Category Archives: Property

NSW Government Land Tax Assistance
The NSW Government is introducing measures to help commercial and residential landlords manage their rental properties.

At present, the Government have not finalised the specific documents required to apply for the reduction in land tax. However the information supplied would need to show your tenant is in financial distress as a result of COVID-19. These documents may include BAS statements, a letter from an accountant or evidence that the lease was reduced in response to this financial distress, such as copies of old and new tenancy/lease agreements that indicate rent reduction.

We ask that you start to prepare any supporting documents in readiness and we will advise you when the application process is released. Our partners and managers are available should you require assistance.

Basic Elements of the Land Tax Support Package
Includes a reduction of up to 25 per cent of the land tax payable in the 2020 land tax year. It’s available when:

  • your land is used for business or residential purposes
  • you’re leasing property to a residential tenant – or a business tenant with annual revenue of up to $50 million – who can demonstrate financial distress resulting from the COVID-19 outbreak
  • you reduce the rent of the affected tenant by at least as much as the tax reduction
  • the land tax is directly related to the property for which rent has been reduced.

Financial distress is considered to be:

  • for commercial tenants – a 30 per cent drop in revenue
  • for residential tenants – a 25 per cent drop in household income .

Further reading on the package can be found at Land Tax Support Package.

Understanding Foreign Resident Capital Gains Withholding (FRCGW) Payment

This Article


This article is written for sellers (vendors) of Australian real estate (house, unit, factory, farm), who are non-residents of Australia.



The foreign resident capital gains withholding (FRCGW) payments regime is enshrined in the Taxation Administration Act 1953 (TAA 1953).The FRCGW payments regime first came into effect on 1 July 2016.

In this regard, Subdivision 14-D of Schedule 1 to the TAA 1953 imposes a non-final withholding obligation on the purchaser of certain Australian real estate where the property is acquired from a foreign resident.

The relevant schedules of the TAA1953 were updated in Treasury Laws Amendment (Foreign Resident Capital Gains Withholding Payments) Act 2017. Thisupdate received royal assent on 22 June 2017.

The 2017 update:

  • Increased the withholding rate from 10% to 12.5%
  • Decreased the sale Value threshold from AU$2m to AU$750,000

For property transactions on or after 1 July 2017 the new rates apply.

Purpose of the Rules

These rules require Purchasers of Australian property valued in excess of $AU750,000 to withhold 12.5% of the purchase if the seller (vendor) is a non-resident.

Point to note: In Australian legislation the term “non-resident” is used to describe persons not ordinarily resident in Australia. Rarely is the term “Foreign resident” used. When you read this ‘Foreign resident’ means ‘non-resident’ for Australian tax purposes.

Furthermore “seller” means “vendor” and vice versa


Where an Australian property is sold for AU$750,000 or more, the FRCGW rules may apply.

The starting point when selling an Australian property is to ask whether you as a seller are

  • An Australian tax resident, or
  • a non-resident (aka “Foreign Resident”).
  • If you are an Australian tax residentand sell an Australian property for AU$750,000 or more, you will need to apply for, and receive a Capital Gains Withholding Clearance Certificate.


For it to be effective in avoiding the withholdingof sale proceeds, the seller must provide it to the purchaser. This must occur before settlement

  • If you are a non-resident seller of Australian property, you will not receive this certificate, and the purchaser (with help from aconveyancer) will be required to withhold 12.5% of the sale price. The purchaser will then provide that withheld amountdirectly to the ATO at the time of settlement.
  • If you are a purchaser, you will use the Foreign resident capital gains withholding purchaser payment notification

Tax for the seller of the property?

The FRCGW is not a FINAL tax. It is simply an “estimate”.

What this means is that an Australian Tax Return is still required for filingin the financial year when the property is sold.

The final tax (as worked out on the tax return) and the estimate (FRCGW) is then reconciled, and the seller of the Australian property:

  • Receives a refund for any overpaidFRCGW; or
  • Is given a bill (Notice of Assessment) for ‘catch up’ tax


Consider the following Case Study:

Michelle was originally a resident of Australia.

She purchased anapartment in Sydney in 2003 for $515,000.

She never lived in it, she just rented it out (it was an “investment property”)

In 2010 Michelle moved to the UK to accept a job opportunity and became a non-resident of Australia.

Michelle made a life in the UK and decided never to return to Australia. She continued to collect rental income from the unit.

(In May 2012 the non-resident CGT Concession rules changed denying Michelle the 50% CGT discount from this point onwards)

In May 2012 because of a change in law, her tax agent suggested Michelle get the property appraised. It was valued at AU$850,000

(IN July 2016 the FRCGW Rules were introduced and updated from 1 July 2017)

In August 2019 Michelle sold the property for $1,050,000.

The purchaser withheld $131,250 from the proceeds under the FRCGW regime because

  1. Michelle couldn’t provide a certificate proving she was an Australian resident; and
  2. The property was valued in excess of AU$750,000

Upon settlement Michelle only received $919,750 ($1,050,000 less the FRCGW of $131,250)

Working out the FINAL TAX

Accordingly, and taking all of the above into consideration, Michelle with the help of her tax agent:

  1. Calculated a Gross Gain on sale of $496,858 (after purchase and selling costs like advertising, agent commission and stamping duties were deducted) but;
  2. Calculated a Taxable Capital Gain of $348,292.50 (after taking into consideration the discounts applicable before the non-resident laws changed in May 2012).

Michelle’s FINAL tax worked out to be $138,281.63.

As $131,250 was already withheld under FRCGW, there is an estimated balance $7,031.63 of tax to pay, which is required to be paid via the filing of an Australian tax return.

We note Michelleis required to lodge an Income Tax Return, and we are able to file this on her behalf.

Do I lodge?




Q: Lets say the FRCGW resulted in an overpayment of the calculated final tax?

A: Of course – Michelle should engage a tax agent to lodge a tax return as soon as possible – and seek a refund of the overpayment.




Q: We often get asked whether as a non-resident Michelle would bother to lodge if she is now in the UK, unlikely to return to Australia and has $7k to “catch up”. Who’s going to chase her?

A: By law – Michelle must lodge an income tax return. As a non-resident with an Australian sourced property she is required to lodge and pay the “catch up”.

If Michelle ever returned to Australia to live and work the obligation to lodge and pay remains.

And of course the longer she leaves it the worse (penalties and interest) it will be.

If you are a non-resident (or former resident) of Australia and have Australian real estate with a view to sell, please contact us to understand your obligations after the FRCGW regime applies.

There have been so many changes in superannuation in the last few years, it can be hard to keep track with the best ways to maximise your self-managed superannuation fund.

Here are our Top 10 strategies to utilise your Self-Managed Superannuation Fund (SMSF).

1. Maximise Contributions with Personal Superannuation Contributions

If you make a personal contribution into your superannuation fund, you may be able to claim a tax deduction for those contribution. The contribution must be made from your after-tax income i.e. from your bank account directly into your super fund. Before claiming a deduction, you must submit a Notice of Intent to Claim a Deduction for Personal Contribution Form and receive an acknowledgement from your fund. Personal super contributions that are claimed as a tax deduction will count towards your concessional contribution cap (2018-19: $25,000). If you exceed the cap, you will have to pay extra tax and will count to your non-concessional contribution cap.

Suitable for members who are investors externally to their SMSF

2. Direct Property Investment

Buying an SMSF Property or investment property directly through an SMSF is becoming increasingly popular. Direct property investing can provide capital growth and rental income in a very tax advantageous structure. Rental income is taxed at 15% and capital gains at 10% if the property is held for more than 12 months. If you hold your property until you have retired and commenced a pension, both rental income and capital gains could become tax free.

Suitable for people who enjoy property investing

3. Business Real Property

Generally speaking, you cannot buy an SMSF property and live in it, nor can you rent it to a relative, even on commercial terms. However, if you run a business, you can buy a commercial property using your SMSF and lease it to your own business.

Your business would pay rent at market rate to your SMSF, which is a tax-deductible expense for your business. Since rent is not classified as a superannuation contribution, you can still make concessional and non-concessional contributions, subject to your age and contribution caps.

Suitable for members who are investors externally to their SMSF

4. SMSF Property Loans or Limited Recourse Borrowing Arrangements

SMSFs can borrow money to purchase a single acquirable asset such as a property, or a collection of identical assets that have the same market value such as a parcel of shares. This is achieved via a limited recourse borrowing arrangement (LRBA). This arrangement involves the lender’s recourse being limited to the single asset. Borrowing in an SMSF is not without risk although there are several potential benefits including leverage, tax advantages and asset protection.

Suitable for experienced property investors with the ability to service the loan in their SMSF.

5. Recontribution Strategy

A re-contribution strategy is where you withdraw your super and re-contribute it back into super. There a several reasons as to why you may utilise this strategy:
• Estate Planning
• Tax Planning
• To utilise you and your spouse’s Transfer Balance Cap (currently $1.6 million)
• To maximise Centrelink Benefits
• Access government co-contribution and spousal contribution tax offset.

Suitable for members who have retired or over 65 years old, and eligible to make non-concessional contributions

6. Start an Account Based Pension

Once you reach preservation age and have met the relevant retirement conditions, you can allocate up to $1.6 million to start an Account Based Pension. An Account Based Pension converts your accumulation balance into “retirement phase”. In retirement phase, earnings are tax-free.

Suitable for members over 65 years old and members who are retired – aged between preservation age and 64 years old

7. Spousal Contribution Splitting

This strategy involves one member of a couple to split up to 85% of their concessional contributions received within a financial year with their spouse. This opportunity provides an opportunity to equalise their retirement benefits in particular where one spouse is younger, earning a lower income or is not working.

Suitable for couples

8. Separate Investment Strategies/Segregated Assets

Circumstances may warrant separate investment strategies within one fund e.g. Parents with children in one fund. The children have a different investing profile to their parents. Under new legislation if funds have over $1.6 mil in pension phase, they are not entitled to use segregation to determine tax-free earnings. However, there is a difference between segregation for tax and segregation for accounting.

Suitable for funds with both parents and children

9. In Specie Transfers

This involves making a contribution by transferring listed shares or business real property into your SMSF and not receiving cash proceeds. Although this triggers a SMSF capital gains tax event, this will allow future earnings to be made in a concessional tax environment. Subject to contribution caps.

Suitable for investors who hold investments in listed shares and business real property outside super

10. Downsizer Contribution

An older Australian who downsizes can contribute up to $300,000 to super regardless of employment status, Total Superannuation Balance and non-concessional contribution cap. This involves a member 65 years old or older, selling their home and making a contribution within a prescribed period.

Suitable for members over 65 years old

**Bonus Strategy**

11. Carry-forward concessional contributions of unused caps over five years

From 1 July 2018, if your Total Superannuation Balance is less than $500,000 at the end of a financial year, you will have the opportunity to start accumulating the unused portions of your concessional contribution caps from previous years (up to 5 years) in the following financial years. This mechanism will allow you to “catch-up” on concessional caps and make contributions which will count towards your unused concessional contribution caps.
Amounts carried forward that have not been used after five years will expire.
The first year in which you can access unused concessional contributions is the 2019–20 financial year.

Suitable for members with balances less than $500,000 in superannuation

Our SMSF Accountant and Specialist, Leanne Tinyow

Speak to one of experienced SMSF Accountants in Sydney. Leanne Tinyow is Economos’ Head of SMSF Services and is in charge of the compliance and administration of over 400 Self-Managed Super Funds. She is also well versed in helping new clients with SMSF setup and sdministration and can answer several SMSF property related questions.