Scope note. This brief explains a settlement process: who must hold a clearance certificate, when, and what the purchaser does without one. It is an educational guide. Whether a sale produces a capital gain, how it is taxed, and how any withheld amount is credited in your return are matters for your registered Tax Agent.
Here is the sentence that still surprises people at settlement tables around the country: every Australian vendor of real property needs an ATO clearance certificate, or the buyer must hold back 15% of the price and pay it to the ATO instead of to them. Not just foreign residents. Not just properties over $750,000. Everyone, on every sale, since 1 January 2025. The ATO reconfirmed the rules in guidance updated on 9 October 2026. If you are selling anything in the next year, whether a home, an investment unit, a block of land or a shop, this is the one piece of paperwork to start early.
What changed, and why it bites
Foreign resident capital gains withholding has existed since 2016. For years it only applied to properties worth $750,000 or more, at 12.5%, so most suburban sales never met it. From 1 January 2025 the threshold was removed and the rate rose to 15%. The mechanism is blunt by design: the purchaser does not assess whether you are a foreign resident. They simply check whether you have handed them a certificate. No certificate, 15% withheld, even if you have lived in the house for 30 years and were always entitled to one.
The numbers on a typical sale
On a $650,000 home with two owners on the title, 15% is $97,500, or $48,750 each. The ATO’s own example is a couple where one certificate arrives in time and the other does not: the second owner has $45,000 withheld from their share and gets it back only after their tax return for that year is lodged and processed, months later. If you are selling to fund the next purchase, that is the deposit on the new place sitting with the ATO until the following financial year.
Applying: free, 28 days, 12 months
- It is free, and you do not need a signed contract to apply. The ATO’s advice is to apply as soon as you are thinking of selling.
- Allow 28 days. Applications must be lodged at least 28 days before settlement to be sure of having the certificate in time. Processing takes longer if your recent tax returns are not lodged, your residency has changed, or the name on the title does not match the ATO’s records.
- It lasts 12 months from issue, so a certificate obtained before you list is still good for a settlement well into next year. If you decide not to sell, nothing is lost.
- One per vendor. Every name on the certificate of title needs its own certificate, and each is processed separately, so couples can receive theirs on different days.
- Hand it over at or before settlement. The purchaser needs it in hand by settlement day; having been entitled to one does not count.
Who can apply: the vendor, or an Australian legal practitioner or registered tax agent acting for them. Conveyancers who are not lawyers cannot apply on your behalf, though they can help you complete the form. The Tax Practitioners Board asks them to make clear they are not giving tax advice. The certificate arrives by email, or through myGov under Communication → History.
Names, trusts and companies
The first and last names on the certificate must match the certificate of title. Middle names and titles such as Dr or Ms do not matter, but a maiden name on the title and a married name at the ATO will stall the application. Fix the mismatch first: update your legal name with the ATO using a marriage or change-of-name certificate (a statutory declaration alone is not accepted), or correct the title with the state land registry.
For property held in a trust or SMSF, the trustee applies in its own name (the company or individual on the title) using its TFN or ABN, and the purchaser may rely on the certificate if you can show, for example with the trust deed, that the named entity is the trustee. A change of trustee alone is not a sale and needs no certificate. Companies in a consolidated group receive a certificate issued to the head company with members attached.
When no certificate is needed
A 2026 legislative instrument (LI 2026/38) varies the withholding to nil in a short list of situations: property passing to a beneficiary or surviving joint tenant on death, or to the estate’s legal representative; transfers between former spouses under a Family Law Act order or agreement; certain mortgagee sales by Australian banks; and sales by registered charities holding a private ruling. Sales during bankruptcy or external administration are excluded by the law itself. Outside that list, including private separations with no court order and family transfers at less than market value, the certificate is required and the withholding is calculated on market value.
If you are the purchaser
Your side is simpler but not optional. With a valid certificate from every vendor, pay the full price and keep the certificates on file. Without one, lodge the online Purchaser Payment Notification before settlement to get a payment reference number, withhold 15% of each uncertified vendor’s share, pay it to the ATO on settlement day (e-conveyancing platforms do this automatically), and give the vendor a copy of the payment confirmation. They need it to claim the credit. Withhold but pay late and general interest charge runs from settlement; fail to withhold at all and the penalty can equal the amount you should have held back. If you relied in good faith on a certificate that turns out to be invalid, the ATO pursues the vendor, not you. To check a certificate, call the ATO on 13 28 66 with the reference number from the top of it.
One interaction worth knowing: this withholding and GST at settlement on new residential property are independent. A clearance certificate does nothing for GST, and both can apply to the same contract.
Getting a withheld amount back
If 15% was withheld, it is not lost, but it is only refundable through a tax return for the income year the contract was signed (not settled), claimed at the foreign resident capital gains withholding credit label, which is not pre-filled. You will need the purchaser’s payment confirmation. The ATO refunds it in full where there is no CGT on the sale and no other tax debt. This is the part of the process that belongs with your registered Tax Agent; what we do is make sure the settlement file (contract, certificates, payment confirmation) is complete and in the books before they need it.
The vendor’s checklist
- Apply for a clearance certificate the week you decide to sell, before the agent and before the contract.
- One application per name on the title; check each name matches the ATO’s records first.
- Diary the 12-month expiry; re-apply if a long off-the-plan contract will outrun it.
- Give every certificate to the purchaser’s conveyancer well before settlement, not on the day.
- If the sale is a trust, estate, separation or mortgagee sale, confirm which rule applies before listing.
- Keep the settlement statement and certificates with the year’s records for your Tax Agent.
References: ATO, Australian residents and clearance certificates; ATO, Paying the foreign resident capital gains withholding (both last updated 9 October 2026); LI 2026/38 Taxation Administration (PAYG Withholding Variation for Foreign Resident Capital Gains Withholding Payments) Legislative Instrument 2026. Current at 20 October 2026.
This information is general in nature and does not constitute personal financial or tax advice. Please contact us to discuss your individual circumstances. Tax laws are subject to change; information on this page reflects legislation in effect as of October 2026.