Foreign resident capital gains withholding – part 6
Excluded assets
Some assets are not subject to the withholding, including:
- taxable Australian real property with a market value of less than $750,000
- an indirect Australian real property interest providing a company title interest with a market value of less than $750,000
- transactions conducted through an approved stock exchange
- transactions conducted using a broker-operated crossing system, such as a ‘dark pool’, as described in the ASIC Market Integrity Rules (ASX Market) 2010
- transactions subject to another withholding obligation
- securities lending arrangements, as these don’t trigger a CGT liability for the vendor and therefore no payment obligation is imposed
- transactions where the vendor is in external administration or transactions arising from the administration of a bankrupt estate, a composition or scheme of arrangement, a debt agreement, a personal insolvency agreement, or same or similar circumstances under a foreign law.
Exceptions
Foreign resident capital gains withholding doesn’t apply when the vendor disposes of either:
- an Australian real property and provides the purchaser with a clearance certificate from us
- any other asset where the purchaser is given a vendor declaration.
Vendor
The vendor is the entity that holds the legal title to the asset this withholding applies to.
Where the asset is held on behalf of another entity, the vendor is the legal owner of the asset, for example, the trustee or custodian who holds the legal title on behalf of beneficiaries.
When the vendor is treated as a foreign resident
A vendor is treated as a foreign resident if:
- the vendor doesn’t provide the purchaser with either a valid
- clearance certificate by settlement, if they are disposing of an asset that requires a clearance certificate to be provided to avoid the withholding being imposed
- vendor declaration stating they are an Australian resident, or that the membership interest is not an indirect Australian real property interest, when asked to do so by the purchaser with respect to a transaction involving an asset for which a vendor declaration can be used to avoid the withholding being imposed
- the purchaser applies the ‘knowledge condition’.
