Starting from 1st January 2025, all property sellers in Queensland will need to obtain an ATO Clearance Certificate when selling their property. This change marks a significant shift in the property sale process, aiming to ensure compliance with Australian taxation obligations.

What is an ATO Clearance Certificate?

The ATO (Australian Taxation Office) Clearance Certificate is a document that confirms the seller is an Australian resident for tax purposes. It assures the buyer that they do not need to withhold part of the purchase price to cover potential capital gains tax obligations. Without this certificate, buyers are legally required to withhold a portion of the sale proceeds and remit it to the ATO.

Key Changes from 1st January 2025

Previously, ATO Clearance Certificates were only mandatory for properties sold for $750,000 or more, and if the certificate was not provided, 12.5% of the purchase price had to be withheld. However, from 1st January 2025, the following changes come into effect:

  • Applies to all property sales, regardless of the sale price.
  • The withholding rate has increased from 12.5% to 15% if the seller does not provide a clearance certificate.

Why is an ATO Clearance Certificate Important?

Failing to provide an ATO Clearance Certificate at settlement can have serious financial consequences for sellers. If the certificate is not presented, 15% of the sale price will be withheld by the buyer and sent directly to the ATO. For example, on a $500,000 sale, this would equate to $75,000 withheld until the seller's tax status is verified.

How to Obtain an ATO Clearance Certificate

Applying for an ATO Clearance Certificate is a straightforward process:

  1. Online Application: The certificate can be applied for online via the ATO website.
  2. Details Required: Sellers will need to provide their name, address, tax file number (TFN), and information about the property being sold.
  3. Processing Time: While the application process is generally quick, it is advisable to apply well in advance to avoid any settlement delays.

Implications for Sellers

This new rule means that sellers should prioritise obtaining their clearance certificate as soon as they decide to list their property. This proactive step can help ensure a smoother transaction process and avoid unexpected deductions from the sale price.

Need Assistance?

If you have any questions about the new ATO Clearance Certificate requirements or need guidance through the process, feel free to reach out. At Pam Court Realty, we understand the importance of smooth and efficient transactions and are here to support you every step of the way.

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