ATO Tax Clearance Certificate

Here's the breakdown

How will I be impacted?

This is a requirement of ATO that, for any settlements over the value of 2 million dollars, the sellers are required to deduct 10% of the purchase price and, pay the same to ATO immediately.

Is there a way to avoid 10% payment?

Yes there is, Obtaining a Tax clearance certificate is the way to go. Any Australian resident and/or resident entities are eligible to apply for tax clearance certificate. Once, the same is applied for and obtained, it can then be presented to the vendor prior to settlement.

What about a non Australian resident?

An application to the ATO may be lodged by foreign residents asking for a variation of the 10% non-final witholding tax. Once, the ATO approves the variation request, the same can then be handed over to the purchaser prior to the settlement takes place. The sum paid to ATO will be considered as credit against any tax liability assessed in that financial year’s tax return application.

I want to apply for tax clearance certificate, how can I do that?

All you have to do for that is give us a quick call and we will be glad to offer you further assistance. It may be a complex task to undertake by yourself so why not, leave it on to us as professionals and you can enjoy the breeze in the meantime.

We’ve Answered Your Burning Questions Right Here

How much will it cost to obtain a tax clearance certificate?

It is expected to be a one-time payment of AUD $165 including GST. Our online application service is coming soon.

How long will it take to get my tax clearance certificate?

Your Australian tax clearance certificate or withholding variation can take anywhere from 5-28 days. More complicated issues could take longer than this time frame.

If I have to pay the withholding, when is the payment required to be made?

To pay the withholding to the ATO, the purchaser must complete a foreign resident capital gains withholding purchaser payment notification form so that they receive a payment reference number (PRN) and a PDF icon for a payment slip and barcode. This should be done before the day of settlement as the purchaser must pay the withholding to the ATO on or before the day the purchaser becomes the owner of the asset, and requires the PRN, payment slip and barcode to do this.

Who is liable to pay the withholding?

The purchaser is fully liable to withhold and pay the amount. If withholding does not occur when it should, the ATO will hold the purchaser liable.
For example Ben purchases a property from his friend Tom for $3,000,000. Ben has known Tom for many years and knows that Tom is an Australian resident so before settlement he does not bother to receive a clearance certificate from Tom. Ben at settlement pays Tom the full $3,000,000. The ATO holds Ben responsible to pay the 10% withholding to the ATO. Ben cannot find Tom and now has to pay an additional $300,000 to the ATO for withholding plus interest.