Australian Expats Dodge a Bullet…. For Now
Australian Expats Dodge a Bullet…. For Now – Today was meant to be the day that Australian expat property owners found out once and for all whether the proposed changes to the Main Residence Exemption (MRE) was either going to be passed or amended.
With debate on the bill by the Senate scheduled for 12 noon today everyone was bracing for a result which never happened. At the last minute the debate was cancelled from what we understand a cross-bencher approaching the government and highlighting the issues that Atlas Wealth Management and many of our industry colleagues have been talking about since the bill was introduced back in July 2018.
Just in case you’re late to the party, and are unaware of how wide sweeping these changes are, I have linked below posts and articles that we and industry colleagues have produced that show the true scale of the proposed changes:
- Atlas Wealth Management – Blog Post – Australian Expat Property Owners To Feel Pain From Budget Changes
- Atlas Wealth Management – Media Interview with the AFR – Capital gains tax exemption changes expected to ignite expat property fire sale
- Atlas Wealth Management – Media Interview with the AFR – Expats Face CGT Hit on the Sale of Aussie Family Home
- Tax Banter – Blog Post – Draconian and retrospective CGT main residence exemption amendments hit Parliament
Where To From Here?
The government may go away and reconsider their options and, if common sense prevails, hopefully take on board all of the submissions that have been provided to them outlining why this bill needs to be stopped. After this week the Senate will break up and resume sitting on the 12th of November – time still marches on.
As we see it they have four options:
- Let the bill pass in its current form.
- Let the bill pass but amend the dates so that they’re not implementing legislation that is retrospective 17 months in arrears and Australian expats have an adequate amount of time to consider their options and make the appropriate decisions.
- Amend the bill so that there is a carve out for Australian citizens. After all the original intention of the bill (if you believe the title) was to make housing more affordable and to slow down the wave of foreign investors buying up properties in Australia.
- Amend the bill so that the Main Residence Exemption is preserved up until the day of departure in which case Australian expats may accrue Capital Gains Tax (CGT) on any price appreciation for the period that they are classified as a non-resident for tax purposes.
I’m not going to go into detail into why these changes are punitive and unfairly target Australian expats living and working overseas because to date we have done over 7 blog posts and 3 live webinars (not to mention many social media posts) but what I wanted to talk about is the misunderstanding of who an expat is and why these proposed changes strike at the core of the Australian community.
Who Is An Australian Expat?
We believe that there is a common misconception that all Australian expats are millionaires living overseas, earning massive incomes and living a privileged life but that could not be further from the truth. In August of this year we released the inaugural Expat Insights Report which was the largest survey of Australian expats that has been conducted to date.
We received responses from 1,774 Australian expats living in over 65 countries and asked them a range of questions relating to work, finances, family and lifestyle. What came out of these questions was a picture of an Australian expat that many people in Australia, and especially Canberra, would not have painted.
The most common profession in the survey was Teaching with 16.03% of respondents working in the Education Sector. The second most popular sector was in the Hospitality, Travel & Tourism sector with 8.41% of respondents. Even the Health sector comprised of 7.79% of survey answers. Over 32.23% of the Australian expats who participated in the survey work in what is traditionally considered to be modest earning careers.
The government themselves freely admits that these professions need assistance, with ongoing talks between federal and state governments about providing them with affordable housing in Australia yet they are happy to pass this legislation through which negatively impacts the same people who just happen to live in a different jurisdiction.
Australians near and far have always had a love affair with property however that appears to be changing for Australian expats. 70% of respondents said that they don’t own any property back in Australia and 64% of respondents said they had no intention of buying a property in Australia any time soon.
The changes in tax legislation by Canberra has also not gone unnoticed overseas. The recent changes have deterred 41% of those looking to buy back in Australia from going ahead with the purchase.
We shall keep our ear to the ground on any future developments and will be sure to keep Australian expats informed of any changes.