This article is for general information purposes only and reflects the state of information at the time of publication. It is not legal or financial advice. Always seek professional advice tailored to your specific circumstances before making decisions.
From 1 July 2016, foreign residents are required to obtain a clearance certificate from the Foreign Investment Review Board (FIRB) when purchasing property and from the Australian Taxation Office (ATO) in relation to the sale of property within Australia.
Vendors
For property transactions valued above $2 million, the purchaser is required to withhold 10% of the purchase price unless the Vendor provides a clearance certificate from the ATO. The certificate may be produced on or before settlement. If the Vendor does not provide a clearance certificate, the purchaser must withhold 10% of the purchase price for transactions exceeding $2 million and remit it to the ATO.
Australian resident Vendors who are to receive more than $2 million from a sale should also obtain a clearance certificate to ensure no funds are withheld from the sale proceeds.
Purchasers
For purchasers required to pay the 10% withholding amount, a ‘Purchaser Remittance Form’ must be completed to provide details of the Vendor, Purchaser, and the asset acquired to the ATO.
Foreign resident purchasers, regardless of the purchase price, must either:
- Obtain a clearance certificate for a particular property (if the purchase is unsuccessful, the fee is not refundable), or
- For property purchased at auction, obtain a clearance certificate indicating the maximum amount the individual is eligible to bid.
The ATO has announced an automated process for issuing clearance certificates. Straightforward cases may be issued within 1–14 days. However, cases requiring manual processing due to data irregularities or exceptions may take 14–28 days.
