Capital Gains Tax Changes For Non Residents

The following information has been obtained directly from the ATO web site. Please refer to your qualified tax advisor for further information and how the proposed changes to properties owned by foreign investors may effect you. 

On 9 May 2017 the Government announced that Australia's foreign resident capital gains tax (CGT) regime will be extended to deny foreign and temporary tax residents access to the CGT main residence exemption. This change applies from the date of announcement. Properties held prior to this date will be grandfathered until 30 June 2019.

Following consultation, the Government has amended the change to the main residence exemption to ensure that only Australian residents for tax purposes can access the exemption. As a result, temporary tax residents who are Australian tax residents will be unaffected by the change.

Administrative treatment

The ATO will accept tax returns as lodged during the period up until the proposed law change is passed by Parliament. Past year assessments will not be reviewed until the outcome of the proposed amendment is known.

After the new law is enacted, taxpayers will need to review their positions:

  • for properties acquired from 7:30PM (AEST) on 9 May 2017 – back to the 2016–17 income year;
  • for properties held from 7:30PM (AEST) on 9 May 2017 and disposed after 30 June 2019 – back to the 2019–20 income year.

Those taxpayers who lodged their tax return in accordance with the changes do not need to do anything more.

Those taxpayers who did not return their capital gain will need to seek amendments and obtain or reconstruct records to support any costs associated with the property.

No tax shortfall penalties will be applied and any interest accrued will be remitted to the base interest rate up to the date of enactment of the law change. In addition, any interest in excess of the base rate accruing after the date of enactment will be remitted where taxpayers actively seek to amend assessments within a reasonable time frame after enactment.

Legislation and supporting material

The exposure draft legislation and explanatory material External Link was released for consultation on 21 July 2017. Submissions closed on 15 August 2017.

More information