An additional step in standard settlements of property sold by an Australian resident
As of 1 July 2017, Sellers of residential land in Australia need to provide ATO issued clearance certificates for properties sold over $750,000 (even if you are not a foreign resident).
The Sellers must give the Clearance Certificate to the buyer or their conveyancer/settlement agent before settlement.
If for example you sell a house that you own together with your husband/wife/business partner as tenants in common, both you and your partner will need to lodge separate applications for clearance certificates.
Applications for foreign person clearance certificates can be made on-line at: https://www.ato.gov.au/FRWT_Certificate.aspx
This requirement arises out of the ATO Foreign Resident Capital Gains Withholding Regime that attempts to ensure that people, who are deemed foreign residents, and sell property are paying their capital gains tax obligations prior to the proceeds from the sale being moved off-shore.
Note 1. So there are no issues/delay to settlement, check and ensure your name shown on the Clearance Certificate(s) matches your name as it is shown on the certificate of title.
Note. 2. If the Clearance Certificate(s) is not received before settlement, the buyer will notify their conveyancer / settlement agent that a Clearance Certificate was not received, the Buyer at settlement must withhold 12.5% of the purchase price, and the Buyer must pay the 12.5% of the purchase price to the ATO.
Please call Chris Marshall if you would like to discuss further.