Selling a property is already a busy time, but did you know there’s one more important document you’ll need before settlement? An ATO Clearance Certificate.
This requirement applies to all property sales in South Australia, regardless of the property’s sale price. Introduced as part of measures to ensure foreign residents meet their capital gains tax obligations, it’s now something every seller needs to be aware of.
What is an ATO Clearance Certificate?
The Australian Tax Office (ATO) Clearance Certificate proves you’re an Australian tax resident. Without it, buyers are required to withhold 15% of the property’s sale price at settlement and send it to the ATO. This is to cover any potential capital gains tax liability.
Since 1 January 2025, this applies to all property sales, regardless of value. So, whether your home sells for $300,000 or $3,000,000, you’ll need to have your certificate ready before settlement day.
How to Apply
The good news? Applying is straightforward and free. You can complete the application online through the ATO website. The process involves providing basic details about the property and confirming your tax residency status.
While the turnaround time for certificates is usually quick, we recommend applying as soon as you’ve decided to sell as it can take up to 28 days to be processed. Therefore, leaving it until the last minute could delay settlement or the receipt of your sale proceeds if the certificate isn’t ready in time.
Why Does This Matter?
If the certificate isn’t available by settlement, the buyer must withhold 15% of the property’s sale price and if you are entitled to this money, you won’t get it back until after the financial year ends and you lodge your Taxation Return. This can significantly affect the funds you receive and could be a huge impact if you are planning on using the sale proceeds to buy your next property. Having the certificate ensures the full proceeds of the sale come to you, without unnecessary deductions.
Stay Ahead of the Process
Selling property comes with its fair share of responsibilities, and obtaining an ATO Clearance Certificate is now one of them. By taking care of this early, you’ll avoid any last-minute complications and ensure a smooth settlement process.
If you have questions or need help navigating the application process, feel free to get in touch with us. We’re here to make your property journey as seamless and stress free as possible!
For more information, you can also visit the ATO’s detailed guide here.