As part of the 2017/2018 federal budget to promote house affordability, it was announced that non-residents would no longer be entitled to the CGT main residence exemption. This means that any non-resident that maintained their home in Australia would no longer be entitled to a tax-free gain on disposal, but would be taxed on any capital gain they made on the disposal of their home
If the law is passed and you are a foreign resident when a CGT event happens to your residential property in Australia, you may no longer be entitled to claim the main residence exemption.
The change will apply to foreign residents as follows:
(1) For property held prior to 9 May 2017, the exemption will only be able to be claimed for disposals that happen up until 30 June 2019 and only if they meet the requirements for the exemption.
(2) For disposals that happen from 1 July 2019 they will no longer be entitled to the exemption.
(3) For property acquired on or after 9 May 2017, the exemption will no longer apply to disposals from that date.
There are some planning opportunities available to non-residents if action is taken prior to 30 June 2019 that could help with tax savings on up to $1 million. If you are interested in exploring the potential for this planning opportunity, please contact one of Marsdens Commercial lawyers.
It is important to note that this change is not yet law and is subject to parliamentary process. The Government is likely to provide comment on the status of this bill in the parliamentary sitting starting from 2 April 2019.
If you require assistance in respect to your contractual arrangements and commercial related matters, contact our Business Law Accredited Specialists and Partners, Justin Thornton at jthornton@marsdens.net.au or Rahul Lachman at rlachman@marsdens.net.au or on (02) 4626 5077.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
