ATO Clearance Certificate Updates

There has been a change in Foreign resident capital gains withholding (FRCGW) rules are starting from 1 st of January 2025. Previously, Australian residents selling a property needed to provide a clearance certificate to the purchaser at or before settlement – otherwise, 12.5% of the purchase price was withheld from the property sale, on properties valued at $750,000 or more.
Under the Changes:
  • The withholding rate increases from 12.5% to 15%
  • The $750,000 property value threshold now becomes $0, with withholding rules being applied to all property sales
This change will apply to any contracts entered into on or after 1 January 2025. The whole point of this is designed to support the collection of tax liabilities owed by non-residents selling Australian property. So, all Australian residents selling property now require a clearance certificate from the ATO to avoid withholding being applied to the transaction.
What Non-Compliance Means?
Failure to provide the clearance certificate by settlement means 15% of the sale price must be withheld by the purchaser and paid to the ATO. And, you won’t get any refund due until you complete your next income tax return!
Processing Time for Clearance Certificate:
Most clearance certificates will be issued within a few days but it’s important to apply early as it can sometimes take up to 28 days to issue. They are valid for 12 months, so the seller doesn’t need to wait until the contract is signed.
To apply for an ATO Clearance Certificate:

Author

May Aung