The Capital Gains Withholding Clearance Certificate Explained
Selling property in Australia? Since 1 January 2025 nearly every seller needs an ATO clearance certificate, or the buyer must withhold 15%. Here is how to get one.
By Timothy Hirou GaschereauPublished 9 min read
Try it yourself
If you are selling property in Australia, your conveyancer has probably mentioned an ATO "clearance certificate". It sounds like bureaucratic box-ticking, and it mostly is, but skip it and the buyer must legally hold back 15% of your sale price. On a $900,000 sale, that is $135,000 you do not see for months.
Here is exactly what the certificate is, how to get one (free), and why you should apply the day you decide to sell.
🎯 The essential: Under the foreign resident capital gains withholding regime, a buyer must withhold part of the sale price and pay it to the ATO unless the seller provides a valid clearance certificate proving Australian tax residency. From 1 January 2025 the $750,000 threshold was removed and the rate rose to 15%, so nearly every Australian seller now needs a certificate at settlement. It is free, applied for online, valid 12 months, and can take up to 28 days, so apply early. Each person on the title applies separately. This is general information, not personal tax advice.
What the withholding regime is
When someone sells certain Australian property, the law requires the buyer to withhold a portion of the price and pay it to the ATO, to make sure foreign residents actually pay their capital gains tax rather than taking the money offshore. The regime is called foreign resident capital gains withholding (FRCGW), and it has existed since 2016, but most Australian sellers ignored it because it only applied to properties worth $750,000 or more. The clearance certificate is the document that tells the buyer: the seller is an Australian tax resident, so nothing needs to be withheld.
The big 2025 changes
From 1 January 2025, for contracts signed on or after that date, two things changed:
- The withholding rate rose from 12.5% to 15%.
- The $750,000 threshold was removed entirely.
There is no floor anymore. A $250,000 block of land, a $400,000 unit, a $1.8 million family home, all are caught if the seller does not produce a valid certificate. (Contracts signed before 1 January 2025 used the old 12.5% rate and $750,000 threshold.)
What this means for Australian sellers
In plain English: if you are an Australian tax resident selling any real property, you now need a clearance certificate to hand your buyer at or before settlement. That is essentially everyone selling a house, unit, land, or commercial property, even if your sale is fully CGT-exempt and even if it is the family home you have owned for 30 years.
The certificate does not say you owe no CGT. It simply confirms you are an Australian resident for tax purposes, so the withholding mechanism does not apply. Think of it as showing ID at the door: the bouncer does not care whether you plan to drink, just that you are allowed in. Your actual CGT position is a separate matter for your tax return.
How to get your clearance certificate
The good news: it is free and entirely online.
- 1. Check who applies. Every person on the title lodges their own separate application.
- 2. Gather details: your TFN, contact details, and the property address, with your name matching the title exactly.
- 3. Go to the ATO's online application (or access it via myGov linked to the ATO).
- 4. Complete it in one session (it cannot be saved), about 15 to 20 minutes.
- 5. Submit and wait. Most issue quickly; some take up to 28 days.
- 6. Provide the certificate to your conveyancer or the buyer's solicitor before settlement.
How long it takes
Officially up to 28 days, though many sellers get it within a few days. It takes longer if your tax returns are overdue, your residency status is ambiguous, your name does not match the title records, or the ownership sits in a trust, company or SMSF. The certificate is valid for 12 months, so there is no downside to applying the day you decide to sell, before you even list. Apply late and a slow certificate can hold up settlement.
What happens without one at settlement
If a valid certificate is not provided by settlement, the buyer is legally required to withhold 15% and remit it to the ATO. They have no discretion, even if they know and trust that you are an Australian resident.
| With a certificate | Without one | |
|---|---|---|
| Buyer withholds? | No | Yes, legally required |
| Amount withheld | $0 | 15% of the sale price |
| You receive at settlement | Full proceeds | 85% only |
| Getting the rest back | N/A | Claim a credit in your tax return |
| Cash flow impact | None | Funds tied up for months |
What about foreign residents?
If you are genuinely a foreign resident for tax purposes, you cannot get a clearance certificate, so the buyer will withhold 15% by default. But if 15% is more than your estimated Australian tax on the sale, you can apply for a variation notice to reduce the rate closer to your actual liability. Variations are more complex with longer timeframes, so if you are a non-resident selling Australian property, involve a registered tax agent early.
Frequently asked questions
Do I need a clearance certificate if I am selling my family home?
+
Yes. Since 1 January 2025 the requirement applies to all Australian real property sales, regardless of value or whether it is your main residence. The certificate does not affect your CGT main residence exemption; it simply confirms you are an Australian tax resident so the buyer does not have to withhold. Even a fully CGT-exempt sale needs one to avoid the 15% withholding.
How long does it take to get a clearance certificate from the ATO?
+
The ATO says up to 28 days. Many sellers get it within a few business days, but delays happen if your tax returns are overdue, your name does not match the title, or your residency status is unclear. Apply as early as possible, ideally as soon as you decide to sell.
What happens if my buyer withholds 15% at settlement?
+
The buyer remits it to the ATO and you receive only 85% of the sale price at settlement. You claim the withheld amount as a credit when you lodge your annual tax return, so depending on timing you could wait several months to get it back. It is not lost, but it is tied up.
Can my conveyancer or tax agent apply on my behalf?
+
Yes. A registered tax agent or your conveyancer can lodge the application if you authorise them. The certificate is still issued in your name and linked to your TFN, so you provide your personal details. Many conveyancers include this in their standard service.
I am selling with my partner. Do we each need a separate certificate?
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Yes. Every person named on the title lodges their own separate application. Joint owners each need their own certificate, and the slowest application sets the pace for settlement, so have everyone apply early.
What if I am a foreign resident selling Australian property?
+
Foreign residents cannot get a clearance certificate, so the buyer will withhold 15% at settlement unless you obtain a variation notice from the ATO to reduce the rate closer to your actual tax liability. Variations are more complex, so get a registered tax agent involved early.
Is the clearance certificate the same as a CGT exemption?
+
No. The clearance certificate only confirms you are an Australian tax resident. It does not mean you are exempt from CGT and it does not calculate or reduce any CGT you owe. A CGT exemption like the main residence exemption is a separate matter handled in your tax return.
Books worth reading
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Sources
- ATO, foreign resident capital gains withholding overview
- ATO, Australian residents and clearance certificates
- ATO, online clearance certificate application
- ATO, strengthening the foreign resident CGT regime (2025 changes)
General information only, not personal financial or tax advice. Rules and rates change. Consider a registered tax agent or conveyancer for your situation, and verify current requirements with the ATO.
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General information only. This article is educational and does not constitute personal financial advice. It does not account for your circumstances. Consider your own situation and seek advice from a licensed adviser before acting. Read our full disclaimer.
Timothy Hirou Gaschereau
Founder of Snowball Invest, not a financial adviser.
I write about what I'm learning myself, because nobody ever taught us how to take control of our own money. It's a skill, not a mystery, and it's never too late to learn it. The best day to start was yesterday, the second best is today.
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