Why do i need a tax clearance certificate?

A Clearance certificate is used to prove the seller is not a foreign resident and that withholding tax is not applicable to the property transaction. The seller is responsible for obtaining a clearance certificate from the ATO to avoid the buyer of the property withholding the GST component of the transaction. Clearance certificates typically take up to 28 days to be issued and should be provided to buyer at or before settlement. The issuance of clearing certificates is a way to reduce the risk of foreign residents selling Australian real estate and relocating overseas without remitting the tax component of the transaction to the ATO. Unless the seller can produce a Foreign Resident Capital Gains Withholding Clearance Certificate (FRCGW) the buyer will withhold 12.5% of the purchase price on settlement.

Share this:

Disclaimer: The information contained in this document is based on information believed to be accurate and reliable at the time of publication. Any illustrations of past performance do not imply similar performance in the future. To the extent permissible by law, neither we nor any of our related entities, employees, or directors gives any representation or warranty as to the reliability, accuracy or completeness of the information; or accepts any responsibility for any person acting, or refraining from acting, on the basis of information contained in this newsletter. This information is of a general nature only. It is not intended as personal advice or as an investment recommendation, and does not take into account the particular investment objectives, financial situation and needs of a particular investor. Before making an investment decision you should read the product disclosure statement of any financial product referred to in this newsletter and speak with your financial planner to assess whether the advice is appropriate to your particular investment objectives, financial situation and needs.