While ATO rules on foreign resident capital gains tax are tightening from 1 October 2026, there's a related issue that affects every Australian business owner, property investor, and executor selling property.

I'm talking about the clearance certificate. It isn't new, but with the ATO sharpening its focus on this whole area, it's crucial to get it right, because missing it can cost you real cash at settlement.

Since 1 January 2025, foreign resident capital gains withholding applies to every sale of Australian real property, regardless of price, at a rate of 15%. The only way an Australian resident seller avoids that withholding is by giving the buyer a clearance certificate from the ATO before settlement.

No certificate means the buyer must withhold 15% of the purchase price and send it to the ATO. On a $900,000 sale, that's $135,000 you won't see at settlement. You can claim it back through your tax return, but that's money tied up for months that you may have needed for your next purchase, to pay down debt, or to fund your business.

Buyers and conveyancers are being more careful than ever with this paperwork. The good news is that a clearance certificate is valid for 12 months, so you can apply as soon as you decide to sell.

So, don't leave your clearance certificate to the last minute. It's a small step that prevents a big headache.

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