Foreign Resident Capital Gains
Withholding Clearance
Certificate

Foreign Resident Capital Gains Withholding Clearance Certificate for Property

If you sell a property which settles 1 July 2016 or after, you will need a Foreign Resident Capital Gains Withholding Clearance Certificate.

It has a crazy long name – but if you don’t have one, 10% of the sale price of your property will be sent straight to the ATO.

The new ATO rules were made to encourage foreign tax residents to lodge tax returns, and pay tax on the profit they are making on property.

The Clearance Certificate will confirm to the buyer that you are an Australian tax resident.

You will need to ask the ATO for this Clearance Certificate. And the sooner the better! The ATO are currently saying it will take between 14 – 28 days. We applied for our first on in the first few days of July – so time will tell.

We called the ATO to ask how the application was going – but they only repeated their expected turnaround time.

If you are not able to give the purchaser this Clearance Certificate when the property settles, they will, by law, have to send 10% of the purchase price to the ATO. If they do not, they will be held responsible.

When you lodge your tax return you will be able to get this money back, less any tax for the profit you made on the property.

But be warned – 10% if the sale price is a lot of money – and if the property has a large mortgage over it, this could complicate things with the bank!

Here is the link to the form on the ATO Website

But I would recommend asking your accountant or solicitor to apply for this.

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