Beware the ATO does not take 15% of your sale proceeds. Changes to seller CGT clearance requirements on 1 January 2025

December 17, 2024

Commencing 1 January 2025, all sellers of land must provide buyers with an ATO Foreign Resident Capital Gains Withholding Clearance Certificate (ATO Clearance Certificate). Historically, this regime only applied to properties worth $750,000 or more, but that limit has been scrapped.

If a seller does not provide a buyer with the ATO Clearance Certificate by settlement, a buyer must retain 15% of the purchase price (or market value of the property if it is a gift) and remit that amount to the ATO. This percentage has increased from 12.5%.

The seller’s solicitor, or accountant, will usually arrange for the ATO Clearance Certificate to be obtained. The ATO may take up to 28 days to issue the ATO Clearance Certificate.

This applies to all Contracts dated on or after 1 January 2025. It does not apply to contracts dated before 1 January 2025 that settle after this date.

It is important to note that this does not just relate to sales contracts, this applies to most transfers of land (ie. a change of trustee, receiving property as a beneficiary under a Will, receiving assets under a succession plan).

Therefore, anyone looking to sell or transfer land should apply for the certificate as the first step and take the ATO’s response time into account when considering or negotiating the timeframes in relation to a transfer or a sale contract.

For more information, please contact our property team at Fox and Thomas.