Capital Gains Withholding: Real Estate Agents

Since July 2017 an Australian resident selling real estatate that has a market value greater than $750,000 will need to apply for a clearance certificate. This application is to the ATO and attempts to ensure that amounts are not withheld from sale proceeds.

When a valid clearance certificate is absent at settlement, and has not been previously presented, 12.5% of the purchase price must be withheld by the purchaser. This 12.5% is to be paid to the ATO.

To acquire a clearance certificate, a vendor that is a Australian resident (or their representative) must complete an online clearance certificate application for Australian residents form. This form is available at ato.gov.au/FRCGW. Provided the vendor is assessed as an Australian resident a certificate will be issued electronically. This usually occurs within days of the application.

This capital gains withholding only applies to contracts entered into after the 1st of July 2017.

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