Posted on April 17, 2025
In 2016 the Government introduced Capital Gains Tax (CGT) withholding obligations on any sale of real property over $2M or more. In July of 2017 it reduced this acquisition price to $750,000 or more. If a property was sold in excess of these amounts and the Vendor was not able to supply the Purchaser with an ATO Clearance Certificate confirming no obligations to the ATO, then the Purchaser was entitled to withhold 12.5% of the sale proceeds and submit this amount to the ATO on settlement day.
From 1 January 2025 the threshold has been removed. All Vendors must now produce a clearance certificate to a Purchaser at or prior to settlement, failing which the Purchaser is now entitled to withhold 15% of the sale price and submit same to the ATO on settlement day.
It is therefore imperative that such certificates are applied for as soon as possible when a property is listed for sale as they can in some instances take 30 days to be received from the ATO. Should you have a 30 day settlement, this is particularly important. Even if you are entitled to a clearance certificate, if one is not produced the Purchaser will be within its rights to withhold the funds and submit to the ATO.
Should you require assistance in relation to the sale of any real property, please contact senior conveyancer Foula Markos.
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