Quick answer
Since 1 January 2025, foreign resident capital gains withholding applies to property sales of any value at a rate of 15%. To avoid the buyer withholding 15% of the price at settlement, an Australian resident vendor needs a valid ATO clearance certificate issued at or before settlement. The ATO says certificates can take up to 28 days to issue, so apply as soon as you're considering a sale.
Key points
- Withholding now applies to property of any value, at 15%
- Australian resident vendors need a clearance certificate at or before settlement
- Allow up to 28 days for the ATO to issue it
- Certificates are valid for 12 months if residency doesn't change
- Discharges, title issues and buyer finance are other common blockers
Most business owners selling a property think about price, agent and timing. Fewer think about a single ATO document that, if it’s missing on settlement day, can take 15% of the sale price out of their hands. Since 1 January 2025, that document matters for every property sale, not just expensive ones.
This guide explains the clearance certificate rules, how to get one in time, and the other paperwork that most often delays settlements, so that the money you’re relying on actually arrives when the contract says it will.
What changed on 1 January 2025?
The foreign resident capital gains withholding (FRCGW) regime requires a buyer to withhold part of the purchase price and pay it to the ATO, unless the vendor provides a clearance certificate. Before 2025 it only applied to property worth $750,000 or more, at a 12.5% rate. According to the ATO’s FRCGW overview, from 1 January 2025 a 15% rate applies to property of any value.
The name is misleading. The rules exist to collect tax from foreign resident vendors, but they affect Australian resident vendors too, because the only way to switch off the withholding is to show the buyer a valid clearance certificate at or before settlement.
How do you get a clearance certificate?
From the ATO’s page on Australian residents and clearance certificates:
- Apply online or on paper. Australian legal practitioners and registered tax agents can apply on your behalf. Conveyancers can help, but the ATO notes they can’t submit the application themselves.
- Allow up to 28 days. The ATO says applications can take up to 28 days to process and issue.
- Apply early. The ATO recommends lodging as soon as you’re considering selling, and at least 28 days before settlement.
- It lasts 12 months. A certificate is valid for 12 months from issue, as long as your residency status doesn’t change.
Because it lasts a year, there’s little downside to applying as soon as you decide to sell, even before you list. For companies and trusts, make sure the application is in the name of the entity on the title.
What happens if you don’t have one at settlement?
The buyer is obliged to withhold 15% of the price and pay it to the ATO. On a $1.2m sale, that’s $180k you don’t receive on the day. You can generally get it back by claiming a credit in your tax return, but that can be many months away.
For a vendor who has committed the sale proceeds to something else, such as the settlement of new premises, repaying a bridge or clearing a debt, a withheld 15% can be as disruptive as a delayed settlement. It’s one of the most avoidable problems in property.
What other paperwork delays settlements?
The clearance certificate isn’t the only trap. Other common causes of late or messy settlements:
| Blocker | What to do early |
|---|---|
| Existing mortgage discharge | Ask your lender how long its discharge process takes and request figures early |
| Caveats or other interests on the title | Get a title search and deal with anything registered |
| GST treatment unclear | Agree in the contract whether it’s a going concern or the margin scheme applies |
| Leases and tenant documents | Have current leases, estoppel details and bonds ready |
| Buyer’s finance | Check the finance condition date and chase confirmation |
| Company or trust details | Make sure the vendor entity and signatories are correct |
| Missing certificates or approvals | Organise building, zoning or compliance documents early |
On GST: commercial property sales are generally subject to GST, but a sale can be GST-free as a going concern if the conditions are met, including that the buyer is registered for GST and both parties agree in writing. The ATO’s pages on selling commercial premises and selling a going concern set out the rules. Getting this wrong can mean renegotiating at the last minute.
If your sale proceeds are already earmarked and a delay would cause real problems, it may be worth talking through a backup plan before settlement day.
A vendor’s settlement timeline
Working backwards from settlement, an illustrative plan for a business selling premises:
- As soon as you decide to sell: apply for the clearance certificate; order a title search; ask your lender for its discharge process.
- Before listing: gather leases, compliance documents and outgoings statements; confirm the GST position with your accountant.
- At exchange: check the contract’s GST clause, special conditions and settlement date; diarise the buyer’s finance date.
- Four weeks before settlement: confirm the clearance certificate has issued and give a copy to your conveyancer; request discharge figures.
- One week before: confirm the buyer’s readiness; check final adjustments.
- Settlement day: proceeds paid, mortgage discharged, and the money is where it needs to be.
If you’re buying new premises at the same time, the timeline for the purchase runs in parallel. Our page on buying before you sell explains how to handle the overlap.
What if settlement is delayed anyway?
Sometimes it is, even when you’ve done everything right. The buyer’s lender asks for another document, a discharge runs late, or the buyer needs more time. If the sale money is committed elsewhere, you have a few options:
- Negotiate an extension on your other commitment, if the other party will agree.
- Use your contract rights, such as a notice to complete, with advice from your lawyer.
- Bridge the gap with a short-term loan, with the delayed settlement as the exit.
Our page on settlement delayed finance covers the last option in detail, including what a lender will want to see. For any bridge relying on a sale, see exit by sale and set a term with room for delays; the bridging loan term page shows how.
An illustrative example
A logistics business is selling its old depot for $2.1m and has committed the proceeds to settling a larger site three days later. Its conveyancer asks, six weeks out, whether a clearance certificate has been applied for. It hasn’t. The directors’ tax agent applies that day and the certificate issues well before settlement.
Had nobody asked, the buyer would have withheld $315k at settlement, and the business would have been short on the purchase of its new site. (Illustrative scenario.) One application, made early, avoided a serious problem.
The vendor’s quick checklist
- Clearance certificate applied for, issued and copied to your conveyancer.
- Title search done and any caveats or old interests dealt with.
- Mortgage discharge requested and timing confirmed.
- GST position agreed and reflected in the contract.
- Leases and tenant documents ready.
- Buyer’s finance condition date diarised.
- Plan B ready if settlement slips.
What if you’re a company, trust or SMSF?
The same rules apply to entities. The clearance certificate needs to be in the name of the vendor shown on the title, whether that’s a company, the trustee of a trust or the trustee of a self-managed super fund. Common problems we see:
- The certificate is applied for in a director’s name rather than the company’s.
- A trust’s property is held by a corporate trustee, and the application uses the trust name only.
- The vendor entity has changed since the property was bought, and nobody has updated the details.
Your tax agent or lawyer can check the exact vendor name on the title before applying. It takes minutes and avoids a certificate that doesn’t match the contract, which can cause the same withholding problem as having no certificate at all.
Protect the money you’re counting on
A sale is only an exit once the money lands. If your plans depend on a settlement arriving on time and in full, it’s worth having a fallback before you need one. Tell us about the sale, the settlement date and what the proceeds are committed to. It takes about 60 seconds, there’s no credit check when you first enquire, and your details aren’t sprayed across a list of lenders. A real person calls you to talk it through.
Please give us the actual settlement dates and loan balances when you fill in the form. Accurate details mean a faster, better-matched answer.
Frequently asked questions
Do I need a clearance certificate to sell my commercial property?
If you're an Australian resident for tax purposes and want to avoid the buyer withholding 15% of the price, yes. Since 1 January 2025 the withholding rules apply to property of any value, so a certificate is needed regardless of price.
How long does a clearance certificate take?
The ATO says applications can take up to 28 days to process and issue, and recommends lodging at least 28 days before settlement. It suggests applying as soon as you're considering selling.
How long is a clearance certificate valid?
For 12 months from the date of issue, as long as the vendor's residency status doesn't change during that time.
What happens if I don't have a clearance certificate at settlement?
The buyer must withhold 15% of the purchase price and pay it to the ATO. You would then need to claim it back through your tax return, which can tie up a large amount of money for months.
Who can apply for a clearance certificate?
The vendor can apply online or on paper. Australian legal practitioners and registered tax agents can apply on the vendor's behalf. The ATO notes that conveyancers can help but can't submit applications themselves.
Can a bridging loan help if settlement is delayed?
Yes. If your sale settlement moves and you need the proceeds for another commitment, a bridging loan can cover the gap, with the delayed settlement as the exit.