There has been a change in the sale of properties for vendors in Australia from 1 July 2017. Any Australian resident who wants to sell their property over $750,000 will have to get a Clearance Certificate from ATO. You will have to prove that you’re an Australian resident and not a foreign national from 1 July 2017, failing which you will be assessed to a 12.5% withholding tax from your clearance fund. This new rule applies to all the property which comes under Taxable Australian Property which comprises of buildings, vacant land, a residential and commercial property whose total value exceeds $750,000.
The good thing about getting it is that you will avoid the 12.5% tax levied upon the sale of the property. This also applies when you are deciding to sell your property through auction campaign or Expression of Interest but are unaware of your final purchase price. A valid Clearance Certificate is likely to help you to a deduction from tax in all the cases if you happen to be an Australian citizen.
Here’s to let you know that if you are a foreign resident, then you will be assessed on the said tax of 12.5% which was previously 10%. This rule is strictly for foreign residents who deal in taxable Australian real property. Buyers will have to hold the 12.5% of the settled amount and pay it to ATO. It will further be assessed on an individual basis as foreign laws differ invariably in Australia.
You should get a Clearance Certificate if you are planning to sell a property over $750,000. In the case, if your tax is already deducted by the ATO even if you are a permanent inhabitant of Australia, then you can claim it by filing your next tax return. If you are an Australian national, then you are eligible for claims if you obtain a Clearance Certificate which is issued by ATO. Receiving a Clearing Certificate takes about 14 days from the date of application.