There are changes to the Australian Taxation Office (ATO) guidelines regarding tax clearance certificates for property sales, effective 1 January 2025.
Key Changes:
- Mandatory Clearance Certificates: From 1 January 2025, all Australian residents selling or disposing of property, regardless of the sale price, will be required to obtain an ATO tax clearance certificate.
- Increased Withholding Rate: If a clearance certificate is not provided to the purchaser by the date of settlement, 15% of the property’s sale price will be withheld and paid to the ATO. (This replaces the current 12.5% withholding for properties over $750,000).
- No Threshold: The previous $750,000 property value threshold has been removed. All property sales are now subject to these rules.
- Refunds via Tax Return: If funds are withheld, any refund will only be processed after you lodge your next income tax return.
What This Means for You:
- It is crucial to obtain a tax clearance certificate before your property settlement to avoid the 15% withholding.
- Clearance certificates are valid for 12 months, so you can apply in advance, even before signing a sales contract.
- While most certificates are issued quickly, some can take up to 28 days. We advise applying early to avoid delays.
How We Can Help:
We understand that these changes may seem complex, and we are here to assist you. Our team can help you with the application process for your tax clearance certificate.
Please contact us if you have any questions or require further information. We are committed to ensuring a smooth and compliant property sale for you.
The information (including taxation) contained on this website is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. DLA Partners strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.