If you’re buying or selling property in Adelaide or anywhere in South Australia, you may come across something called Foreign Resident Capital Gains Withholding (FRCGW).
It sounds complex—but it’s a standard part of many property transactions, and getting it wrong can delay settlement or cost you money.
What is FRCGW?
Foreign Resident Capital Gains Withholding (FRCGW) is a tax rule administered by the Australian Taxation Office.
It requires buyers to withhold a portion of the purchase price and pay it directly to the ATO if the seller is a foreign resident.
Current withholding rate:
- 15% of the purchase price
When Does FRCGW Apply?
FRCGW generally applies when:
- The property is $750,000 or more, and
- The seller is not an Australian resident for tax purposes
This applies to:
- Residential property
- Vacant land
- Some commercial property
What Does This Mean for Sellers?
If you are an Australian resident, you are not automatically exempt—you must prove it.
You’ll need a clearance certificate from the ATO:
- Officially called a Foreign Resident Capital Gains Withholding Clearance Certificate
- Confirms you are an Australian resident for tax purposes
- Must be provided before settlement
Without it:
- The buyer is legally required to withhold 15% of the sale price
- This amount is sent to the ATO
–− Important: This is not an extra tax—it’s a withholding against your final tax liability.
What Does This Mean for Buyers?
If you’re purchasing property in South Australia, you may have a legal obligation.
As the buyer, you must:
- Check if a clearance certificate has been provided
- Withhold 15% of the purchase price if it hasn’t
- Pay that amount to the ATO before settlement Failing to do this can result in:
- Penalties from the ATO
- Liability for the unpaid amount
Common Mistakes to Avoid
- Sellers leaving it too late
Clearance certificates can take time—apply early. - Buyers assuming it doesn’t apply
Even Australian sellers must provide a certificate. - Incorrect paperwork
Errors can delay settlement or trigger withholding unnecessarily.
How Long Does It Take to Get a Clearance Certificate?
In many cases:
- It can be issued within a few days
- But delays can occur during busy periods
–− Best practice: Apply as soon as you decide to sell.
What Happens at Settlement?
If a valid clearance certificate is provided:
- No withholding is required
- Settlement proceeds as normal
If not:
- The buyer withholds 15%
- Pays it to the ATO
- The remaining balance is paid to the seller
Why FRCGW Matters
FRCGW is one of the most common causes of:
- Settlement delays
- Last-minute stress
- Unexpected financial shortfalls
Getting advice early ensures everything runs smoothly.
Need Help with FRCGW in South Australia?
At Beltana Conveyancing we guide buyers and sellers across South Australia through every step of the conveyancing process—including FRCGW requirements.
We’ll make sure:
The correct documents are in place
Deadlines are met
Settlement happens without surprises
Final Tip
If you’re selling property in Adelaide, don’t wait until contracts are signed—apply for your clearance certificate early to avoid unnecessary complications.
