If you’re a foreign resident selling Australian real estate worth more than $750,000 or the contract was entered into from 1 July 2016, the buyer must withhold 12.5% of the purchase price and send it to the ATO. You can claim it back when you lodge your Australian tax return.
The objective of foreign resident capital gain withholding is to assist collecting foreign residents' Capital Gains Tax liabilities. The 12.5% withholding applies regardless of whether your gain on the sale of the asset is subject to tax under Capital Gains Tax or as ordinary income.
The withholding obligation applies to both Australian resident and foreign resident buyers.
