ATO REQUIREMENTS

ATO REQUIREMENTS WHEN SELLING your home

ATO Clearance Certificates will affect all property transactions from 1 January 2025.

• Threshold Removed: The $750,000 threshold will be reduced to $0, requiring clearance certificates for all sales.
• Withholding Rate Increased: The rate will rise from 12.5% to 15%.

• Ensure the name registered with the ATO matches the name on the title.
• Correct discrepancies with the ATO, especially if unrelated to official name changes.
• Apply for the clearance certificate only after confirming the name is correctly registered.

Are you an Australian resident vendor?

Australian vendors can avoid the requirement of the purchaser to withhold the 15% by providing one of the following to the purchaser before settlement:

for Australian real property, a clearance certificate must be obtained from the ATO

• Australian resident vendors selling real property will need to obtain a clearance certificate from the ATO prior to settlement, to ensure they don't incur the 15% non-final withholding (to avoid possible delays in settlement the vendor should complete and lodge the form with us as early as practical as it can take up to 28 days to process) – an application for a clearance certificate can be lodged before a contract for sale being entered into.
• for other asset types, a vendor declaration the vendor may provide the purchaser with a vendor’s declaration to specify withholding isn't required on the acquisition of the asset.

What do sellers have to do prior to settlement?

• Sellers (individuals and companies) must apply to the ATO for a Clearance Certificate.
• Give the Clearance Certificate to the buyer and their conveyancer/settlement agent before settlement.

What does the ATO do?

• The ATO will determine if the seller is deemed a foreign resident.
• The ATO should issue a Clearance Certificate to all applicants who are not foreign residents.

What does the buyer do if a Clearance Certificate is received prior to settlement?

• The buyer will give the Clearance Certificate to their conveyancer / settlement agent.
• The buyer, at settlement, will not withhold any money.

What does the buyer do if a Clearance Certificate is not received prior to settlement?

• The buyer will notify their conveyancer / settlement agent that a Clearance Certificate was not received.
• The buyer at settlement must withhold 12.5 per cent of the purchase price.
• The buyer at settlement must pay the 12.5 per cent of the purchase price to the ATO.

What does the seller do if they are not issued with a Clearance Certificate and the ATO receives 12.5 per cent?

When the seller submits their tax return, the ATO will assess any capital gains tax liability.

Can the seller delay settlement if the Clearance Certificate has not been received?

Only through agreement between the buyer and the seller.

How to apply?

To apply for a Clearance Certificate click on the link below:

https://www.ato.gov.au/FRWT_Certificate.aspx

For more information, click here to visit the ATO website OR visit: www.ato.gov.au and search for: Impacts on foreign and Australian residents