8 July 2015
Media Release - #2015061, 2015

Release of draft legislation for the foreign resident capital gains withholding tax measure

The Government is releasing exposure draft legislation that will introduce a withholding tax obligation to ensure that foreign resident investors comply with Australia’s tax laws.

From 1 July 2016, a 10 per cent non-final withholding obligation will apply to the disposal, by foreign residents, of taxable Australian property.

This change supports the operation of Australia’s capital gains tax. It will address difficulties associated with collecting tax from foreign resident taxpayers.

Where the seller of certain Australian assets is a foreign resident, the buyer will be required to pay 10 per cent of the price to the Australian Taxation Office as withholding tax. This obligation to withhold from the price payable to foreign residents will not apply to residential property under $2.5 million.

Consistent with the Government’s deregulation agenda, the design of the measure ensures that the underlying policy intent is delivered whilst minimising compliance costs.

This measure puts Australian residents and foreign residents on a level playing field when it comes to meeting their tax obligations.

Submissions are invited on the exposure draft legislation and explanatory material which are now available on the Treasury website.

Submissions close on 7 August 2015.