How to Avoid 15% ATO Withholding Tax When Selling Property - Your Guide to the FRCGW Clearance Certificate (2025 Update)
If you’re planning to sell property in Australia, there’s one small document that can make a very big difference: the Foreign Resident Capital Gains Withholding (FRCGW) Clearance Certificate.
From 1 January 2025, the rules have changed. The ATO now requires 15% withholding on all property sales, regardless of price, unless the seller provides a clearance certificate. That means whether you’re selling a $500,000 unit or a $2 million family home in Mornington, this certificate is essential.
In this guide, you’ll learn:
- What the FRCGW Clearance Certificate is
- How the 2025 changes affect you
- What happens if you don’t have one
- The step-by-step process to apply
- 7 ways to ensure you meet the requirements
What is the FRCGW Clearance Certificate?
The FRCGW Clearance Certificate is an ATO-issued document that confirms you are an Australian tax resident for capital gains purposes.
Why it matters:
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Without it, the buyer must withhold 15% of the purchase price at settlement.
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That money is paid straight to the ATO, not to you.
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Even if you’re an Australian resident, you need the certificate to prove it.
It’s free, valid for 12 months, and quick to apply for - make sure you do it early.
Why the 2025 Changes are so Important
Previously, the withholding rules only applied to properties sold for $750,000 or more, and the rate was 12.5%. Now:
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The threshold has been removed – all sales are affected.
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The withholding rate has increased to 15%.
For Mornington Peninsula sellers, this affects every sale.
If you don’t present a valid clearance certificate:
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The buyer’s solicitor/conveyancer is legally required to withhold 15%.
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That portion is sent directly to the ATO.
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You may recover it later via your tax return, but it ties up your money unnecessarily.
If you’re a foreign resident for tax purposes, the withheld amount goes towards your Australian Capital Gains Tax liability.
The application is straightforward, but it must be done correctly.
Go to the ATO website and search “Apply for FRCGW Clearance Certificate.”
Many certificates are issued instantly, though some can take up to 28 days if further checks are needed.
👉 For a full breakdown of how to apply, watch my detailed YouTube video below.
7 Key Tips for Sellers
While the full process has more detail (which I cover in the video), here are 7 quick ways to stay on track:
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✅ Confirm your ATO residency early
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✅ Apply before listing your property
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✅ Have your TFN ready
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✅ Match your property details with the title records.
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✅ Check name spellings carefully
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✅ Reply fast to any ATO queries.
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✅ Work with your conveyancer early.
👉 For a full breakdown of these tips, watch my detailed YouTube video below.
For sellers in Mornington, Mount Eliza, Mount Martha, and surrounding areas on the Mornington Peninsula, the increase to 15% is significant. Our local property market means almost every sale will be impacted.
At McNeill Real Estate, we include FRCGW Clearance Certificate checks as part of our pre-listing process. This ensures that when you sell, you won’t face any last-minute surprises at settlement.
The clearance certificate is:
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Free
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Quick to apply for
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Essential to keeping your full sale proceeds
Don’t risk losing 15% of your sale price to the ATO unnecessarily.
📌 For the step-by-step guide and detailed examples, watch my full YouTube video below.
📞 Ready to sell? Contact one of our friendly team members at McNeill Real Estate today for advice and a free property appraisal.
Disclaimer: The contents of this video do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such. You should seek legal advice or other professional advice in relation to any particular matters you or your organisation may have.
