What Is An ATO Tax Clearance Certificate

 ATO Tax Clearance Certificate

If you sell a property with a Contract value of over $750,000.00 you are required under the terms of the Contract to provide the Buyers with an ATO Tax Clearance Certificate prior to settlement.

If the ATO Tax Clearance Certificate is not provided at settlement then the Buyers Conveyancer/Solicitor are required to pay to the ATO 12.5% of the purchase price to the ATO at settlement.

So if you do the sums that is a whopping $93,750.00 that is deducted from your sale proceeds. Obviously the higher the sale the higher the amount to be deducted.

Any property that is sold below the threshold of $750,000.00 does not require an ATO Tax Clearance Certificate to the Buyers.

It is easy to obtain the ATO Tax Clearance Certificate and the quickest way is to apply online directly through the ATO website. The Clearance Certificates can take up to 28 days to issue.

The information you will to have at hand to complete the online forms are:

  1. Tax file numbers;
  2. ABN for Comanpanies;
  3. Email address;
  4. Contact phone number;
  5. Address;
  6. Date of Contract or possible date;
  7. Anticipated settlement date;

The ATO Tax Clearance Certificate must be in the name of the parties registered on the Title. So, if the property is registered in two individual names, then you will be required to provide two ATO Tax Clearance Certificates for each person.

If the property title is registered in the name of a Company then the registered entity must still provide an ATO Tax Clearance Certificate prior to or at settlement.

If you would like assistance to obtain an ATO Tax Clearance Certificate then please contact Kim Matheson at kim@nclaw.com.au