​

Noel Whittaker is the author of Wills, Death & Taxes Made Simple and numerous other books on personal finance. Email: [email protected]​

The email came from a frustrated and unhappy reader, and he didn’t mince words.

‘Why does the current government require Capital Gains Tax Clearance Certificates from every property seller in Australia? I understand the need to identify foreign property owners for CGT, but why apply it to everyday Australians who own and live in just one property? Surely, there must be a better way to identify foreign investors.’

‘I am 68 and live on acreage—I don’t want to downsize because my one-acre block brings me joy through flower and vegetable gardening in my retirement. My issue is that many people might miss this requirement and risk losing a significant percentage of their home’s sale price. What can be done to prevent this?’ they continued.

It was news to me, but given how important this could be, I’ve done the research. Mark Molesworth, tax partner at BDO, tells me the tax law on withholding tax for Australian real estate sales changed from 1 January 2025. From that date, all sellers must obtain a residency clearance certificate—if they are an Australian resident—or risk having the buyer withhold 15% of the market value of the property. These rules have been gradually extended by governments of all sides since they were first introduced in 2016.

Don’t lose 15% of your sale price. Image Credit: Shutterstock

For contracts signed before 1 January 2025, the new legislation doesn’t apply, even if settlement happens in 2025. For those pre-existing contracts a clearance certificate is only required if the market value of the property exceeds $750,000. However, for all contracts signed on or after that date, a clearance certificate will be mandatory regardless of the property value.

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[Towing]

That is probably going to be for most house sales in Metropolitan areas and farms.
A house that was worth about $24,000.00 in the 1970s is probably worth about $750,000.00 now. In fact a 3 bedroom home built in the 1950s is worth that or more now. It is not the fault of the owners that values have risen so much but they will be penalized. There should be a purchase date on which the tax is calculated.

 

[Lizzie1149]

That is probably going to be for most house sales in Metropolitan areas and farms.
A house that was worth about $24,000.00 in the 1970s is probably worth about $750,000.00 now. In fact a 3 bedroom home built in the 1950s is worth that or more now. It is not the fault of the owners that values have risen so much but they will be penalized. There should be a purchase date on which the tax is calculated.

Actually is has applied to homes over a certain price. Now it applies to all homes sold. We had to get a certificate for our place when the contract was signed. It is about making sure that foreign buyers pay

 

[Glenys R]

I am in my eighties and selling at present. Why does the govt. let this be so difficult? If I have a rates notice for the property and Council is receiving payment for these rates from me I must be who I say I am and own the property. Why would I be paying someone else's rates? It seems as if someone spends their time dreaming up money making schemes and paperwork to make life more complicated than it needs to be!

 

[mylittletibbies]

More government Red tape. It never ends. With all the info government departments have on us these days surely they could work out who is and isn't an Austrslian citizen and withhold this tax along with stamp duty.
On second thoughts, maybe not. If other departments are anything to go on they'd probably stuff that up also.

 

[Lizzie1149]

I am in my eighties and selling at present. Why does the govt. let this be so difficult? If I have a rates notice for the property and Council is receiving payment for these rates from me I must be who I say I am and own the property. Why would I be paying someone else's rates? It seems as if someone spends their time dreaming up money making schemes and paperwork to make life more complicated than it needs to be!

This is not about rates. It is about foreign ownership. It is called the foreign ownership withholding tax. Can also apply to citizens who have come back from overseas or are living abroad. Not applicable to us on pensions unless we have large other incomes. You will be exempt. You fill out a form (online, get some help from the agent selling your home) You do have to answer yes to a question that seems like it needs a no answer but the text in the box above tells Australian citizens to say yes. We just did ours. We don't pay taxes anymore so don't have to comply with this either. Our forms came through a couple of days later. Don't let this be any more difficult than it really is. They love to confuse people.

 

[Meredy Andrew]

I am in my eighties and selling at present. Why does the govt. let this be so difficult? If I have a rates notice for the property and Council is receiving payment for these rates from me I must be who I say I am and own the property. Why would I be paying someone else's rates? It seems as if someone spends their time dreaming up money making schemes and paperwork to make life more complicated than it needs to be!

It's not about you proving who you are or the govt making things difficult. It's about overseas investors paying capital gains tax when they sell, which they have previously got away with not paying. I think the new requirement needs to be made known as unless you are an accountant or conveyancer, the average person is not aware of the new requirement.

 

[Jash]

Apparently your solicter will/should do this as it's all part of the contact now. Just remind your solicter or you can do it yourself.

 

[mylittletibbies]

It's not about you proving who you are or the govt making things difficult. It's about overseas investors paying capital gains tax when they sell, which they have previously got away with not paying. I think the new requirement needs to be made known as unless you are an accountant or conveyancer, the average person is not aware of the new requirement.

This should be made a requirement of the conveyancer/settlement agent and not the buyer/seller.
If the ATO want this requirement then they should pull their finger out and make sure they do what is required from their end, in a timely manner so settlement can go ahead without delays.
Obviously, if they can't do this task in less than 28 days then they need to hire more staff.

 

[Mika in the van]

Never heard of this before. We were just below selling our house for $730,000. Now it’s any price.
As long as it’s easy to do then I’m all for foreigners paying more tax.

 

[Luckyus]

The expression Map of Tassie? takes on an even greater meaning when combined with the so called political elite?

 

[Bevo59]

What's wrong with showing your Birth Certificate or Australian Citizenship Certificate, most people would have these!

 

[Cheezil]

Wow, bloody govt! As if there wasn't already enough bs to deal with in every day life! No wonder there are suicides, all of this stuff can be so overwhelming!
I just want to be back in the 80s when life was so uncomplicated!