From 1 January 2025, all Australian residents selling real property are required to obtain a clearance certificate from the Australian Tax Office (ATO) following updates to foreign resident capital gains withholding (FRCGW) legislation.
Clearance certificates are issued in the legal name on the ATO's system and delays are occurring when the name on the Certificate of Title doesn't match ATO records. If you don't have a clearance certificate by settlement, 15 per cent of the sale price must be withheld by the purchaser.
To prevent unnecessary delays, the ATO has provided the following tips:
- Only first and last names need to match. Middle names do not need to be included, as they aren't matched to ATO systems.
- If you have changed your name, you should update your details with the ATO before applying for a clearance certificate. This can be done online for Australian-issued documentation. Documents from an overseas source will need to be sent to the ATO by post so you will need to allow plenty of time for this.
- If the name on the Certificate of Title and clearance certificate still don't match, for example your maiden name is on the Title and your ATO details are in your married name, you must provide proof of a name change to the purchaser. This can include a marriage certificate or a legal change of name certificate.
- You must use your legal name, not nicknames or anglicised versions. You should ensure the name used matches official identification documents.
It is recommended that you apply for a clearance certificate early. While most certificates are issued within a few days, some can take up to 28 days to process. Without a valid certificate at settlement, 15 per cent of the sale price will be withheld and only refunded (if applicable) after lodging a tax return.
For full details on clearance certificates, visit the ATO website at ato.gov.au/clearancecertificate.
