Selling a property comes with a long list of paperwork, and since January 2025 there is one more item on it. If you are selling property in South Australia without an ATO clearance certificate in hand before settlement, the buyer is legally required to hold back 15% of your sale price and send it to the Australian Taxation Office.
What is an ATO clearance certificate?
It is a document from the ATO confirming you are an Australian tax resident. The rule behind it, foreign resident capital gains withholding, exists so overseas sellers meet their capital gains tax obligations. Australian residents are not the target, but the withholding applies to everyone selling property by default. The certificate is what switches it off.
Do I need one if my property is worth less than $750,000?
Yes. That threshold is gone. Before 1 January 2025 the rules only applied to sales of $750,000 or more, at a rate of 12.5%. Contracts signed from 1 January 2025 onwards have no threshold and a 15% rate. A $320,000 unit is caught the same as a $3 million house.
The date that matters is when the contract was signed, not settlement day.
How do I get an ATO clearance certificate and how long does it take?
You can apply online through the ATO website. There is no fee. You answer some questions about your tax residency and the property, and you can lodge before you have a buyer or even a signed contract by entering an anticipated contract date.
The ATO says processing can take up to 28 days. They often come back faster than that, but you cannot rely on it. A certificate stays valid for 12 months from the date it is issued, so applying the moment you decide to sell costs you nothing and reduces the risk of not receiving it in time to settle.
What if there is more than one name on the title?
Every vendor needs their own ATO clearance certificate. The ATO does not accept joint applications, so a couple selling the family home lodges two separate ones. This is the part that catches people out, and one missing certificate is enough to trigger withholding.
The same applies where the seller is a Company, a Trust or a Deceased Estate. Each entity on the Title applies in its own right, and the details have to match the title exactly.
What happens if it is not ready by settlement?
The buyer must withhold 15% of the sale price and pay it to the ATO. It is not discretionary, and your conveyancer cannot waive it.
You do get the money back if you are entitled to it, but only after the financial year ends and you lodge your tax return. That can be months away. If you were counting on the full proceeds to settle your next purchase, you need to take this into consideration when making an offer or arranging finance.
On a $700,000 sale that is $105,000 sitting with the ATO instead of in your account, over a form that costs nothing and takes minutes.
Apply before you list
An ATO clearance certificate costs nothing, lasts a year, and takes a few minutes to apply for. There is no advantage in waiting.
Sort it out when you decide you are selling property, and it becomes one less thing that can hold up your settlement.
The ATO’s detailed guide sets out the full rules. If you would rather have someone keep track of it for you while you are selling property, get in touch here or call us on (08) 8261 5092.