Short answer
The buyer's solicitor withholds 15% of the sale price at settlement. On a $900,000 sale, $135,000 is held by the buyer pending ATO refund. You receive 85% of the proceeds on settlement day. The withheld amount is locked up for 6–18 months until the refund flows through the tax system. This is why the certificate must arrive before settlement morning — there is no recovery option once settlement closes.
The rule explained
From 1 January 2025, the ATO withholds 15% on all Australian property sales unless the seller produces an ATO clearance certificate before settlement. The withholding happens at settlement — the moment the contracts close and the buyer's solicitor receives the sale proceeds. If the clearance certificate has not arrived by 9 am on settlement day, the buyer's solicitor is legally required to withhold. There is no discretion. The buyer's solicitor does not get to choose. Under TAA 1953 Schedule 1 Subdivision 14-D, the withholding is mandatory if the certificate is not present.
Once settlement closes, the withholding is locked in. The buyer's solicitor holds the $135,000 (on a $900,000 sale) in their trust account pending ATO refund. You receive $765,000 on settlement day. The $135,000 is released after the ATO processes your tax return and issues the refund — typically 6–18 months later. You cannot recover the money faster. You cannot dispute it. You cannot get the buyer to release it. The clock has already started, and you have lost the cash for months.
What most people get wrong
Many sellers think they can apply for the certificate after settlement if the buyer withholds. Wrong. The certificate must be applied for and approved before settlement. Applying after settlement does not get the buyer to release the withheld funds — it only validates the refund claim for tax purposes. The damage is done: the cash is locked up. Sellers also assume the buyer will be flexible about release — wrong again. The buyer's solicitor is bound by law. They cannot release the funds without an ATO directive, which does not happen unless you lodge the certificate application before settlement and the ATO issues the certificate before settlement.
Worked example
Property sale price $900,000, settlement date 30 April 2025, no clearance certificate applied for. 9 am on 30 April, the buyer's solicitor receives the sale proceeds ($900,000) and the clearance certificate is not in their inbox. The solicitor withholds 15% ($135,000) and pays the seller $765,000. The $135,000 goes into the buyer's solicitor's trust account. The seller files a tax return in July 2025 claiming the withheld amount. The ATO processes the return and issues a refund cheque in November 2025 (7 months later). The seller's cash position is damaged for seven months on a $900,000 sale.
Run your check
The free FRCGW clearance certificate calculator shows you the exact withholding amount, how urgent your application is, and whether you have enough time before settlement. Takes 90 seconds.