As of 1 July 2017 all residential sale contracts priced at $750,000 or more will require all sellers registered on the title (regardless of residency or citizenship status) to obtain an Australia Taxation Office Foreign Resident Capital Gains Withholding Clearance Certificate (Clearance Certificate).

If all Sellers names as registered on the title do not serve Clearance Certificates on the Buyer(s) noted in the contract by the designated date, then the Buyer(s) are required to pay 12.5% of the contract price to the ATO in lieu of the Seller(s). On $750,000 this 12.5% ATO payment equates to $93,750.

This is a radical change to residential sales contracts that will see Seller(s) forfeit 12.5% of their sale price on settlement unless they comply with their legal obligations.

It will be up to the Seller after settlement to seek a refund from the ATO for their non-compliance.

We strongly recommend that all sellers who will sign contracts to sell their properties dated 1 July or thereafter immediately obtain advice from heir accountants to complete the application for the Clearance Certificate.

After obtaining advice, these applications should be completed on-line or in hard copy and then faxed or express posted to the ATO as per the ATO contact details on the application.