Step Two – Review clearance certificate
A buyer is not required to question a seller’s residency, and does not need to withhold an amount at settlement where they have received a valid clearance certificate. Broadly, a buyer may rely on a clearance certificate when all of the following conditions are met:
the name of the seller (on the certificate) matches the name on the certificate of title;
TAX TIP – Name on clearance certificate does not match title
As the ATO issues clearance certificates in the name that is in their system, there may be instances in which the name of the seller on the certificate does not match the name recorded on the certificate of title. This could occur, for example, where a seller is the trustee of a trust or superannuation fund. In such cases, the ATO accepts the buyer has fulfilled their obligation if the vendor can show that the entity on the clearance certificate is the trustee of the trust (e.g., by providing a copy of the trust deed).
- the date the certificate is received by the buyer falls within the time period shown on the certificate; and
- the certificate is received by the buyer before settlement.
A buyer may choose to check the validity of a clearance certificate with the ATO if desired (although there is no requirement to do so). Refer to ‘Clearance certificates’ in the ATO’s factsheet (QC 48972) which discusses these rules in further detail.