Update on Clearance Certificates for $2 million plus properties

A month ago we blogged about the changes to come into force from 1 July 2016 for Vendors selling properties worth $2 million or more.

The online form has been released today and can be accessed here.

Summary of changes 

As the new requirements are only days away from coming into force, we set out some of the key points which will apply to all contracts exchanged after 1 July 2016 with a sale price of $2 million or more.

  • all vendors of premium property are affected – both Australian residents and non-resident Vendors;
  • a clearance certificate must be obtained by a Vendor and provided to a Purchaser on or before settlement to ensure no witholding occurs;
  • if a clearance certificate cannot be obtained by a Vendor, then the Purchaser must withold 10% of the purchase price and remit that to the Commissioner of Taxation;
  • clearance certificates are valid for 12 months from the date of issue and can be used for multiple disposals of real property that occur within that 12 month period;
  • the ATO estimates that in uncomplicated cases, certificates will be issued within days (process is automated), however it expected that where irregularities occur or further information is required, it may take 14 – 18 days for the certificate to issue.

Online lodgement

From 27 June 2016 the Applicaiton Form should be available for online lodgement.  Vendors can either complete and lodge the form themselves or have it completed and lodged by a third party on their behalf, e.g. solicitors and tax agents.

Find out more 

If you are a prospective Vendor thinking about selling a property with a value of $2 million or more, you may like to read more about the process on the ATO’s website.  You can also give us a call if this issue will affect you in a proposed sale, we would be happy to assist with all of your conveyancing needs.