PAYG and non-resident capital gains withholding

The Commissioner has issued a legislative instrument, F2016L01123 , to ensure that the correct amount of foreign resident CGT withholding tax is withheld where there is a sale of Australian property by multiple sellers and one of them is an Australian resident and at least one is a foreign resident. The PAYG amount must be based on the proportion of the acquisition cost and the market value of the financial benefit attributable to foreign resident entities. The instrument commenced on 1 July 2016.

Example: A property is to be sold for an amount of $4 million. The sellers are: A, an Australian resident who owns 50 per cent; B, an Australian resident who owns 25 per cent; and C, a foreign resident who owns 25 per cent. A and B have provided valid clearance certificates to the purchaser. The amount to be withheld from the purchase price is 10 per cent of the amount attributable to C. That is 10 per cent of $1 million, being $100,000.