Sell an Australian property without an ATO clearance certificate and your buyer must hold back 15% of the price and send it to the ATO. On a $900,000 sale that is $135,000 you will not see at settlement, even if you have lived in Australia your whole life.
This guide explains what the certificate is, who needs one, how to apply and how long it takes, for sales being settled in 2026. It also corrects a common error: the $750,000 threshold no longer applies. Every rule here was checked against the ATO’s foreign resident capital gains withholding overview and clearance certificate guidance on 9 October 2026.
It is written for Australian resident sellers, including migrants, joint owners, trustees and companies selling property. For the wider tax picture on a sale, see our guide to capital gains tax on property.
Key takeaways
- Withholding is 15% for contracts entered into from 1 January 2025, on the value of all property.
- The $750,000 threshold applied only to contracts from 1 July 2017 to 31 December 2024 (rate 12.5%).
- Australian resident vendors avoid withholding by giving the purchaser a valid clearance certificate at or before settlement.
- Processing can take up to 28 days. Apply early; you do not need a signed contract.
- Certificates are valid for 12 months from issue. Each joint owner needs their own.
- Amounts withheld are claimed as a credit in your tax return for the year the contract was signed.
ATO clearance certificate at a glance
| Item | Rule |
|---|---|
| Withholding rate | 15% of the purchase price (contracts from 1 January 2025) |
| Minimum property value | None for contracts from 1 January 2025 |
| Who applies | The vendor on title, or their Australian legal practitioner or registered tax agent |
| Cost to apply | Free |
| Processing time | Up to 28 days; apply at least 28 days before settlement |
| Validity | 12 months from issue, if residency status does not change |
| Deadline to give purchaser | At or before settlement |
Source: ATO FRCGW overview, ATO Australian residents and clearance certificates, ATO clearance certificate application, checked 9 October 2026.
What is an ATO clearance certificate?
It is a certificate issued under the foreign resident capital gains withholding (FRCGW) rules. It confirms the vendor is not a foreign resident for those rules. Despite the name, the regime affects Australian residents most, because the purchaser must withhold unless the vendor proves otherwise.
It does not decide whether you owe capital gains tax, and it is not a general tax clearance. A foreign resident cannot get one; instead they may apply for a variation to reduce the rate.
When do you need a clearance certificate?
According to the ATO overview, the purchaser must withhold unless the vendor is an Australian resident with a valid clearance certificate issued at or before settlement, or a foreign resident with a variation notice. The rules cover taxable Australian real property, including:
- your home, investment property, vacant land and commercial property
- a lease over Australian real property
- mining, quarrying or prospecting rights in Australia
- indirect Australian real property interests, such as some company shares
Sales through an approved stock exchange, and sales where the vendor is bankrupt or in external administration, are excluded.
How did the withholding rate and threshold change?
The rate depends on the date the contract is signed, not the settlement date.
| Contract signed | Rate | Property value covered |
|---|---|---|
| 1 July 2016 to 30 June 2017 | 10% | $2,000,000 and above |
| 1 July 2017 to 31 December 2024 | 12.5% | $750,000 and above |
| From 1 January 2025 | 15% | All property, no threshold |
The ATO’s own example: a $1.2 million contract signed on 16 December 2024 attracts 12.5% ($150,000). Signed after 1 January 2025, it attracts 15% ($180,000). The ATO page, updated 22 June 2026, lists no further changes.
Who applies, and what do joint owners and trusts need?
The vendor holding legal title applies, or an Australian legal practitioner or registered tax agent applies for them. A conveyancer who is not a legal practitioner cannot apply but can help you complete the form.
- Joint owners: each vendor needs their own certificate. Applications are processed separately, so they may arrive at different times.
- Trusts: the trustee holding legal title applies, using the trustee’s own TFN.
- Companies: the company applies and answers incorporation and residency questions.
- Names: the name on the certificate of title and the clearance certificate must match.
How do you apply for a clearance certificate?
Apply through the ATO’s online clearance certificate application. It is free and must be completed in one session. You will need:
- the vendor’s name exactly as on title, entity type and date of birth for individuals
- TFN and ABN if held (not mandatory, but they speed processing)
- a phone number or email address
- the contract date (or expected date) and expected settlement date
- answers on residency changes and whether your last two years of tax returns are lodged
That last question matters. If you have returns outstanding, lodge them before you apply; our guide to the overdue tax return penalty explains the cost of late lodgment. If your residency history is complicated, for example after moving to Australia, our tax clearance services for migrants can help, and our guide to the foreign income tax offset covers overseas income in your return.
The certificate is emailed if you gave an email address, or posted otherwise. Give a copy to the purchaser or their conveyancer on or before settlement.
What if withholding happens anyway?
The purchaser pays the amount to the ATO using a purchaser payment notification and should give you the payment confirmation (ATO paying FRCGW). You then claim the amount as a credit in your tax return for the income year in which the contract was signed, not the year of settlement. It is not pre-filled, and you need the payment confirmation. It is refunded in full only if you have no tax debts and no tax payable on the sale or other Australian income (ATO variations page).
Worked example: an Australian resident sells a $640,000 unit
Mei, an Australian resident, signs a contract on 3 March 2026 to sell an investment unit for $640,000. Settlement is 14 April 2026.
Under the old rules the unit was below $750,000, so no certificate was needed. Because the contract was signed after 1 January 2025, the 15% rate applies to all property.
Without a certificate, the buyer withholds $640,000 x 15% = $96,000. Mei would get the remaining $544,000 at settlement and claim the $96,000 in her 2025-26 tax return, less any tax owing.
Mei applies on 2 February 2026, 71 days before settlement and well ahead of the 28-day processing window. The certificate arrives, she gives it to the buyer, and she receives the full $640,000 less her own costs.
Rule of thumb: Apply for a clearance certificate when you decide to sell, not when the contract is signed. It is free, lasts 12 months and removes a 15% hold on your sale price.
Common mistakes with ATO clearance certificates
- Relying on the $750,000 threshold. It ended for contracts from 1 January 2025.
- Applying a week before settlement. Processing can take up to 28 days, and the ATO cannot guarantee a faster turnaround.
- Covering only one joint owner. Each vendor needs their own certificate.
- Name mismatches. The name must match the certificate of title exactly.
- Letting it expire. A certificate lasts 12 months; check the date if settlement moves.
FAQ about ATO clearance certificates
What is an ATO clearance certificate?
It is a certificate the ATO issues to an Australian resident vendor confirming they are not a foreign resident for foreign resident capital gains withholding. If the vendor gives a valid certificate to the purchaser at or before settlement, the purchaser does not withhold. It is not a general tax clearance and does not decide whether you owe capital gains tax on the sale.
Do I need a clearance certificate if my property is worth less than $750,000?
Yes, for contracts entered into from 1 January 2025. The ATO says a 15% rate now applies to the value of all property, with no minimum threshold. The $750,000 threshold applied only to contracts from 1 July 2017 to 31 December 2024. So an Australian resident selling a low-value unit or block of land still needs a certificate to avoid withholding.
How long does a clearance certificate take?
The ATO says it can take up to 28 days to process and issue a certificate, and recommends applying at least 28 days before settlement. You do not need a signed contract to apply. Each joint owner’s application is processed separately, so certificates for a couple may arrive at different times.
How long is a clearance certificate valid?
A certificate is valid for 12 months from its date of issue, as long as the vendor’s residency status does not change during that time. If settlement is delayed past the expiry date, or you sell a second property later, check the date and apply for a new certificate if needed.
What happens if I settle without a clearance certificate?
The purchaser must withhold 15% of the purchase price and pay it to the ATO. You do not lose the money, but you have to claim it as a credit in your tax return for the income year in which the contract was signed. Any tax debts or tax on the sale can be offset against it, so it may not all come back.
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Talk to a registered tax agent
Nanak Accountants can apply for your clearance certificate as your registered tax agent, check your lodgments are up to date and review the capital gains tax on your sale. Call 1300 626 258, book a discovery meeting or visit nanakaccountants.com.au.
This article is general information only and is not personal tax or legal advice. Figures and rules were checked against the ATO foreign resident capital gains withholding overview, clearance certificate, application, variation and payment pages on 9 October 2026. Rates and thresholds change, so confirm the current position before acting.
