If you’re selling a property for more than $750,000, you may have been told that you need to get a “Foreign Resident Capital Gains Withholding clearance certificate”. Despite the name, this is the certificate that Australian tax residents will need to obtain, otherwise the purchaser of your property is obliged to withhold (and remit to the ATO) 12.5% of the sale price.
If you aren’t an Australian tax resident, you may be able to apply for a variation certificate, lowering the amount that the purchaser withholds to an amount between 0 and 12.5%.
To ensure you’re able to easily obtain your certificate, you will need to make sure that your tax returns are up to date. Ideally, the property should be in the same name as your name with the ATO (but we can help you sort these issues out).
If you are acting as a trustee or the executor of an estate, you should obtain the certificate using your personal tax file number, even if the estate or trust has its own TFN.
What if I don’t live in Australia?
Unfortunately, even if you’re an Australian citizen, if you’re not an Australian resident for tax purposes, you may still need to have an amount withheld.
Does everyone on the title or selling the property need a clearance certificate?
Yes, or else funds will still be withheld.
Who can make the application?
Your solicitor or accountant is able to complete the application on your behalf. If you are using a conveyancer, they are able to assist you by lodging your application online from the signed paper form that you provide to them.
Where can I get more information?
The ATO website has more information about Foreign Resident Capital Gains Withholding, however if you would like advice on your specific circumstances, please feel free to contact us.
The information in this post is correct at the time of publishing, but should not be treated as legal advice.