ATO Requirements When Selling Your Home: Key Changes Starting January 2025 in Brisbane, QLD
From 1 January 2025, significant changes to the Australian Taxation Office (ATO) Clearance
Certificate requirements will impact all property transactions across Queensland and Australia.
Here’s what sellers and buyers in Brisbane need to know:
Key Changes to Clearance Certificates
- Threshold Removed:
a. The current $750,000 threshold will be reduced to $0, meaning all property sales
will require an ATO Clearance Certificate regardless of the sale price.
- Increased Withholding Rate:
a. The withholding tax rate will rise from 12.5% to 15%, further emphasizing the
need for sellers to comply to avoid unnecessary withholding.
What Sellers Need to Do
To comply with the new rules and ensure smooth transactions:
- Verify Your Details:
a. Ensure your name registered with the ATO matches the name on the property
title. Address any discrepancies before applying for the Clearance Certificate.
- Apply for a Clearance Certificate:
a. Applications can be submitted before entering a sales contract, and the process
can take up to 28 days, so apply early to avoid settlement delays.
- Provide the Certificate to the Buyer:
a. Ensure the buyer and their conveyancer/settlement agent receive the Clearance
Certificate prior to settlement.
Responsibilities of Buyers and Sellers
For Sellers (Individuals or Companies):
- Obtain a Clearance Certificate from the ATO.
- Submit the certificate to the buyer’s conveyancer/settlement agent before settlement.
For Buyers:
- If a Clearance Certificate is provided:
o Submit the certificate to your conveyancer/settlement agent.
o No withholding of funds is required at settlement.
- If a Clearance Certificate is not provided:
o Withhold 15% of the purchase price at settlement.
o Pay the withheld amount directly to the ATO.
What Happens If Withholding Occurs?
If the seller cannot provide a Clearance Certificate:
- The buyer will withhold 15% of the sale price at settlement and remit it to the ATO.
- The seller can claim the withheld amount when filing their tax return.
- The ATO will assess any capital gains tax liability based on the transaction.
Can Settlement Be Delayed?
Settlement can only be delayed if the buyer and seller mutually agree. Without an agreement,
withholding will proceed if no Clearance Certificate is provided by the seller.
How to Apply for a Clearance Certificate
- Visit the ATO website: ATO Clearance Certificates.
- Follow the instructions to complete the application process.
Why This Matters
These updated requirements ensure compliance with the ATO’s Foreign Resident Capital Gains
Withholding (FRCGW) rules. Both buyers and sellers in Brisbane, QLD, must take proactive steps
to avoid delays, unexpected withholding, or potential penalties during property transactions.
For further details, visit the ATO website: www.ato.gov.au and search for “Impacts on foreign
and Australian residents.”
Ensure your property sale proceeds smoothly by staying informed and prepared!