Private ruling: CGT - Foreign Resident Capital Gain Withholding
Date of advice: 16 February 2026
Published: 7 April 2026
Ruling period: 1 July 20XX to 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the Company required to withhold and remit 15% of the capital proceeds to the Commissioner under the foreign resident capital gain withholding (FRCGW) regime in Subdivision 14-D of the Taxation Administration Act 1953 (TAA 1953) [1] ? | A1: No. Subdivision 14-D of Schedule 1 to the TAA 1953 does not apply in this case. The FRCGW regime only applies where property is acquired from a foreign resident. The vendor in this transaction is an Australian resident company. Accordingly, no withholding is required. The Company also obtained a valid clearance certificate, which independently confirms to the purchaser that the vendor is not a foreign resident for Subdivision 14-D purposes. For completeness, any withholding obligation under Subdivision 14-D, where it does arise, is imposed on the purchaser, not the vendor. The vendor Company therefore never had any obligation to withhold or remit an amount under the FRCGW regime as any such obligation would rest solely with the purchaser. However, this does not affect the fact that an Australian resident company may, in other contexts, have withholding obligations, such as where a distribution to a foreign shareholder constitutes a dividend. In such circumstances, dividend withholding tax rules may apply to the Company independently of Subdivision 14-D.

Relevant facts and circumstances: 1. The Company was incorporated in Australia on DDMMYYYY and is an Australian resident company. 2. The Company acquired property located In Australia (Property). 3. The Property acquisition was fully funded by a Foreign Entity. 4. An Australian resident individual holds 1 ordinary share (1% interest) in the Company. 5. The Foreign Entity holds 99 ordinary shares (99% interest) in the Company. 6. The Company's principal object has been to provide religious education. 7. From incorporation until 20XX, the Company had no trading activities and derived no income. 8. All operating expenses were funded by the Foreign Entity. 9. On DDMMYYYY, the Property was sold at public auction with settlement scheduled for DDMMYYYY. 10. The Company obtained an ATO Clearance Certificate under Subdivision 14-D of the TAA. 11. The Company incurred a capital loss of $X from the sale of the Property. 12. After discharging all liabilities, the remaining sale proceeds will be distributed to shareholders in accordance with their beneficial interests. 13. On the date of settlement, the remaining net proceeds will transfer to a foreign country. 14. An amount equal to X% of the sale proceeds is being held in the solicitor's trust account pending the Commissioner's ruling.

Relevant legislative provisions: Taxation Administration Act 1953 schedule 1 Subdivision 14-D | [1] All future references are to the Taxation Administration Act 1953 unless otherwise stated.