Foreign Resident Capital Gains Withholding

Work out what a purchaser must hold back at settlement and pay to the ATO where a vendor has not produced a clearance certificate.

Applies to every sale, at any priceFor contracts entered into on or after 1 January 2025 the withholding rate is 15% and the former $750,000 threshold has been removed. An Australian resident vendor must give the purchaser an ATO clearance certificate before settlement or 15% of the price is withheld — including on a family home.

The sale

$950,000 · 1 vendor · 0 certs

Sale price

Or market value if the parties are not dealing at arm's length. Withholding is calculated before settlement adjustments such as rates and strata levies.

Vendors on title

Each vendor must apply for their own certificate.

Vendors with a clearance certificate

Foreign residents cannot obtain a clearance certificate.

Variation notice

Standard 15% rate

The vendor holds an ATO variation notice reducing the withholding rate

Varied rate

A foreign resident vendor can apply to the ATO for a variation where 15% of the price exceeds the expected tax on the gain, or where a mortgagee leaves insufficient proceeds at settlement.

Settlement position

Rate applied

–

of exposed proceeds

Withheld at settlement

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paid to the ATO

Proceeds exposed

–

without a certificate

What gets withheld at different sale prices

Your saleOther sale prices

Since the threshold was removed, there is no longer a price below which withholding can be ignored. The single most valuable thing a vendor can do is apply for the clearance certificate as soon as the property is listed — it is free, valid for 12 months, covers multiple sales, and the ATO warns it can take up to 28 days.

Settlement coming up without a clearance certificate?

If a certificate does not arrive before settlement, 15% of the price goes to the ATO and the vendor waits until their tax return to get it back. We can help you get the paperwork moving.

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Why an Australian vendor still needs a clearance certificate

Foreign resident capital gains withholding is designed to collect tax from non-residents selling Australian property. But the mechanism works in reverse: the purchaser must withhold from every vendor unless that vendor proves they are an Australian resident by handing over an ATO clearance certificate.

That means an Australian family selling their own home will have 15% of the price withheld if the certificate is not produced before settlement. There is no capital gain, no tax owing, and the money still goes to the ATO — recoverable only when the vendor lodges their return, potentially many months later.

Where there are several vendors on title, each one applies separately. One missing certificate exposes that vendor's share of the proceeds, not the whole price. Foreign residents cannot get a certificate at all, but can apply for a variation notice reducing the rate where 15% clearly exceeds the tax on the gain.

Rates & assumptions used

Foreign resident capital gains withholding rate of 15%, applying to contracts entered into on or after 1 January 2025. The previous 12.5% rate and $750,000 threshold applied to contracts entered into before that date.
Withholding is calculated on the sale price, or on market value where the parties have not dealt at arm's length, before settlement adjustments.
Where there are multiple vendors, the calculator apportions the price by number of vendors on title. Actual apportionment follows the interests held on title, which may not be equal.
A valid ATO clearance certificate given to the purchaser before settlement removes the withholding obligation for that vendor. Certificates are free, valid for 12 months, and the ATO advises they can take up to 28 days to issue.
Not modelled: transactions covered by a legislative instrument that do not require a clearance certificate; company title interests and indirect Australian real property interests; GST-inclusive price adjustments where the margin scheme applies.

Not sure whether your vendor is a foreign resident?

Residency for tax purposes is tested differently to residency for immigration or social security, and the purchaser carries the risk.

Important. Figures shown are estimates generated from the information you enter. They are not an assessment, a quote, or a statement of what you will actually pay.

The purchaser carries the withholding obligation. Penalties and interest apply if a purchaser fails to withhold when required, or fails to pay the amount to the ATO on the day of settlement. Withholding is a prepayment against the vendor's actual capital gains tax liability, not a final tax — the vendor claims a credit when they lodge their return. Residency for tax purposes is determined differently to residency for immigration or social security purposes.

This calculator provides a general estimate only, based on the figures you enter and the rates and assumptions listed above as at 28 July 2026. It is not legal, financial, tax or credit advice, does not take account of your objectives, financial situation or needs, and is not a substitute for advice from a qualified adviser. Rates, thresholds, concessions and eligibility rules change, and an official assessment may differ from this estimate. You should confirm your position with the relevant revenue office or the Australian Taxation Office and obtain your own professional advice before acting.