Clearance Certificate Guide for Australian Residents (2026)
Last reviewed:
Primary tax-year context: Current Australian tax settings
This article is general information only. We maintain pages using primary-source checks and date-based reviews. See editorial policy.
General information only. Speak with a registered tax agent for advice.
If you are selling Australian property for $750,000 or more, you need to obtain an ATO clearance certificate before settlement — even if you are an Australian resident who has lived in the property for decades. Missing this step means the buyer is legally required to withhold 12.5% of the purchase price and pay it to the ATO instead of you.
What Is Foreign Resident Capital Gains Withholding?
Foreign Resident Capital Gains Withholding (FRCGW) is a regime under which buyers of Australian property must withhold a portion of the purchase price and remit it to the ATO, unless the seller provides evidence that they are an Australian resident for tax purposes.
The withholding rate is 12.5% and the threshold is $750,000. On a $1 million property, that is $125,000 withheld at settlement.
The system is designed to ensure the ATO can collect capital gains tax from foreign residents who sell Australian property and may not otherwise be subject to ATO enforcement. But the withholding obligation falls on the buyer — not the ATO — regardless of whether the seller is Australian or foreign. If the buyer fails to withhold when required, the buyer faces penalties.
Who Needs a Clearance Certificate?
The clearance certificate requirement applies to all sellers of taxable Australian real property valued at $750,000 or more — Australian residents and foreign residents alike.
This surprises many Australians. The clearance certificate is not something only foreign residents need. If you are an Australian resident selling property at or above $750,000, you need a clearance certificate to confirm your residency status to the buyer and prevent the withholding.
Property types covered include:
- Residential property (houses, apartments, units)
- Commercial property
- Vacant land
- Indirect Australian real property interests (e.g., shares in companies where more than 50% of assets are Australian land)
The $750,000 threshold applies to the total purchase price in the contract. If a property is sold for $750,000 exactly, the withholding rules apply.
What Happens Without a Clearance Certificate
If you do not provide a valid clearance certificate to the buyer at or before settlement:
- The buyer is legally obligated to withhold 12.5% of the purchase price
- The buyer remits the withheld amount to the ATO as a PAYG withholding credit
- The withheld amount is credited against your tax account
- You claim the credit in your income tax return for the relevant year — but you do not receive it back until your return is processed
The practical consequence: on a $900,000 property sale, $112,500 of your proceeds are withheld at settlement. You get $787,500 at settlement instead of $900,000. The remaining $112,500 is credited against your tax account, and you claim it when you lodge your tax return — potentially six to twelve months later.
If you have no or minimal capital gains tax liability (e.g., you are selling your main residence, which is generally CGT-exempt), the entire $112,500 will be refunded — but you have to wait for it.
How to Apply for a Clearance Certificate
Applying is straightforward and free:
- Go to the ATO’s online services (accessible via myGov) or the ATO’s dedicated FRCGW portal
- Complete the clearance certificate application — you will need your TFN and details matching the title of the property
- Submit the application online
Processing times are typically 1 to 14 business days. Most applications from straightforward Australian residents are processed within a few days. Applications that flag potential issues (e.g., past non-lodgement of returns, large outstanding debts, or residency questions) may take longer.
A clearance certificate, once issued, is valid for 12 months from the date of issue. If you applied several months before settlement and your certificate is still valid at the settlement date, you do not need a new one.
The Name Must Match the Title
A critical detail: the name on the clearance certificate must exactly match the name on the property title documents. If the property is held in joint names, each owner needs their own clearance certificate. If the property is held in a trust or company name, the certificate must be in the entity’s name.
Mismatches at settlement can create last-minute complications. Confirm the exact names on the title before applying.
When to Apply
Apply as early as possible in the sale process — ideally when you sign the contract or even before listing. Given that processing can take up to 14 business days (and occasionally longer for complex cases), leaving it until the week before settlement is a significant risk.
A reasonable approach:
- Apply when you sign the sale contract (or when you list the property if the sale is likely)
- Allow two to three weeks for processing
- Provide the certificate to the buyer’s conveyancer as soon as you receive it
- Confirm the certificate is still valid (within 12 months) at settlement
What If You Have Outstanding ATO Debts?
An outstanding tax debt does not automatically prevent you from obtaining a clearance certificate — the clearance certificate confirms residency status, not debt-free status. However, if the ATO identifies significant compliance issues during the application process, there may be delays or additional requirements.
If you have outstanding debts or unfiled returns, it is worth addressing these before applying, or engaging a tax agent to manage the process.
After Settlement
If withholding did occur (because you couldn’t obtain the certificate in time, or for any other reason):
- The buyer provides you with a PAYG withholding payment summary
- You include this withholding credit in your income tax return for the year of sale
- The withheld amount offsets your tax liability, with any excess refunded
If the withholding exceeds your total tax liability for the year, you receive a refund — but you must lodge your return first.
Checklist Before Settlement
- Confirm all seller names exactly match the property title
- Apply for the clearance certificate as early as possible — at least 3 weeks before settlement
- Verify the certificate is still valid at the settlement date (12-month validity)
- Share the certificate with the buyer’s conveyancer before settlement
- If selling via an agent or through a trust/company, confirm which entity needs the certificate
Sources (verified)
Next Steps
- Estimate capital gain outcome in the CGT Calculator
- Compare property scenarios in the Investment Property Calculator