Updated 18/11/2025

Foreign Resident Capital Gains Withholding (FRCGW) applies to all property sales in South Australia by vendors who are foreign residents. From 1 January 2025, this withholding obligation requirement applies to all property transactions, regardless of the contract price. Purchasers are required to withhold 15% of the sale proceeds for the Australian Taxation Office (ATO) if no valid clearance certificate is provided.

At Eckermann Conveyancers, we understand how important it is for both vendors and purchasers to navigate this process correctly. Our experienced team works closely with clients and the ATO to ensure withholding obligations are met, documentation is accurate, and settlements proceed smoothly — avoiding delays or unexpected complications.

What Is Foreign Resident Capital Gains Withholding?

Foreign Resident Capital Gains Withholding is a tax mechanism designed to secure payment of capital gains tax (CGT) obligations from foreign residents disposing of Australian property.  Initially, it applied only to properties above $2 million, then $750,000. From 2025, all South Australian property transactions may be subject to withholding.

Key point: If the vendor does not hold a valid Foreign Resident Capital Gains Withholding Certificate, or a Variation Notice, the purchaser must withhold 15% of the purchase price and remit it to the ATO during settlement. Eckermann Conveyancers can help confirm whether a certificate is required and ensure compliance.

Who Needs a Capital Gains Withholding Clearance Certificate?

Every vendor selling South Australian property should provide a Capital Gains Withholding Clearance Certificate to confirm they are an Australian resident.

  • Australian resident vendors: Must apply for a clearance certificate and have this at hand before settling their property.
  • Foreign or non-resident vendors: Will be subject to 15% withholding if they do not qualify for a certificate or supply a Variation Notice.

This certificate is sometimes referred to as a foreign resident withholding clearance certificate and is essential to avoid unnecessary withholding.

How to Apply for a Foreign Resident Withholding Certificate

Vendors can apply through the ATO online portal. Many conveyancers or accountants assist with this process to avoid errors or delays. Certificates typically take up to 28 days to be issued, so early application—ideally before marketing the property—is recommended.

Applications should be lodged well before settlement. Certificates are valid for 12 months, reducing risk of delays.

Common delays include:

  • The vendor has not lodged a recent tax return.
  • Outstanding tax debts requiring manual review by the ATO.

At Eckermann Conveyancers, we help clients in South Australia manage these steps efficiently so that property settlements can proceed as planned.

What Happens If You Don’t Have a Clearance Certificate?

Without a valid certificate or variation notice at settlement, the purchaser’s conveyancer must:

  1. Withhold 15% of the total purchase price.
  2. Remit this amount to the ATO using the Foreign Resident Capital Gains Withholding Purchaser Payment Notification form.

This ensures compliance but may delay access to full sale proceeds for the vendor until their next tax assessment allows a potential refund.

When Is Withholding Not Required?

Withholding is generally not required if:

  • The vendor provides a valid Clearance Certificate before settlement.
  • The property is not considered taxable Australian real property under ATO guidelines.
  • The transaction does not constitute a disposal of an asset as defined by the ATO.

Conveyancers verify these exemptions during pre-settlement checks to prevent compliance issues. Eckermann Conveyancers ensure that these rules are applied correctly for every transaction.

How Conveyancers Help with Capital Gains Withholding

Conveyancers ensure both vendors and purchasers meet their obligations by:

  • Checking whether a Clearance Certificate is supplied.
  • Preparing necessary withholding payment notification forms.
  • Confirming 15% withholding transfers are completed if required.

In South Australia, working with an experienced Conveyancer like Eckermann Conveyancers ensures all steps are handled in accordance with local procedures and ATO requirements — minimising risk and keeping settlements on track.

How long does the ATO take to issue a certificate?

The ATO usually issues a Clearance Certificate within a few days of receiving the application, but it can take up to 28 days. Delays occur if the vendor’s tax information is outdated or incomplete. Early submission is strongly recommended to avoid settlement postponements.

Conclusion

With the 2025 FRCGW changes, both vendors and purchasers in South Australia must be diligent. Failure to comply can result in financial delays and penalties. Working with Eckermann Conveyancers ensures compliance, accurate documentation, and a smooth settlement process — providing peace of mind at every stage of your property transaction.