ATO reminds property vendors and purchasers about Clearance Certificates

Posted: 12/07/2017

​From 1 July 2017, real property disposals by foreign vendors where the contract price is $750,000 and above (previously $2 million) will attract the foreign resident capital gains withholding (FRCGW) tax rate of 12.5% (previously 10%). Australian resident vendors selling real property can avoid the 12.5% withholding by providing a ‘Clearance Certificate’ from the ATO prior to settlement. ​

For Australian residents, a Clearance Certificate provides certainty to purchasers regarding their withholding obligations and confirms the withholding tax is not applicable to the transaction. The Australian resident entity (or their representative) will need to complete an online Clearance certificate application for Australian residents. The ATO's website outlines how to determine if a vendor is a 'foreign resident' and provides more details on how and when to apply for a Clearance Certificate and answers questions about validity and how long a certificate will take to produce.