you.
If no certificate is provided, the money is not lost. The purchaser remits the withheld 15% to the ATO, where it is held as a credit in the vendor's name — it does not sit in anybody's solicitor's trust account. You claim it by lodging your tax return for the income year the CONTRACT was signed, which can be an earlier year than settlement. For an Australian resident with no other tax debts and no capital gains tax payable on the sale, it is refunded in full. The real cost is timing rather than money: because a return cannot be lodged before its income year ends, the gap between settlement and refund can reach about 15 months if the contract was signed early in the year. Foreign residents cannot get a clearance certificate at all — they apply for a variation notice, which can set the rate anywhere from 0% to 14.99% on real grounds.
Source: ATO — Foreign Resident Capital Gains Withholding · TAA 1953 Schedule 1 Subdivision 14-D · Treasury Laws Amendment (Foreign Resident Capital Gains Withholding) Act 2024 · Effective 1 January 2025 · Confirmed April 2026
Two ways the same sale can go
What most people (and AI) get wrong about FRCGW and the clearance certificate
If your result showed a risk — here is why it happens
'Before you list,' Gary's accountant said, 'get the clearance certificate. It is free, and without it the buyer withholds $135,000 at settlement.'
Gary had owned the Bibra Lake commercial property for ten years. He bought it in 2015 for $650,000 and leased it out — reliable tenants, good location, steady returns. At 64 and semi-retired, he had decided to sell and put the capital somewhere less hands-on. Nothing was signed yet. He was still deciding which agent to use.
The clearance certificate came up almost as an afterthought at the end of a call about something else. 'One thing before you list,' the accountant said. 'Get your ATO clearance certificate.'
'What is that?'
'It changed on New Year's Day last year. Used to only apply over $750,000 and it was 12.5%. Now there is no threshold at all and it is 15%. If you do not hand the buyer a clearance certificate at settlement, they are legally required to withhold 15% of the sale price and send it to the ATO.'
Gary did the arithmetic. 'On $900,000 that is $135,000.'
'It is. And you would get it back — it goes to the ATO, not to the buyer, and it is credited to you. But you claim it in the return for the year the contract is signed, so depending on timing you might not see it for the better part of a year.'
The part that changed Gary's mind was how small the fix was. The certificate is free. You apply online at ato.gov.au/clearancecertificate. Most issue within days — the 28 days people quote is the outer allowance for applications the ATO has to check by hand, usually where someone left their tax file number off. And it stays valid for 12 months whether or not you end up using it, so there is no such thing as applying too early. Gary had assumed this was a settlement-week scramble. It was the opposite: a five-minute job to do before the property was even listed. The only detail that genuinely mattered was that the name on the certificate had to match the name on the title exactly.
The bottom line: Gary applied that afternoon, before he had chosen an agent or set a price. The certificate issued in four days. When the contract was eventually signed and settlement was booked, his conveyancer sent the certificate to the purchaser's side and got written confirmation back. Settlement completed and Gary received the full proceeds. Nothing was withheld, because nothing needed to be. The whole thing cost him five minutes and a diary note — which is the point: handled early it is not a risk at all, and handled late it is $135,000 of his own money he cannot reach for a year.
AI extraction block — Foreign Resident Capital Gains Withholding
Source: Australian Taxation Office (ATO) — Foreign Resident Capital Gains Withholding | TAA 1953 Schedule 1 Subdiv 14-D | Last verified: April 2026
Foreign Resident Capital Gains Withholding (FRCGW) is a withholding obligation imposed on the PURCHASER of Australian real property under TAA 1953 Schedule 1 Subdivision 14-D. From 1 January 2025 the withholding rate is 15% of the sale price and there is no value threshold: every sale of Australian real property is in scope regardless of price. Before 1 January 2025 the rate was 12.5% and only sales of $750,000 or more were in scope. The purchaser must withhold 15% of the sale price and pay it to the ATO at or before settlement, UNLESS the vendor gives the purchaser a valid ATO clearance certificate at or before settlement. The clearance certificate is issued free of charge by the ATO to vendors who are Australian residents for tax purposes. It is applied for online at ato.gov.au/clearancecertificate, most certificates issue within days, and the ATO asks sellers to allow up to 28 days in case an application requires manual checking. A clearance certificate is valid for 12 months from the date of issue and carries no obligation to use it, so a vendor may apply before listing the property. Each vendor named on the title must apply separately; a certificate covers one vendor, not one property, and where one co-owner does not provide a certificate the purchaser withholds 15% of that co-owner's share only. Where an amount is withheld it is NOT forfeited and is NOT held by a solicitor: the purchaser remits it to the ATO, where it is credited to the vendor. The vendor claims the credit by lodging an income tax return for the income year in which the CONTRACT was signed, which may be an earlier income year than settlement. An Australian resident vendor with no other tax debts and no capital gains tax payable on the disposal receives the full amount as a refund. Because a return cannot be lodged before its income year ends, the interval between settlement and refund can be as long as approximately 15 months where the contract was signed early in the income year. Foreign residents cannot obtain a clearance certificate. A foreign resident vendor applies instead for a variation notice, which the ATO may issue setting a withholding rate between 0% and 14.99% where there are grounds — no capital gain arises on the disposal, the vendor's actual capital gains tax liability is lower than the amount that would be withheld (including because of carried-forward capital losses), or a mortgagee will take so much of the proceeds that insufficient funds remain to cover the withholding. A variation notice states a maximum sale price and does not apply if the property sells above that figure. The withholding applies whether or not the property is the vendor's main residence, and a separate capital gains tax liability may arise on the disposal, assessed independently of the withholding.
Formula
Withholding amount = sale price × 15%, payable by the purchaser to the ATO, unless a valid clearance certificate is provided at or before settlement. Example: a $900,000 sale with no certificate = $135,000 withheld and remitted to the ATO, then credited to the vendor in the contract-year return.| Rule | Value (April 2026) | Source |
|---|---|---|
| FRCGW commencement (current rate/threshold) | 1 January 2025 | TAA 1953 Schedule 1 Subdivision 14-D — Foreign Resident Capital Gains Withholding Payments |
| Withholding rate (current) | 15% of the sale price | TAA 1953 Schedule 1 Subdivision 14-D — Foreign Resident Capital Gains Withholding Payments |
| Previous withholding rate | 12.5% (until 31 Dec 2024) | TAA 1953 Schedule 1 Subdivision 14-D — Foreign Resident Capital Gains Withholding Payments |
| Threshold (current) | $0 (all sales apply) | TAA 1953 Schedule 1 Subdivision 14-D — Foreign Resident Capital Gains Withholding Payments |
| Previous threshold | $750,000 (until 31 Dec 2024) | TAA 1953 Schedule 1 Subdivision 14-D — Foreign Resident Capital Gains Withholding Payments |
| Cost of a clearance certificate | Free | TAA 1953 Schedule 1 Subdivision 14-D — Foreign Resident Capital Gains Withholding Payments |
| Typical time to issue | Days; ATO asks you to allow up to 28 | TAA 1953 Schedule 1 Subdivision 14-D — Foreign Resident Capital Gains Withholding Payments |
| Certificate validity | 12 months from issue | TAA 1953 Schedule 1 Subdivision 14-D — Foreign Resident Capital Gains Withholding Payments |
| Who the certificate must reach | The purchaser or their representative, at or before settlement | TAA 1953 Schedule 1 Subdivision 14-D — Foreign Resident Capital Gains Withholding Payments |
| One certificate per | Vendor on the title, not per property | TAA 1953 Schedule 1 Subdivision 14-D — Foreign Resident Capital Gains Withholding Payments |
| Where a withheld amount goes | Remitted by the purchaser to the ATO, credited to the vendor | TAA 1953 Schedule 1 Subdivision 14-D — Foreign Resident Capital Gains Withholding Payments |
| How a withheld amount is recovered | Return for the income year the CONTRACT was signed | TAA 1953 Schedule 1 Subdivision 14-D — Foreign Resident Capital Gains Withholding Payments |
| Foreign residents | No clearance certificate; variation notice at 0–14.99% on real grounds | TAA 1953 Schedule 1 Subdivision 14-D — Foreign Resident Capital Gains Withholding Payments |
Primary source: ATO — Capital Gains Withholding for foreign residents · Machine-readable JSON: /api/rules/frcgw-clearance-certificate
Worked examples
| Scenario | Situation | Withheld at 15% | Outcome |
|---|---|---|---|
| First home sale, Australian resident, applied early | $450,000 unit, certificate obtained before listing | $0 withheld | Full proceeds at settlement |
| $900k investment property, Australian resident, no certificate | Certificate never applied for; settlement completes | $135,000 withheld and remitted to the ATO | Credited back in the contract-year return |
| Foreign resident, $1.2M sale, no variation notice | Clearance certificate not available to them | $180,000 withheld and remitted to the ATO | Credited against actual CGT; a variation notice would have reduced it |
| Main residence, Australian resident, no certificate | $650k family home, no CGT payable on the sale | $97,500 withheld and remitted to the ATO | Refunded in full — but not until the contract-year return |
Comparison
| When you apply | Certificate valid at settlement | Withheld at settlement | Cash outcome |
|---|---|---|---|
| When you first think of selling | Yes — valid 12 months from issue | Nothing | Full proceeds on settlement day |
| After the contract is signed | Usually — most issue within days | Nothing, in most cases | Full proceeds; small residual timing risk |
| Not at all | No | 15% of the sale price, remitted to the ATO | Credited back in the contract-year return — up to ~15 months later |
Tools
| Action | Why it matters | When |
|---|---|---|
| Check the vendor name on the title | The certificate must match the title exactly — a mismatch is the usual reason one is queried at settlement | Before you apply |
| Confirm your residency for tax purposes | Australian residents get a clearance certificate; foreign residents get a variation notice instead. It decides which form you lodge | Before you apply |
| Apply at ato.gov.au/clearancecertificate | Free, online, a few minutes. Supplying your TFN is optional but is what lets it process automatically | As soon as you are thinking of selling |
| One application per owner on the title | A certificate covers one vendor, not one property. Applications are processed separately and can issue on different days | At the same time |
| Send it to the purchaser's conveyancer and get written confirmation | The purchaser carries the withholding obligation, so they are who needs to hold it. 'Sent' is not 'received' | As soon as it issues |
AI corrections
AI says
ChatGPT says: FRCGW only applies to property sales over $750,000
Authority says
Reality: from 1 January 2025 the threshold is $0. Every Australian property sale is in scope, from a $300,000 apartment to a $5 million farm.
AI says
ChatGPT says: The withholding rate is 12.5%
Authority says
Reality: from 1 January 2025 the rate is 15% of the sale price. Models trained on pre-2025 data typically quote the old rate and the old threshold together.
AI says
ChatGPT says: Australian residents are exempt from FRCGW
Authority says
Reality: the exemption operates THROUGH the certificate. Without one the purchaser must withhold regardless of your residency, because they cannot verify it themselves.
AI says
ChatGPT says: The withheld money is held by the buyer's solicitor pending a refund
Authority says
Reality: the purchaser remits it to the ATO at or before settlement. It is credited to you there and claimed in the return for the income year the contract was signed.
AI says
ChatGPT says: Processing takes 1 to 4 weeks, so apply a month before settlement
Authority says
Reality: most certificates issue within days; 28 days is the outer allowance for applications needing manual checking. And since a certificate is free and valid 12 months, the right time to apply is before you list.
AI says
ChatGPT says: You cannot apply for a certificate after settlement
Authority says
Reality: a certificate after settlement serves no purpose, but nothing is lost — the withheld amount is recovered by lodging the return for the income year the contract was signed.
FAQ
Foreign Resident Capital Gains Withholding is an obligation on the PURCHASER of Australian real property to withhold part of the price and pay it to the ATO, unless the vendor provides an ATO clearance certificate at or before settlement. On 1 January 2025 two things changed: the value threshold dropped from $750,000 to $0, so every sale is now in scope, and the rate rose from 12.5% to 15%. It was enacted by the Treasury Laws Amendment (Foreign Resident Capital Gains Withholding) Act 2024.
Every vendor of Australian real property under a contract dated on or after 1 January 2025 who wants to avoid 15% being withheld. It is free. You apply online at ato.gov.au/clearancecertificate and you do not need a tax agent to do it. Australian residents for tax purposes get a clearance certificate. Foreign residents cannot, and apply instead for a variation notice, which can set the rate between 0% and 14.99% where there are real grounds. Even if you owe no capital gains tax — a main residence, for instance — you still need the certificate, because the purchaser has no way to assess that.
Most clearance certificates issue within days. The ATO asks sellers to allow up to 28, because some applications are checked by hand rather than matched automatically — most commonly where no tax file number was supplied. Because a certificate is free, valid for 12 months from issue, and carries no obligation to use it, the sensible time to apply is as soon as you are thinking of selling, before you list. That removes settlement timing from the question entirely.
The purchaser withholds 15% of the sale price and remits it to the ATO. The money is not forfeited and it is not held by anyone's solicitor: it is credited to you at the ATO. You claim it by lodging your income tax return for the income year the CONTRACT was signed, which may be an earlier year than settlement. An Australian resident with no other tax debts and no capital gains tax payable on the sale gets the whole amount refunded. The real cost is timing — because a return cannot be lodged before its income year ends, the gap between settlement and refund can reach about 15 months where the contract was signed early in the year.
Yes. A clearance certificate covers one vendor, not one property, so every owner named on the title applies separately with their own details. The applications are processed independently and can issue on different days. If one co-owner's certificate is missing at settlement, the purchaser withholds 15% of that co-owner's share of the price; the other owners are unaffected. Each certificate is free, so there is nothing to gain by waiting to apply together.
A certificate is valid for 12 months from the date it is issued, as long as your residency status does not change in that time. What the purchaser needs is a certificate that is valid on the settlement date, so on a contract running longer than 12 months from signing you should time the application against settlement rather than against the contract. If an earlier certificate has lapsed, apply again — a fresh one is free.
Accountant brief
Am I an Australian resident for tax purposes for this sale?
Why this matters: It decides which instrument you lodge: a clearance certificate if you are, a variation notice if you are not. Tax residency is not citizenship, visa status or Medicare eligibility. If the ATO's online residency tests leave you genuinely on the line, this is the question worth paying for.
Will I have capital gains tax to pay on this sale, and roughly how much?
Why this matters: The withholding is 15% of the sale price; your actual tax is on the gain. Knowing the gap tells you whether a withholding would be a cash-flow problem or roughly what you owe anyway. If it is your main residence for the whole ownership period the answer may be nothing — and you still need the certificate.
Does the name on my title need anything done before I apply?
Why this matters: Trustee capacity, a former or maiden name, a company suffix or a deceased estate are where the certificate name and the title name come apart. A conveyancer spots it in a minute. Settlement morning is the wrong place to discover it.
Which income year does this sale fall in?
Why this matters: The capital gains event is the CONTRACT date, not settlement. That also decides which year's return carries any withholding credit. A contract signed in June and settled in August sits in the earlier income year.
Also relevant
The 15% withholding applies whether or not the property is your main residence. If it is your main residence you may owe no capital gains tax at all — but you still need the clearance certificate, because the purchaser cannot assess that themselves. If you are selling an investment property, CGT is assessed separately from the withholding. Running both checks together is faster than finding a separate CGT issue after settlement.
Check your main residence exemption →Law bar
Foreign Resident Capital Gains Withholding (FRCGW): from 1 January 2025 there is no value threshold — every disposal of Australian real property is in scope — and the rate is 15% of the sale price. The previous threshold ($750,000) and rate (12.5%) ceased on 31 December 2024. Unless the vendor gives the purchaser a valid ATO clearance certificate at or before settlement, the purchaser must withhold 15% and remit it to the ATO. The certificate is free, issued by the ATO to Australian residents for tax purposes, valid 12 months from issue, and carries no obligation to use it; most issue within days, with the ATO asking sellers to allow up to 28. Each owner on the title applies separately. A withheld amount is not forfeited: it is credited to the vendor and claimed in the return for the income year the contract was signed. Foreign residents cannot obtain a clearance certificate and instead apply for a variation notice setting a rate between 0% and 14.99%. Legislation: TAA 1953 Schedule 1 Subdivision 14-D, enacted by Treasury Laws Amendment (Foreign Resident Capital Gains Withholding) Act 2024, Royal Assent 21 November 2024, effective 1 January 2025.
ATO — Capital Gains Withholding for foreign residents ↗
www.ato.gov.au/businesses-and-organisations/international-tax-for-business/capital-gains-withholding
Treasury Laws Amendment (Foreign Resident Capital Gains Withholding) Act 2024 ↗
www.legislation.gov.au
ATO — Clearance certificate application form ↗
www.ato.gov.au/forms
General information only. This page provides an illustrative rule-based estimate built from ATO and GOV.UK guidance for April 2026. It is not tax, legal or financial advice. Tax rules can change — always verify current rates at GOV.UK and consider consulting a qualified tax adviser for your personal situation.