ATO Clearance Certificate for All QLD Property 2025
The Foreign Resident Capital Gains Withholding (‘FRCGW’) rules changed on 1 January 2025.
Previously and up until the 31st of December 2024, Australian residents selling their Queensland property were required to apply for an Foreign Resident Capital Gains Clearance Certificate (‘clearance certificate’) to be provided to the buyers at, or before, settlement to avoid having 12.5% of the sale proceeds being withheld by the Australian Tax Office (“ATO”) from the sale of their property, only and when the value of the sale exceeds $750,000.
However, starting on the 1st of January 2025, all property sales in Queensland, regardless of price of the property, will require the seller to obtain a Foreign Resident Capital Gains Clearance Certificate to avoid the proceeds from the sale of their property being withheld.
Key Changes to Property Law in QLD – Effective 1 January 2025
- The $750,000 property value threshold has been removed, making clearance certificates mandatory for all property sales.
- The withholding rate has increased from 12.5% to 15%.
Why the Change?
The updated FRCGW legislation aims to ensure that foreign residents fulfill their capital gains tax obligations before the sale proceeds leave Australia.
Although Australian residents are generally exempt, the clearance certificate serves as evidence of their residency status.
What is an ATO Clearance Certificate?
An ATO clearance certificate is a document issued by the ATO to confirm that the seller of the property is an Australian resident for tax purposes.
What QLD Property Sellers Need to Do?
1. Apply for ATO Clearance Certificate/s
If you sign a contract on or after 1st January 2025, you must apply for a clearance certificate via the ATO website.
2. Apply Early
While the clearance certificates are typically issued within a few days, it may still take up to 28 days if there are outstanding tax matters.
3. Validity
Clearance certificates are valid for 12 months, so it’s best to apply in advance, even if you’re not planning to sell immediately.
What if I am a Foreign Resident Selling My Property in QLD?
As a foreign resident selling your property in Queensland, you would not be able to obtain the clearance certificate.
As such, the buyer of your property will be required to pay the 15% of the purchase price directly to the ATO to be offset against your future Capital Gain Tax (‘CGT’) liabilities.
It’s important you discuss the taxation matter with your accountants concerning the sale of your property, even before putting it up for sale.
Consequences of Non-Compliance
If a clearance certificate is not provided to the buyers at, or before, settlement, 15% of the purchase price will be withheld by the buyer and remitted directly to the ATO.
In addition, the 15% withheld by the ATO on behalf of the sellers would not be refunded till the next tax return lodged.
Key Dates to Remember
- Contracts Signed On or Before 31st December 2024 – The previous threshold of $750,000 still applies.
- Contracts Signed From 1st January 2025 – The updated legislation applies, making clearance certificates mandatory for all sales.
Get Assistance to Obtain an ATO Clearance Certificate
Sellers can apply directly through the ATO website, engage the team of expert conveyancing lawyers at HTW Legal Group, or task their real estate agent to assist.
Navigate the new conveyancing requirements with confidence.
📞Contact HTW Legal Group today.
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