From 1 January 2025 all Australians selling property need a clearance certificate to prevent a portion of the sale price from being withheld. While it is understood that most lawyers are handling this process for their clients, it’s important for everyone involved to be aware of this requirement. Clearance certificates for Australian residents All Australian residents (for tax purposes) selling or disposing of Australian real property (property) must have a clearance certificate and give it to the purchaser at, or before settlement. Without a clearance certificate, the purchaser must withhold up to 15% of the sale (or market value if not sold at arm's length) for foreign resident capital gains withholding (FRCGW) purposes. Example: the importance of getting a clearance certificate early – 15% withheld from sale Willow and Stanley are Australian residents for tax purposes. On 1 September 2024 they decide to sell their family home, their main residence. They need the funds from the sale to purchase a new residence. They are both listed as owners of the property on the certificate of title, so both must apply for their own clearance certificate. They find a purchaser on 8 January 2025 and sign the contract of sale, with a settlement 30 days later on 6 February. They don’t apply for a clearance certificate until 15 January and don't have both of their clearance certificates at, or before settlement. The property sold for $600,000, however: • Willow's clearance certificate issued and was given to the purchaser • Stanley was still waiting for his clearance certificate. The sale goes through and settlement occurs. As Stanley didn't have a clearance certificate at settlement, 15% of Stanley's share of the sale ($90,000) must be withheld by the purchaser and paid to us. Stanley must wait until his 2025 tax return is lodged and processed for a refund. As the purchaser had received a clearance certificate from Willow, there's no withholding required on her share of the sale. (Example provided by the ATO website) If you would like to read more about Clearance Certificates, please click on the below link: https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/foreign-residents-and-capital-gains-tax/foreign-resident-capital-gains-withholding/australian-residents-and-clearance-certificates#ato-ClearancecertificatesforAustralianresidents

We wanted to bring to your attention some important changes regarding student and training loan indexation that have just passed through Parliament. The law is changing how the indexation on student loans is calculated. In the past, indexation has been based solely on the Consumer Price Index (CPI) . However, moving forward, the indexation rate will be based on the lower of either the CPI or the Wage Price Index (WPI) . This new rule will be backdated to 1 June 2023 , which means it will affect loans from that date onward. Here’s how the updated indexation rates break down: 3.2% for 1 June 2023 (reduced from 7.1%) 4% for 1 June 2024 (reduced from 4.7%). Impact on Your Loan If your loan has been over-indexed in the past two years, you may be entitled to a refund . The Australian Taxation Office (ATO) will automatically adjust your account to reflect the new, lower rates and will process refunds for any excess amounts already paid. This means: If after the adjustment, your account is showing a credit (i.e., you've paid more than required), this excess will be refunded to your nominated bank account provided you have no outstanding tax or other Commonwealth debts . If your loan is in credit after the adjustment, any remaining funds may be transferred to offset your income tax account (if applicable), and the remainder will be refunded to you. What You Need to Do For most clients, there’s nothing you need to do at this stage. The ATO will automatically recredit excess amounts to your account once the legislation receives Royal Assent , and this process will begin soon after. You should expect to see these credits applied to your account by the end of January 2025 . However, in some cases, due to the complexity of individual accounts, it might take a bit longer. Unfortunately, the ATO cannot provide a list of exactly which clients will receive refunds, as they will only know once all recredits are processed. We drew inspiration to write this article from the ATO