If you are thinking of selling a property with a market value of $750,000 or more, they must apply and be eligible for a clearance certificate.
When you sell a property and don’t have a valid clearance certificate at or before settlement, the purchaser must withhold 12.5% of the purchase price. This is the foreign resident capital gains withholding (FRCGW) amount.
Clients selling properties can apply for a clearance certificate from the ATO.
Affected properties include:
- vacant land
- residential and commercial property.
When to get a clearance certificate
Clients selling property should lodge their application for a clearance certificate as early as they can. Clearance certificates are current for 12 months and can be used for multiple sales.
Sellers must provide a certificate before settlement and it can take up to 28 days for processing.
When there isn’t a clearance certificate
Remember these things at settlement:
- The purchaser must withhold 12.5% of the purchase price and remit it to the ATO (the seller will likely want to delay settlement until they have a certificate).
- If it’s a new residential property that’s subject to GST at settlement, the purchaser must also withhold the GST amount and remit it to the ATO with Form two, GST property settlement date confirmation.
The purchaser pays the sale price, minus any withheld amounts to the seller.
- The two withholding obligations occur separately but operate together.
If the settlement date changes, you don’t need to resubmit Form one: GST property settlement withholding notification, just make sure the new settlement date is entered when lodging Form two.
- Capital gains withholding: Impacts on foreign and Australian residents
- Clearance certificates
- GST at settlement online forms and instructions
- GST at settlement – a guide for suppliers and their representatives
Source: ATO – Clients selling property for $750K +
If you have any further queries, please do not hesitate to contact our office on (03) 5366 0700 or send us an email at