What the certificate is
Under the foreign resident capital gains withholding (FRCGW) rules, the ATO says withholding must be applied on all real property sales unless the vendor is an Australian resident with a clearance certificate, or a foreign resident with a variation notice. The certificate is the proof for Australian residents.
The ATO's rules on who applies and for how long:
- The vendor, an Australian legal practitioner, or a registered tax agent can apply. The ATO says conveyancers cannot apply on the vendor's behalf, although they can help the vendor prepare the application.
- A certificate is valid for 12 months from its date of issue, as long as the vendor's residency status does not change.
- Each vendor needs their own. Where there are several sellers, each provides their own clearance certificate or variation, depending on their tax residency.
- A certificate confirms Australian residency, so a foreign-resident seller applies for a variation notice instead. The ATO can withdraw a certificate at any time if it learns the vendor is a foreign resident.
Get your buyer plan
See your FIRB fee, state surcharge and the steps in order, worked out for your situation. Free, about a minute.
Why the buyer cares
The obligation to withhold sits with the buyer. The ATO says that if the vendor does not provide a valid certificate or variation notice at or before settlement, the purchaser must withhold an amount from the sale price (or market value) and pay it to the ATO.
For contracts signed from 1 January 2025 the rate is 15% of the price, whatever the value, while a contract signed earlier can fall under the previous 12.5% rate. The ATO says a purchaser who fails to withhold and pay by settlement may face a penalty equal to 10 penalty units or the amount not withheld. The withholding guide has the full rule.
A certificate only protects the buyer if it is valid for this sale. The ATO says that where the certificate or variation notice is not valid, for example because names do not match, the purchaser must withhold.
What the buyer's side checks
| Check | What the ATO says |
|---|---|
| Names | The first and last names on the certificate must match the property's certificate of title. Middle names do not need to match and honorifics such as Miss or Ms do not matter |
| Dates | You may rely on the certificate if the date it is made available to you falls within the period stated on it |
| Entity | Where the property is held by a trustee, the ATO accepts the purchaser has met their obligation if the vendor shows that the entity on the certificate is the trustee of the trust, for example from a copy of the trust deed |
| Everyone | Each vendor named on the title gives you their own certificate |
| Genuine | If you need to check a certificate or variation is valid, phone the ATO on 13 28 66, with the number in the "Our reference" field and the vendor's name as it appears on the certificate |
On timing, the ATO says each vendor must give their certificate to the purchaser before the settlement date, and elsewhere that the purchaser must withhold if no valid certificate is provided at or before settlement.
Off-the-plan and long contracts
A certificate lasts 12 months, but some contracts are longer. The ATO's example is an off-the-plan apartment with a contract period over 12 months, where the settlement date may fall after the certificate expires. The ATO says the purchaser may rely on a certificate as long as the date it is made available to the purchaser is within the period stated on it, and the certificate period covers some of the time the transaction is in effect, which runs from the contract date to the settlement date.
For an off-the-plan purchase, the questions for your legal representative are when the seller's certificate will be given to you and whether its period covers part of the time between contract and settlement.
When the seller applies
The ATO says applications can take up to 28 days to process and issue. It says to lodge as soon as the seller is considering selling, and at least 28 days before settlement. It also says it cannot promise a certificate will be issued by settlement if an application is lodged close to that date. Delays can happen if tax returns are overdue, residency has changed, or names do not match.
If a name on the title shows the legal name but does not match the ATO's records, the ATO says the seller needs to update their legal name with the ATO before applying.
If there is no certificate
Without a valid certificate or variation notice, the buyer withholds, lodges a purchaser payment notification and pays at settlement. The seller then claims the amount as a credit in their tax return and needs the buyer's payment confirmation to do so. For the buyer, the amount comes out of the price already agreed, not on top of it.
Keep reading
Frequently asked questions
Can the buyer apply for the clearance certificate?
No. The certificate is the vendor's. The ATO says the vendor, an Australian legal practitioner or a registered tax agent can apply. Conveyancers cannot apply on a vendor's behalf, although they can help the vendor prepare the application. A buyer's role is to check the certificate the seller provides.
How long is a clearance certificate valid?
The ATO says certificates are valid for 12 months from their date of issue, provided the vendor's residency status does not change. For contracts longer than 12 months, there is a separate rule about when the buyer can rely on it.
Do I need one if I am buying a new apartment from a developer?
The ATO says withholding applies to all real property sales unless the vendor is an Australian resident with a certificate or a foreign resident with a variation. Its guidance discusses off-the-plan contracts too. Ask your conveyancer how it applies to your contract, since the vendor is whoever the contract names.
What if the seller says they are an Australian resident but has no certificate?
The ATO says that where a vendor does not provide a valid certificate at or before settlement, the purchaser must withhold. A residency declaration does not replace a certificate for real property. The ATO says Australian residents selling taxable Australian real property need a clearance certificate to avoid withholding.
Sources
- Australian residents and clearance certificates, Australian Taxation Office
- Foreign resident capital gains withholding overview, Australian Taxation Office
- Paying the foreign resident capital gains withholding, Australian Taxation Office
- Foreign resident capital gains withholding variations, Australian Taxation Office
- Vendor declarations, Australian Taxation Office
Checked 5 October 2026.
firbapproval.com.au is an independent guide. It is not affiliated with, endorsed by or connected to the Foreign Investment Review Board, the Australian Treasury or the Australian Taxation Office. We do not lodge or process applications. Applications are made to the ATO. General information only, not legal, tax, migration or financial advice.