Australian residents and clearance certificates

If you are an Australian resident and are selling or disposing of real property in Australia, a recent requirement is that the seller is required to provide the purchaser with a Clearance Certificate, either at or before the settlement date.

If you fail to provide this Certificate at settlement (latest date to provide) that the purchaser must withhold 15% (applied to all sales after 1 January 2025) of the Sale price for foreign resident capital gains withholding (FRCGW). For example, say your sale price $2.1 million.  If this certificate is not provided the purchaser must withhold $315,000.  This will be paid to the ATO and will be held until your tax return has been lodged.

Things to consider:

• Are you considering selling real property – apply for a certificate. It may take up to 28 days for it to be approved
• Each vendor is required to have a separate certificate
• Must be provided no later than the settlement date
• FRGCW is not available until the lodgement of the current year tax return
• Clearance certificates are valid for 12 months from date of issue (depending on vendor’s residency)
• Ensure prior year returns have been lodged (may delay the issuing of the Clearance Certificate)

Source Australian residents and clearance certificates | Australian Taxation Office

Questions?

Are you preparing to sell your property? Our experienced team can help. Talk to us today – 07 3263 7030 or tax@mcfillin.com.