AU Nonresident Cgt

Section 1 — Quick Reference

Section 1 Quick Reference table

Field	Value
Country	Australia
Applies to	Non-residents of Australia disposing of Australian assets
CGT rate (non-resident)	30% flat rate on net gain (no 50% discount available)
Key test	Taxable Australian Property (TAP) test
Withholding	12.5% of gross proceeds on TAP transactions > AUD $750,000
Primary legislation	ITAA 1997 Div 855; TAA 1953 Sch 1 Subdiv 14-D
Tax authority	ATO (ato.gov.au)
Verified by	Pending — Australian CPA/CA sign-off required

Section 2 — The Core Rule

Non-residents are only subject to Australian CGT on Taxable Australian Property (TAP). Non-TAP assets sold by non-residents: no Australian CGT.

Section 3 — The TAP Test: What Qualifies as TAP

TAP test asset types table

Asset type	TAP?
Australian real property (land, buildings)	Always TAP
Mining, quarrying, prospecting rights in Australia	Always TAP
Shares in a company where >50% of market value derives from Australian real property interests	TAP (indirect interest)
Units in a trust where >50% of MV derives from Australian real property interests	TAP (indirect interest)
Options/rights to acquire any of the above	TAP
Assets used in Australian permanent establishment of a non-resident	TAP
Shares in an Australian company where assets are predominantly operating business, IP, goodwill, cash	NOT TAP
Portfolio shares (<10% interest in a listed company)	Generally NOT TAP regardless of asset composition

• Critical question for company shares — Look through to the company's balance sheet. If >50% of the market value of the company's assets consists of Australian real property interests → TAP. If the company is an operating business with IP, goodwill, equipment, receivables → likely NOT TAP.

Section 4 — CGT Rate for Non-Residents

CGT rate for non-residents table

Item	Non-resident treatment
CGT rate	30% (top individual rate, not graduated)
50% general discount	NOT available to non-residents (removed 8 May 2012)
SBCGT concessions	Available if all basic conditions met (including active asset test)
Main residence exemption	Generally not available to non-residents (unless Australian citizen/PR in specific circumstances)
Cost base calculation	Same as residents

Section 5 — Foreign Resident Capital Gains Withholding (FRCGW)

• FRCGW obligation — When a non-resident sells TAP with gross proceeds ≥ AUD $750,000, the buyer is required to withhold 12.5% of the gross proceeds and remit to the ATO.
• FRCGW nature — This is a payment on account (not a final tax). Actual tax liability is computed in the non-resident's Australian tax return.

FRCGW threshold table

FRCGW threshold	AUD $750,000
Withholding rate	12.5% of gross proceeds
Who withholds	The buyer (purchaser)
Remittance deadline	Day of settlement

Example: Non-resident sells shares (TAP) for AUD $10M. Buyer withholds AUD $1.25M (12.5%). Net gain is, say, AUD $8M. Australian tax at 30% = AUD $2.4M. The $1.25M already withheld is applied — balance payable AUD $1.15M via Australian tax return.

Section 6 — Clearance Certificate

• Clearance certificate for resident sellers — If the seller is an Australian resident (not a foreign resident), the seller can apply for a clearance certificate from the ATO to confirm residency, relieving the buyer of the withholding obligation.
• Variation for non-resident sellers — If the seller IS a non-resident but believes no tax is payable (e.g. asset is not TAP, or gain is nil due to losses), the seller can apply for a variation to reduce the withholding amount.

Applications: via ATO online portal (myGov / Tax Agent portal). Processing time: 14-28 days typically.

Section 7 — Filing Obligations for Non-Residents

• Filing requirement — A non-resident who sells TAP must lodge an Australian non-resident individual tax return for the year of disposal (even if no tax is payable after losses/concessions). Due date: 31 October following the end of the financial year (or later with a tax agent).
• TFN requirement — Australian Tax File Number (TFN) is required. Non-residents can apply via ATO.

Section 8 — Interaction with Tax Treaties

• DTA coverage and Article 13 — Australia has double tax agreements (DTAs) with 45+ countries. Article 13 of most DTAs follows the OECD Model — gains on shares may be taxed by the country of residence of the seller UNLESS the shares derive principally from Australian real property (aligns with the TAP domestic test).
• Treaty outcome mirrors domestic TAP rules — Under most treaties, the outcome mirrors the domestic TAP rules: if TAP → Australia taxes; if not TAP → Australia does not tax (residence country taxes).

Always check the saving clause and specific treaty wording.

Section 9 — Sources

• ITAA 1997 Division 855 (non-resident CGT)
• Tax Administration Act 1953, Schedule 1, Subdivision 14-D (FRCGW)
• ATO: ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/foreign-residents-and-capital-gains-tax
• ATO: Foreign resident capital gains withholding (ato.gov.au/FRCGW)

Working paper only. The TAP classification requires analysis of the company's asset composition by market value — not book value. Engage a qualified Australian tax adviser for transaction-specific advice.