REIQ Journal

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P A G E 9 R E I Q J O U R N A L | J U N E 2 0 1 6
I N D U S R T Y N E W S
How do Australian residents obtain
a clearance certificate?
A vendor who is an Australian resident
can obtain a clearance certificate by
making an application on
FRCGW from 27 June 2016.
If the vendor is automatically
assessed as an Australian resident,
a clearance certificate will be issued
within days of the application,
however, the process may take longer
for more complex applications.
When does the clearance certificate
have to be given?
Australian resident vendors must
give the clearance certificate to the
purchaser on or before settlement
occurs to avoid the purchaser
withholding 10 per cent of the
purchase price.
What if my client is a foreign person?
Where the vendor is a ‘foreign
person’, the purchaser must retain 10
per cent of the purchase price and
pay that to the ATO at settlement,
unless the vendor provides a valid
‘Variation Notice’ in which case the
purchaser must remit the amount
stated in the notice.
When will the new laws apply?
The new laws will apply to sale
contracts (for $2 million and above)
entered into on or after 1 July 2016.
What types of properties do these
rules apply to?
All property including, vacant land,
residential property, commercial
property, strata title and community
tiles schemes.
What does this mean for agents?
Australian resident vendor/s
• If you are appointed to sell a
property and you consider its
market value to be $2 million or
more then you should advise your
vendor to apply for a clearance
certificate from the ATO as soon as
practicable to avoid 10 per cent of
the purchase price being withheld
at settlement.
• If you are unsure about the ultimate
purchase price but there is some
prospect that it may sell for $2
million or above (for example, it
is being sold at auction and the
purchase price is unknown or it is
being sold by expression of interest)
you should advise your vendor to
apply for a clearance certificate
from the ATO as soon as practicable
to avoid 10 per cent of the purchase
price being withheld at settlement.
Foreign resident vendors
• If the purchase price is $2 million
or above and the vendor is a foreign
resident, you should advise them
that 10 per cent of the purchase price
will be withheld at settlement by the
purchaser and provided to the ATO.
Will the REIQ amend its contracts?
Yes, all REIQ property sale contracts
(residential and commercial) will be
amended to include provisions which
reflect the new tax rules.
Where can I find more information?
You can find more information on the
ATO fact sheet for real estate agents.
Visit for the
ATO fact sheets.
The REIQ will deliver free member
training sessions on this topic. Email
for details.