🏡 Selling Property in Australia? Don’t Forget Your ATO Clearance Certificate!

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Australian residents and clearance certificates

If you’re planning to sell property here in Australia, there’s an important tax step you might not have considered: getting an ATO clearance certificate before settlement — even if you’re an Australian resident.

đź“Ś What Is a Clearance Certificate?

A clearance certificate is a document issued by the Australian Taxation Office (ATO) that confirms you’re an Australian resident for tax purposes. It’s required by law when selling property in Australia to prevent the purchaser from withholding tax under the Foreign Resident Capital Gains Withholding (FRCGW) rules.

đź’ˇ Why It Matters

If you don’t provide a valid clearance certificate before settlement, the buyer is legally required to withhold 15% of the sale price and remit it to the ATO — even if you’re an Australian resident. That could mean a significant amount is held back from your sale proceeds and only refunded after you lodge your tax return.

Changes that came into effect on 1 January 2025 mean:

  • The withholding rate is 15% for all property sales where no certificate is provided.
  • There’s no minimum property value — previously the rule only applied to properties over $750,000.

đź—“ When Should You Apply?

Apply for your clearance certificate as soon as you’re thinking about selling — you don’t have to wait until you sign a contract. They are free, and most are issued within a few days, although some may take up to 28 days to process.

The certificate lasts for 12 months from the date it’s issued — and can be used for multiple property sales within that period.

đź‘Ą Who Needs One?

Anyone selling Australian taxable real property who is an Australian tax resident must have a clearance certificate. This includes:

  • Individuals
  • Companies
  • Trusts
  • Super funds
    …as long as they are selling real property in Australia.

Each vendor listed on the title must obtain their own certificate, and the names on your certificate must match the names on the property title exactly.

🧠 Don’t Delay — It Could Cost You

If you miss having a clearance certificate at or before settlement:

  • The buyer withholds 15% of the sale price.
  • You may need to lodge a tax return to claim this amount back — which could delay your cash flow.

đź›  Special Circumstances

There are situations where a clearance certificate isn’t required, such as:

  • Property transfers due to relationship breakdown with CGT rollover relief.
  • Certain deceased estate transfers.
  • Transfers involving income tax-exempt entities.

If you’re unsure whether these apply to you, speak with your accountant or tax adviser.

đź“Ť Final Tip

Getting your clearance certificate early saves stress, ensures you receive your full sale proceeds, and helps transactions run smoothly. If you’re thinking of selling property in Australia, don’t overlook this step.

For the full ATO guidance on clearance certificates and how to apply, visit the ATO website.