Expats Beware – CGT main resident exemption no longer accessible to foreign tax residents

On 12 December 2019, the controversial Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 (Bill) was granted royal assent. 

The Bill will operate in respect of disposals of main residences occurring from 1 July 2020 and means that individuals who are foreign tax residents at the time of selling their Australian main residence will be liable to pay capital gains tax (CGT) on the increase in value since acquisition. As such, if you owned the property on 9 May 2017, and sell on or before 30 June 2020, the Bill will not apply.

While the Bill contains limited exceptions, some individuals may be eligible for a partial application of the 50% CGT discount on the sale of their residence. However, foreign residents will be unable to access the main residence exception despite the possibility that, prior to moving overseas, they may have owned the property as an Australian tax resident since as early as September 1985.

Foreign residents who currently treat an Australian property as their main residence for CGT purposes should review their tax affairs, particularly if the value of their main residence has significantly increased in value since the time of acquisition.

For further information or advice please contact:

Rod Payne
Principal
T: 03 5226 8541
E: rpayne@ha.legal

Paul Gray
Principal
T: 03 5225 5231
E: pgray@ha.legal

Alexander Gulli
Lawyer
T: 03 5226 8573
E: agulli@ha.legal