How to Apply for an ATO Clearance Certificate Before Selling Australian Property

When do you need an ATO clearance certificate to sell property?

Australian residents for tax purposes selling or disposing of Australian real property need an ATO clearance certificate if they want to prevent foreign resident capital gains withholding from being deducted from the amount paid at settlement.

For contracts entered into on or after 1 January 2025, the FRCGW property-value threshold was removed and the withholding rate increased to 15%. This means the rules can apply regardless of the property's value.

If an Australian resident vendor does not provide the purchaser with a valid clearance certificate on or before settlement, the purchaser generally has a legal obligation to withhold 15% of the purchase price, or market value for a transaction that is not at arm's length, and pay the withheld amount to the ATO.

What is a foreign resident capital gains withholding clearance certificate?

A foreign resident capital gains withholding clearance certificate is an ATO-issued certificate confirming that a vendor is treated as an Australian resident for the purpose of the FRCGW withholding rules for the certificate's validity period.

The certificate prevents the purchaser from having to withhold the standard FRCGW amount when the certificate applies to the vendor and transaction.

The clearance certificate does not determine whether the vendor has a capital gains tax liability from the property sale. It deals with withholding at settlement.

Who can apply for an ATO clearance certificate?

The application is for Australian resident vendors. The entity that holds legal title immediately before the sale or transfer is the entity that must obtain the clearance certificate.

If you are a foreign resident for Australian tax purposes, do not use the Australian resident clearance certificate application. The ATO provides a separate foreign resident capital gains withholding variation process for vendors who may qualify for a reduced withholding rate.

Does every vendor need a separate clearance certificate?

Yes. If a property has multiple vendors, every vendor named as a legal owner must lodge their own application. The ATO does not allow vendors in the same property transaction to submit a joint clearance certificate application.

This is important for jointly owned homes, investment properties and other property interests. Settlement preparation should confirm that a valid certificate has been obtained for each Australian resident vendor whose share would otherwise be subject to withholding.

When should you apply for the clearance certificate?

Apply as early as practical. The ATO states that a clearance certificate application can take up to 28 days to process and specifically recommends early lodgment to reduce the risk of needing to extend settlement.

You do not need to wait until the contract is signed. The application can be submitted before a contract of sale is entered into. If there is no signed contract yet, the application allows an anticipated contract date to be entered.

An approved clearance certificate is valid for 12 months from the date it is issued, allowing vendors to apply well before an expected settlement.

Can you apply before listing or selling the property?

Yes. Because the ATO permits applications before a sale contract is entered into and the certificate is valid for 12 months, applying early can reduce settlement risk. This can be particularly useful where a sale is expected within the certificate's validity period.

How much does an ATO clearance certificate cost?

The ATO does not charge an application fee for lodging the clearance certificate application.

How long does an ATO clearance certificate take?

The ATO states that processing can take up to 28 days. Applications that require clarification or additional residency information may not be immediate, so vendors should not rely on receiving a certificate shortly before settlement.

Providing accurate identifying information and current contact details can help avoid unnecessary delays. The ATO specifically notes that providing identifiers such as a TFN or ABN can help it identify the vendor and process the application faster.

What details do you need for the application?

The online application requests information based on the vendor's circumstances. Core information can include the vendor's entity type, legal name, contact details, address, actual or anticipated contract date and expected settlement date.

For an individual vendor, the form asks for information including the person's first and last name, other given names where relevant, date of birth, contact details and address. The vendor's name should align with the legal and ATO records used to issue the certificate.

The form can also request a TFN and ABN. The ATO states that providing these identifiers assists it in matching the vendor to its records and can speed processing.

What ownership details should you check before applying?

Check exactly which person, company or trustee holds legal title. The ATO's rule is based on the legal owner of the asset rather than who informally regards themselves as the beneficial owner or who is managing the sale.

If there are multiple owners, do not attempt to combine them into one application. Each vendor must apply separately.

What residency questions does the application ask?

The ATO uses the application to establish the vendor's Australian tax residency status. The form asks whether the vendor's residency status has changed since their last tax return or will change before the property is sold and whether required tax returns for the previous two years have been lodged.

It also asks whether the vendor is holding the property on behalf of a foreign resident or on behalf of other entities that include a foreign resident.

Depending on the answers, additional questions can be displayed. Individual applicants may be asked about matters relevant to Australian tax residency, including their presence in Australia, living arrangements, family, assets and ties to Australia or another country.

Do you need to attach documents?

The online form allows supporting documents to be attached. The ATO indicates attachments may be relevant where the vendor's residency status has changed since the last tax return or will change before the sale, or where the vendor has not lodged required tax returns for the previous two years.

The ATO accepts multiple attachment file formats through the application. Only provide documents relevant to supporting the information in the application.

How do trustees apply for a clearance certificate?

If the vendor is a trustee, the trustee holding legal title is the entity that applies. This includes, for example, an executor of a deceased estate or a trustee of a superannuation fund.

The trustee should use their own TFN and ABN as relevant identifiers. For transactions involving assets held on trust, the ATO instructs applicants to select the entity type corresponding to the trustee rather than incorrectly classifying the trust-held asset under an unrelated entity type.

What if a corporate trustee does not have a TFN?

The ATO instructs a corporate trustee without a TFN to attach details of the relevant trust and the company's Australian company number to the application. It also recommends ensuring Australian Business Register associate details are current for the corporate trustee to avoid possible delays.

Can a solicitor, accountant or tax agent apply for you?

Yes. A vendor can lodge the application personally or have an authorised third party such as a solicitor, accountant or registered tax agent complete and lodge it on the vendor's behalf.

The ATO places restrictions on people who charge a fee for completing the application. Conveyancers, real estate agents and other fee-charging service providers cannot complete the form on behalf of the vendor unless they are a legal practitioner or registered tax agent.

However, a vendor can complete a paper version and give it to a conveyancer, real estate agent or other service provider to enter those vendor-supplied details into the online form as part of the settlement service.

Can a conveyancer be the ATO contact?

Yes. The ATO instructions allow a conveyancer who is not a legal practitioner or tax agent to be nominated as the contact for the application. If the ATO asks substantive questions, the conveyancer is expected to relay those questions to the vendor so the vendor can provide the answers, or the ATO can be asked to contact the vendor directly.

How to complete the ATO clearance certificate application online

The ATO's online application is the main method for applying. The application covers application type, representative contact information where relevant, vendor details, additional application details, attachments, declaration and confirmation.

You must complete the online form in one session. The ATO states that an incomplete application cannot be saved and reopened later, so gather the required information before starting.

Contract and settlement dates

The application asks for the contract date and expected settlement date. If no contract has yet been signed, you can enter the anticipated contract date. This enables vendors to apply before the property is formally sold.

Vendor name details

For a company, use the company's legal name, including the name under which the vendor is incorporated and reflected on the certificate of title. For an individual, provide the individual's name details and date of birth as requested.

If the vendor's name has changed, the ATO instructs the vendor to update their name in ATO systems before applying because the clearance certificate is issued using the legal name recorded by the ATO.

What happens after you submit the application?

The confirmation screen confirms that the application was successfully lodged. Save or print a copy of the application confirmation for your records.

The ATO processes the application and may contact the vendor or nominated contact if it needs to resolve or clarify information. Providing an email address and phone number can help the ATO contact you promptly and reduce avoidable delays.

Individual vendors can also access a copy of their clearance certificate outcome through ATO online services linked to myGov, under their communication history.

When must you give the certificate to the purchaser?

If the ATO approves the application, give a copy of the valid clearance certificate to the purchaser on or before the day of settlement. This is the critical step that allows the purchaser not to withhold the standard FRCGW amount for that vendor.

Receiving the certificate from the ATO is not enough by itself. The purchaser must have the applicable certificate by settlement.

What happens if you do not have a clearance certificate at settlement?

For contracts entered into on or after 1 January 2025, the purchaser generally must withhold 15% of the purchase price, or market value for a non-arm's-length transaction, when the Australian resident vendor does not provide a valid clearance certificate and no other applicable relief applies.

The withholding is not necessarily the vendor's final capital gains tax liability. An Australian resident vendor from whom an amount has been withheld may claim the relevant withholding credit through the applicable Australian tax return process. However, obtaining the clearance certificate before settlement avoids having that amount withheld from the settlement proceeds in the first place.

How to avoid a property settlement delay

Do not wait until the final days before settlement. The ATO states that applications can take up to 28 days and expressly recommends applying as early as practical to minimise the need to extend settlement.

Before lodging, confirm every legal owner, submit a separate application for each vendor, make sure legal and ATO names are current, provide available tax identifiers and contact details, and prepare any residency evidence that may be required.

After approval, provide the certificate to the purchaser or the purchaser's settlement representative well before settlement and confirm that certificates have been supplied for every relevant vendor.

How long is a clearance certificate valid?

An ATO clearance certificate is valid for 12 months from its issue date. Because an application can be made before a contract is signed, a vendor may obtain a certificate in advance and use it for a settlement that occurs while the certificate remains valid and otherwise applies.

Is a clearance certificate the same as a CGT exemption?

No. The clearance certificate concerns foreign resident capital gains withholding at settlement. It does not mean the property sale is exempt from capital gains tax and does not calculate the vendor's eventual CGT liability.

Vendors still need to determine the tax consequences of their property sale separately when preparing the relevant income tax return.