Foreign Resident Withholding Tax – Sellers Beware


Are you selling a property in WA > $750,000?

Learn how to avoid the new 12.5% tax.


From 1 July 2017 sellers need to provide the buyer with an ATO Clearance Certificate as evidence that they are an Australian resident for taxation purposes. If they don’t the buyer is required to withhold 12.5% of the contract price and remit it to the ATO.


This is called the foreign resident capital gains withholding (FRCGW) tax.



It should be. However, anecdotal evidence suggests that difficulties/delays can be experienced in obtaining a Certificate if the seller has outstanding ATO debts or returns. These delays can potentially cost a seller thousands of dollars in penalty interest!


Who should apply?

Each entity (individual/company) named on the Certificate of Title needs to apply for a separate Certificate.


When to apply

Certificates are valid for 12 months. It is recommended that sellers apply as soon as the property is listed for sale.


How to apply

ATO instructions for obtaining a clearance certificate can be found here. Essentially. The seller can apply for a Certificate in one of 3 ways:

  • Online here – this is the preferred & fastest method
  • By completing a paper form & mailing/faxing to the ATO.
  • Settlement agent / solicitor can lodge online by inputting details from signed form **


Whilst a certificate will be relatively easy to obtain in most circumstances, there are times when it will not be so straight forward (Executors, Administrators, Mortgagee sales, etc.). If in doubt seller should seek advice from the ATO or a licensed settlement agent.


If you’ve got hours to waste then visit the ATO website to learn more. Better still save yourself time and money and call the settlement experts, Marcus & Jackie at Personalised Settlements on 08 9370 3315.