ATO Clearance Certificate When Selling Property: Avoid 15% FRCGW Withholding

Australian resident property sellers generally need a valid ATO clearance certificate before settlement. Without one, the buyer may have to withhold 15% of the property value and pay it to the ATO under the foreign resident capital gains withholding regime. This is a cash-flow withholding rule, not a final calculation of the seller’s capital gains tax.

What changed from 1 January 2025

For contracts entered into on or after 1 January 2025, the withholding rate is 15% and the former $750,000 property-value threshold no longer applies. The rule can therefore affect ordinary residential sales at any value.

Australian tax residents avoid withholding by giving the buyer a valid ATO clearance certificate covering the relevant seller and disposal period before settlement.

Every registered seller must be covered

Where two or more people sell the property, each Australian resident vendor needs their own clearance certificate. One spouse’s certificate does not cover the other spouse.

The legal name and details on the application should match ATO and title records. Name changes, deceased estates, companies and trusts may require additional care.

When sellers should apply

Apply early after deciding to sell the property. Do not wait until settlement week, particularly where ATO records may need correction.

A certificate is generally valid for 12 months and can cover more than one sale by the same vendor during that period, provided its details and validity remain appropriate.

What happens without a certificate

If no valid certificate or ATO variation is provided by settlement, the purchaser may have a statutory obligation to withhold and remit the amount. The seller cannot solve the issue merely by stating that they are an Australian citizen or resident.

A seller may later claim credit through the tax system, but that does not prevent the immediate reduction in settlement proceeds. Tax advice should be obtained for the final CGT position.

DY practical point

Check the clearance certificate as soon as it arrives: vendor name, validity dates and property transaction timing all matter. Forward it to the conveyancer rather than assuming the ATO automatically sends it to the buyer.

Frequently asked questions

Does every Australian seller need a clearance certificate?

For Australian real property disposals under contracts entered into from 1 January 2025, Australian resident vendors generally need a valid certificate to avoid FRCGW withholding.

Is the 15% withholding the seller’s final tax bill?

No. It is a withholding amount. The seller’s final tax outcome is determined through their tax return and applicable tax rules.

Can the conveyancer apply for the certificate?

An authorised representative may assist, but the vendor must provide accurate tax and identity information. Apply early and seek tax advice where residency is uncertain.

Official references

Australian Taxation Office — Foreign resident capital gains withholding

Australian Taxation Office — Australian residents and clearance certificates

This article provides general information about Victorian conveyancing as at 17 July 2026. It is not legal or financial advice. The correct approach depends on the contract, title, parties and circumstances of each transaction.