Why You Need an ATO Clearance Certificate When Selling Property in Queensland

What Is an ATO Clearance Certificate?

An ATO Clearance Certificate is a document issued by the Australian Taxation Office confirming that you are not a foreign resident for tax purposes. It doesn’t matter if you are an Australian citizen, this certificate is required for every seller (individual, company etc).

This certificate is required under the Foreign Resident Capital Gains Withholding (FRCGW) rules, which are designed to ensure that foreign residents pay the appropriate tax when selling Australian property.

Why Does It Matter?

If you don’t provide this certificate to the buyer before settlement, the buyer is legally required to withhold 15% of the purchase price and pay it directly to the ATO. This can cause real headaches, and might even mean there isnt enough funds to discharge your mortgage at settlement.

You must apply for an ATO Clearance Certificate immediately after a contract is signed for the sale of your property to ensure there is sufficient time to get the certificate back from the ATO and sent to the Buyer.

Recent Changes You Should Know About

Previously, ATO Clearance Certificates were only required for property sales above $750,000.00. However, recent legislative changes have made these certificates mandatory for all sales in Queensland, regardless of price.

What You’ll Need to Provide

To apply for a certificate, your solicitor or conveyancer will need some key information from you, including:

• Your Tax File Number;
• Your residncy status (and whether it will change before settlement);
• Whether you've lodged tax returns in the past two years; and
• Whether you're acting on behalf of a foreign residenet or foreign entity.

If this is your first time hearing about the ATO Clearance Certificate, we understand it’s an odd concept, and we are here to help.

We will help simplify this process, but it’s important to provide the necessary information as early as possible to avoid delays.

Disclaimer: This advice is general in nature and is not intended to be legal advice.

If you would like legal advice, please call our office on (07) 5619 0440 and we would be pleased to assist you.