CGT for foreign residents
The controversial proposal to remove the entitlement to the Capital Gains Tax main residence exemption for foreign residents has been reignited with the Treasurer confirming that the proposed change "remains our Government's policy".
The change originally announced in the 2017-18 Federal Budget was originally introduced on 8 February 2018, however, the bill introducing the law lapsed when Federal Parliament was prorogued for the 2019 Federal election.
Broadly, the change in law proposed to remove the entitlement to the CGT main residence exemption for foreign residents, with the main points being:
It had been proposed that the changes would apply to CGT events for foreign residents that happen on or after 9 May 2017, subject to a 30 June 2019 transitional rule. Presumably the relevant time frame for introduction would be rescheduled following the reintroduction of the changes.
There were significant concerns in relation to the original bill including but not limited to:
These concerns and others will no doubt be raised again, however, it is clearly the intent of the Government is to introduce this policy and therefore, non residents should consider the potential impact of the removal of the exemption on property held in Australia.
Should you have any questions regarding these changes, please contact your ESV engagement partner on 02 9283 1666.
Article by David Prichard