What this ruling covers
The Australian Taxation Office (ATO) has published an addendum to its official ruling LCR 2016/6, updating the guidance on foreign resident capital gains withholding. The addendum was published on 29 July 2026 and applies from 1 January 2025.
The ruling covers situations where a buyer purchases Australian real property or an indirect Australian real property interest from a foreign resident seller. In those circumstances, the buyer is required to withhold a percentage of the purchase price and pay it to the ATO.
How the withholding rate and threshold have changed
The ruling records three successive sets of rules:
- 1 July 2016 to 30 June 2017: a rate of 10% applied to property valued at $2 million or more.
- 1 July 2017 to 31 December 2024: a rate of 12.5% applied to property valued at $750,000 or more.
- From 1 January 2025: a rate of 15% applies to all property values, with no minimum threshold.
Updated worked examples
The addendum updates worked examples within the ruling. A withholding payment previously described as $950,000 paid on 30 September 2017 is now updated to $1.14 million paid on 30 September 2025.
Key actions stated in the ruling
The ruling sets out the following steps for buyers:
- For transactions entered into on or after 1 January 2025, buyers are required to withhold 15% of the purchase price - regardless of the purchase price amount - and pay it to the ATO. There is no longer a minimum threshold.
- Buyers are required to check whether the seller of a property is a foreign resident for withholding purposes under section 14-210 of Schedule 1 of the Taxation Administration Act 1953 before settlement.
- Where the standard withholding amount is considered incorrect for a particular situation, buyers can apply to the Commissioner to vary the amount under section 14-235 of Schedule 1 of the Taxation Administration Act 1953. The ATO's guidance on applying for a variation is available at ato.gov.au.
- The full updated ruling is available at: https://www.ato.gov.au/law/view/document?docid=COG/LCR20166A3/NAT/ATO/00001
This is a plain-English summary for information only, not legal or compliance advice. Always check the official source or consult a qualified professional.