Government’s Federal Budget further tightens rules on foreign property buyers
The Australian 2017 Federal Budget has tightened the foreign resident capital gains tax withholding regime. Other changes include limiting foreign ownership in specified developments, charges for property left vacant and changes to the capital gains tax rules for foreign investors. The capital gains rule changes broadly mean that where a foreign resident disposes of certain taxable Australian property, the purchaser is required to withhold an amount from the purchase price and pay that amount to the Australian Taxation Office (ATO).
For contracts entered into from 1 July 2017, real property disposals where the contract price is $750,000 or more (previously $2 million) will attract a foreign resident capital gains withholding (FRCGW) rate of 12.5% (previously 10%). Existing thresholds will apply to contracts entered into before 1 July, even if they are not due to settle until after 1 July 2017. More information is available in ATO Fact Sheet 2017–18 Budget Fact Sheet 1.6 – Stronger rules for foreign investors owning Australian housing