Estate Sale Clearance Certificate: Executor or Beneficiary?

The title may still name the person who died while an executor or administrator is preparing the sale. Before anyone applies for an ATO clearance certificate, identify who will actually be the vendor transferring the property to the buyer.

The short answer: If the legal personal representative, such as an executor or administrator, is selling the property, that representative applies in their own capacity. If the property has first passed to beneficiaries and they are later selling it as owners, the beneficiaries' position is different. Check the title, estate authority and proposed transfer together before choosing the applicant.

Start with the sale documents, not just the inheritance

Being entitled to money from an estate doesn't necessarily make someone the vendor of the estate's home. A beneficiary may be entitled to sale proceeds without becoming the person who sells the property to the buyer.

For this check, put three records together:

The current title search, showing the registered proprietors, meaning the owners recorded on title.
The grant of probate or letters of administration, where applicable, identifying the legal personal representative authorised to administer the estate.
The proposed contract and transfer documents, showing who is selling and how the property will reach the buyer.

A legal personal representative is the executor or administrator handling the estate. In Victoria, a grant can confirm the authority of the executor or administrator to deal with estate assets, including selling or transferring property. The title can still show the deceased person's name while an estate dealing is being arranged, so the registered name alone may not answer who should apply for the certificate.

Ask for the proposed seller's name and capacity to be confirmed before the application is lodged. 'Capacity' means the role in which a person acts, such as acting as legal personal representative rather than selling property they own personally.

When the legal personal representative is selling

The ATO's clearance certificate instructions say that where the vendor is the trustee of a trust, including an executor of a deceased estate, it is the trustee who applies. The trustee uses their own tax file number or Australian business number as the identifier. Don't assume the estate's tax file number is the right identifier because the sale proceeds will be received by the estate.

The ATO also gives a deceased estate example in which a legal personal representative later sells the property. For the clearance certificate, the representative applies in their own individual or company capacity. The ATO says it isn't necessary to add wording such as 'as executor for' or 'as legal representative for' to the application.

Each vendor must lodge a separate application. If more than one legal personal representative will be a vendor, check the transaction documents and the certificates required for each vendor. The number of beneficiaries who will receive the sale proceeds doesn't decide the number of vendor applications.

As a hypothetical example, suppose two siblings are beneficiaries, but a different person is the executor selling the property for the estate. The siblings' entitlement to the proceeds doesn't make their personal clearance certificates substitutes for the selling representative's certificate. The actual title, grant and proposed transfer still need to be checked.

If beneficiaries become owners before selling

If the property is first transferred to beneficiaries and they later sell it to an unrelated buyer, check the clearance certificate position for the people or entities who are then selling as owners. Don't assume a certificate obtained for an earlier estate step can simply be reused for their later sale.

Keep the inheritance transfer and the later sale separate in the file. A beneficiary may also be an executor, so the same name can appear in different capacities. What matters is the role that person or entity has in the transaction being completed.

An inheritance transfer doesn't exempt a later sale

Certain acquisitions following a death have their foreign resident capital gains withholding amount varied to nil under the current federal withholding instrument. 'Varied to nil' means the withholding amount is reduced to zero for that qualifying acquisition. It isn't a blanket exemption for every estate sale or every later dealing with the property.

The ATO's deceased estate example makes the distinction clear. No clearance certificate is required for the transfer from the deceased owner to the legal personal representative in that example, but the legal personal representative applies for their own certificate when later selling the property to someone else.

Foreign resident capital gains withholding is a system under which the buyer may be required to retain money from the purchase price and pay it to the ATO. The clearance certificate check concerns that withholding obligation; it doesn't determine the estate's eventual capital gains tax liability. A foreign resident vendor doesn't use the Australian resident clearance certificate application, and any variation is a separate matter.

Give the right records to the right person

Send your conveyancer the current title details, the relevant grant or other estate authority, the proposed seller names, the proposed transfer sequence and any clearance certificate already issued. If a contract has been signed, include the settlement date. Make clear whether the plan is a sale by the estate representative or a transfer to beneficiaries followed by their own sale.

The conveyancing task is to compare the vendor and certificate with the sale documents and coordinate the certificate for settlement. Completing the tax application is a separate responsibility. The ATO says a paid conveyancer can't complete the form for a vendor unless the conveyancer is also a legal practitioner or registered tax agent. The limited exception is that, as part of settlement, a conveyancer may key details into the online form from a completed paper PDF supplied by the vendor; that isn't the same as independently completing the application for the vendor.

For an Australian resident vendor seeking to avoid withholding, the ATO says the purchaser must receive the clearance certificate on or before settlement. If the applicant name or capacity doesn't match the planned transaction, raise it promptly and check the underlying documents rather than assuming any certificate will do.

About the Pearson Chambers Conveyancing team

Pearson Chambers Conveyancing assists with Victorian residential purchases, sales and title transfers. Its residential conveyancing services include preparing sale contracts and Section 32 statements and coordinating matters through settlement, including checking the vendor against the transaction documents.

Sources we consulted

Preparing to sell an estate home in Victoria?

Contact Pearson Chambers Conveyancing about preparing the sale contract and Section 32 and handling the conveyancing through settlement. Explain who is administering the estate and whether a transfer to beneficiaries is proposed, so the vendor and clearance certificate can be checked together.

Email contact@pearsonchambers.com.au.

General information only, current as at the date of publication. Victorian conveyancing rules and legislation change frequently. Please contact the Pearson Chambers Conveyancing team for advice on your specific contract.