Navigating ATO Clearance Certificates: Essential for Sellers & Buyers

Published by RG Settlements — property settlement services in Victoria Park, Perth and across Western Australia.

Correction checked 7 September 2026: The rate and threshold references in this article have been updated for contracts from 1 January 2025. Sources: ATO withholding overview and Australian residents and clearance certificates.

For Australian real property contracts entered into on or after 1 January 2025, foreign resident capital gains withholding generally applies at 15%, with no property-value threshold. Australian resident sellers should give the buyer a valid ATO clearance certificate at or before settlement to prevent withholding. Foreign residents may seek a variation.

1️⃣ What is an ATO Clearance Certificate?

An ATO Clearance Certificate confirms that a seller is an Australian resident for tax purposes, so the purchaser does not have to withhold for that seller. It does not determine whether capital gains tax is payable. It is valid for 12 months, provided the seller’s tax residency does not change.

2️⃣ Who Needs an ATO Clearance Certificate?

• Australian resident sellers of Australian real property need a valid clearance certificate to avoid withholding; there is no minimum property price for contracts from 1 January 2025. Each seller should check their own certificate requirements.
• If the seller fails to provide the certificate at settlement, the buyer generally must withhold 15% and remit it to the ATO, unless an applicable exclusion or variation changes the amount.

3️⃣ Buyer’s Responsibility

• If a seller does not supply the clearance certificate, the buyer generally must withhold 15%, subject to applicable exclusions and ATO variations.
• Failure to withhold? The ATO may hold the buyer personally liable for the unpaid tax amount.
• Buyers should always verify the seller’s clearance certificate before settlement to avoid complications.

4️⃣ What About Foreign Sellers?

• Foreign residents cannot obtain an ATO Clearance Certificate.
• However, they may apply to the ATO to adjust the withholding rate based on their circumstances.
• Timing is crucial – foreign sellers should act fast to ensure smooth transactions.

Why It Matters

Obtaining an ATO Clearance Certificate is critical to avoid delays, withholding tax, and financial uncertainty. Apply early, stay informed, and seek professional assistance if needed.

At RG Settlements, our team can help coordinate the clearance-certificate requirements for your property settlement.

Need assistance? Contact us today for expert advice and a hassle-free property transaction!

Apply early. Withholding is a payment towards the seller’s tax obligations, rather than a separate final tax; obtain tax advice for your circumstances.

Planning a property settlement in WA? Get a settlement quote from RG Settlements and speak with our Victoria Park team about your purchase, sale or property transfer.