Selling in NSW? Why You Need an ATO Clearance Certificate
Every Australian seller now needs one, whatever the sale price. Without it, your buyer is legally required to hold back 15% of the price at settlement.
Most sellers we speak to assume this is a tax rule for overseas owners. It used to feel that way, because it only kicked in for sales of $750,000 or more. That changed on 1 January 2025. Today, every seller on the title needs a clearance certificate from the ATO, whether the property sells for $400,000 or $4 million. Here’s what it is, why it matters, and how to get one without holding up your settlement.
At a glance
- Every owner on the title needs their own clearance certificate, for any sale price, on contracts signed from 1 January 2025.
- No certificate by settlement means the buyer must withhold 15% of the price and pay it to the ATO.
- It’s free and valid for 12 months, but can take up to 28 days to issue. Apply as soon as you start thinking about selling.
Why an Australian seller needs this at all
The rule is called foreign resident capital gains withholding. Its purpose is to make sure foreign residents pay any Australian tax owed when they sell property here. To make that work, the law starts from one assumption: unless the seller proves they are an Australian resident for tax purposes, the buyer has to hold back part of the price and send it to the ATO.
The clearance certificate is that proof. It’s the ATO confirming to your buyer that you’re an Australian tax resident and nothing needs to be withheld.
For contracts signed on or after 1 January 2025, two things changed. The withholding rate rose from 12.5% to 15%, and the $750,000 threshold was removed completely. If you’ve read older articles that say cheaper properties are exempt, they’re out of date.
In plain English
Think of the clearance certificate as a note from the ATO to your buyer that says: “This seller lives here for tax purposes. Pay them the full price.” No note, and the law makes your buyer keep 15% of the price aside for the ATO, even though you’re entitled to all of it.
What it looks like in real numbers
A couple sells their Lake Macquarie home for $900,000. They own it equally. One certificate arrives in time. The other is still being processed on settlement day.
The result: the buyer must withhold 15% of the second owner’s half, which is $67,500. If neither certificate had arrived, it would be $135,000.
The money isn’t lost, but you only get it back by lodging your tax return for the financial year the contract was signed. That can be many months away. If those funds were meant for the deposit or settlement on your next home, that’s a serious problem.
How to get your clearance certificate
The application is done online through the ATO and costs nothing. Here’s the process.
Each owner applies separately
If two people are on the title, you need two certificates. The ATO processes each application on its own, so one can arrive days or weeks before the other.
Check your name matches the title
Your first and last name on the certificate must match the certificate of title, or the buyer can’t rely on it. Middle names don’t matter. If you’ve married or changed your name and the title and ATO records don’t line up, sort that out first, because it’s one of the most common causes of delay.
Allow up to 28 days
Many certificates come through quickly, but the ATO says to allow up to 28 days. It can take longer if you haven’t lodged tax returns recently, your residency has changed, or the property is held in a trust or company.
Send it to us
The certificate usually arrives by email. Forward it to us and we’ll provide it to the buyer’s conveyancer before settlement. It stays valid for 12 months from the date it’s issued, as long as your residency doesn’t change, so applying early costs you nothing. If you end up not selling, you simply don’t use it.
“Apply for your clearance certificate the day you start thinking about selling, not the day you sign the contract.”
Can RM apply for it on my behalf?
Under the ATO’s rules, the application can be lodged by the seller, an Australian legal practitioner, or a registered tax agent. Conveyancers can’t lodge it for you, but we can help you complete it. If you’re not confident online, we can sit down with you, enter the details together, and have you sign before it’s submitted.
We’re not tax agents, so if you have questions about capital gains tax on the sale itself, speak with your accountant.
Free to apply, valid for a year, and it protects your full sale price. There’s no reason to wait.
Where sellers get caught out
Leaving it too late. A fast settlement and a slow application is the most common way this goes wrong.
Name mismatches. A maiden name on the title and a married name with the ATO can stall the whole application.
Separated owners. If both names are still on the title, both owners need a certificate. If one now lives overseas and is a foreign resident, they can’t get one, and 15% of their share will be withheld unless the ATO grants a variation.
Deceased estates. Where the executor sells the property to someone outside the will, the executor applies as trustee, using the deceased’s name as it appears on the title. Transfers to a beneficiary under the will generally don’t need one.
Trusts and companies. The entity named on the title applies, which is usually the trustee. These applications can take longer, so start early.
The short version
Every seller on the title needs an ATO clearance certificate, whatever the price. It’s free, it lasts 12 months, and it can take up to four weeks to arrive. Apply before your property goes on the market, send it to us when it lands, and your buyer will pay you the full price at settlement.
Getting ready to sell? Our seller questions hub covers the rest of the process, and what happens after you accept an offer walks you through the steps to exchange.
Thinking about selling?
Talk to Justin, Julie, Amanda or Nicole before you list. We’ll get your contract ready and make sure nothing like this holds up your settlement.
