The Australian Tax Office (ATO) has introduced significant changes to clearance certificate laws that came into effect on 1 January 2025. These changes impact every property transaction in Queensland, making compliance more critical than ever.
Key Changes To ATO Clearance Certificate Rules
Here’s a quick breakdown of the changes:
Withholding Rate Increase
The withholding rate for foreign resident capital gains has increased from 12.5% to 15% of the purchase price.
Threshold Elimination
The previous property price threshold of $750,000 has been removed. These rules now apply to all property transactions regardless of purchase price.
Application Scope
These changes are applicable to contracts entered into on or after 1 January 2025.
How This Affects Australian Resident Sellers
Under the new rules, all Australian residents selling property must provide a valid clearance certificate before settlement. Failure to do so will result in 15% of the purchase price being withheld by the buyer and paid directly to the ATO.
Sellers who fail to provide a valid clearance certificate prior to settlement will only be able to recover this money when lodging their next tax return.
Apply Early
Clearance certificates can take up to 28 days to process, although most are issued within a few days.
It's important to remember that clearance certificates are valid for 12 months, so there is no need to wait for a signed contract or for your contract to be unconditional before applying.
Why These Changes Matter
These updated rules aim to enhance the ATO’s ability to collect tax liabilities from non-residents selling Australian property. However, they place additional compliance responsibilities on Australian residents.
Staying informed and proactive is the best way to avoid pitfalls. If you're reading this article, you're already ahead of the curb.
Find A Lawyer Who Helps
At RHC Solicitors, we assist thousands of people with buying, selling and transferring property every year. As an experienced law firm with 40+ years experience, we understand these changes and how they can affect you. Rest assured, our clients are reminded of their obligations and requirements to ensure your hard-earned money lands in your pocket without delay.
If you've currently engaged another lawyer, and they aren't following up with you about these changes and how they may affect you, consider changing representation to a more reputable and informative firm. We always welcome new clients and have a dedicated team of lawyers and conveyancers ready to help you.
Don't hesitate to contact our office if you have any questions, or would like to discuss anything further.
Disclaimer: This publication is not intended to be comprehensive, nor does it constitute legal advice. We are unable to ensure the information is current and there is no guarantee in relation to accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this publication. The views and/or opinions expressed in this publication is that of the author and may not necessarily represent the views and/or opinions of RHC Solicitors.
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