This week we look at taxes and whether you need an ATO Clearance Certificate when selling property.
The answer is yes if: i) you are selling real estate over $750,000; and ii) you don’t want 12.5 per cent of the sale price to be paid to the ATO.
The ATO requires the Certificate to be obtained before settlement or the Purchaser must withhold 12.5 per cent of the purchase price (the foreign resident capital gains withholding amount).
The Certificate is confirmation you are not a foreign resident. You need to obtain it even if you are an Australian citizen.
You have no rights under the standard contract terms to delay settlement to obtain the Certificate.
The application for the Certificate is usually fairly straightforward, however, it should be applied for as soon as possible once a Contract is signed.
It’s likely that you have planned how to spend the sale proceeds after settlement and often they are needed as part of the funds to buy another property.
Don’t risk having to pay 12.5 per cent of your sale proceeds to the ATO and suffering significant delays in receiving the full settlement proceeds.
Contact us prior to signing a contract if you have any questions about the Certificate.
Trent Wakerley, Director, Kruger Law, Level 3 Ocean Central, Ocean Street, Maroochydore, 5443 9600, krugerlaw.com.au
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