Queensland Law Society

ATO update on foreign resident CGT withholding framework

The ATO’s webpages for foreign resident capital gains withholding (ato.gov.au/FRCGW) have been updated to provide further guidance on:

  • how to fill in a clearance certificate for a trust – it is the entity that has legal title to the asset; generally the trustee needs to apply for a clearance certificate in its own capacity
  • what to do if the client has changed their name – proof of name change may be provided, for example, a marriage certificate issued from an Australian state or territory registry
  • what a head company consolidated group clearance certificate will contain – but subsidiaries can also apply in their own right
  • deceased estates
  • mortgagee in possession situations.

The ‘FRCG Common Questions’ webpage has also been updated.

Practitioners should also be aware of the following:

  • The ATO requires legal practitioners who provide information to the ATO on behalf of their clients to use the online version of the forms, retaining (not submitting) the signed PDF version.
  • Where possible, the TFN of both the purchaser and vendor are to be provided to ensure the forms are processed as quickly as possible. Alternatively the date of birth of the vendor assists identification and allows confirmation of payment to be issued quickly.
  • All vendors of the asset need to obtain a clearance certificate to avoid withholding, for example both the husband and the wife if the property is in joint names.
  • The ATO has adopted an administrative arrangement to allow a purchaser to rely on a clearance certificate when the name matches the certificate of title and the date the certificate is given to the purchaser falls within the time period for which the certificate is valid.

Attachments are not required, but may be useful for a clearance certificate when a taxpayer’s residency status has changed, or for a variation to support the application, or for a purchaser payment notification when there is more than one asset to which the form applies.