CGT BILL PASSES IN BOTH HOUSES LEAVING AUSSIE EXPATS FACING UNEXPECTED TAX BILLS

No longer do expats have access to the main residence exemption for capital gains - even if they were a resident for tax purposes for the majority of the time they owned the property.

While industry professionals called for prorating or resetting the cost base to market value to reduce the period the gain was calculated on, neither recommendation was implemented.

Etax Accountants Tax Manager, Simone Gielis, says there is unfortunately not a whole lot the affected expats can do to avoid paying Capital Gains Tax (CGT).

“These changes are likely to catch a lot of Australian citizens living and working overseas out, with many facing large capital gains tax events for selling a property they lived in sometimes for many, many years.”

“Moving forward, expats who are no longer considered Australian residents for tax purposes will just have to pay CGT if they sold their property on or after 9 May 2017.

The only caveat applies to those expats who have been foreign residents for 6 years or less AND they have had one of the following life events:

• A terminal medical condition to themselves, their spouse or child under 18 or

• Death,

• Divorce or separation, said Ms Gielis.”

The bill was originally announced in 2017-18 budget aimed at denying foreign non-residents the CGT main residence exemption.

This was part of the Government’s plan to combat the growing housing affordability crisis.

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