Author: Wendy Waack, Partner, Business Advisory & Tax
The Federal Government has passed a law that basically eliminates the CGT exemption for main residences to Australians living overseas. This means that if they sell their property while being a non- resident the sale will be subject to capital gains tax. The tax bill will date back from the time the owner purchased their home, which could mean a substantial tax bill.
The change was announced in the 2017-18 budget and has been criticised heavily for being retrospective, given it will expose properties to CGT purchased more than 30 years ago.
Foreign residents who acquired their properties before 9 May 2017, will be able to claim the CGT exemption, if they sell their property on or before June 30, 2020.
Any property sales completed after 30 June 2020 will be subject to CGT unless individuals, who have been non-residents for less than six years, have experienced significant life events including:
- The taxpayer, their spouse, or child under 18 years of age, had a terminal medical condition
- The taxpayer’s spouse or child who was under 18 years of age has died
- The CGT event involved the distribution of assets between the taxpayer and their spouse as a result of divorce, separation or similar maintenance agreements.
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