Property Sales and Clearance Certificates

As seen in Woopi News March 2025

Are you an Australian resident selling a property? Do you know about Clearance Certificates?

When property within Australia is sold, Foreign Resident Capital Gains Withholding (FRCGW) is withheld unless the seller is an Australian Resident for tax purposes. An ATO-issued Clearance Certificate confirms the seller’s Australian residency.

A Clearance Certificate can be applied for from the ATO either online or by paper form. They are usually issued within a few days but may take up to 28 days.

Certificates can be applied for by conveyancers, vendors, legal practitioners, tax agents, or real estate agents, however the conveyancer usually includes this service so check with them first.

If a Clearance Certificate is not obtained, the buyer must withhold FRCGW if the contract was signed:

• Up to the 31 December 2024, at a rate of 12.5% for properties valued at $750,000 or more.
• On or after 1 January 2025, at a rate of 15% for properties of any value.

If you do not supply the buyer with a clearance certificate before settlement date and the buyer withholds an amount for FRCGW, this is treated as a tax credit and is used to offset any capital gains tax liability incurred from the sale of the property. If there is no capital gains liability or the liability is less than the amount that has been withheld, the difference will be refunded as part of your annual tax return.

Ensuring the ATO issues a Clearance Certificate by the settlement date ensures you will receive the full proceeds from the property sale, rather than the buyer withholding an amount and remitting it to the ATO.