Changes Still Afoot With Main Residence Exemption for Australian Expats
Changes Still Afoot With Main Residence Exemption for Australian Expats – Australian expats around the globe let out a sigh of relief when the Treasury Laws Amendment (reducing Pressure on Housing Affordability Measures no.2) Bill 2018 had lapsed on 1 July 2019.
Unfortunately, this period of resting easy has also lapsed as recent comments from the Australian Treasurer, Josh Frydenberg, reignites concerns regarding the Main Residence Exemption for Australian expats as he has indicated that it is committed to its policy change despite the bill lapsing in the Senate.
For Australian expats who have not been following the issue, the proposed changes would have had large negative consequences for non-resident taxpayers who sold their former main residence while overseas.
The Federal Government had proposed in its 2018 bill that Australian non-residents who sell their former principal place of residence while overseas will be required to pay capital gains tax on any gain on the property since its original purchase date.
Australian expats would receive no apportioned CGT discount and depending on the growth of the property’s value, could be hit with a large tax bill on the sale of the property. The proposed change was retrospective in nature and would go back as far as 20 September 1985. See our other articles on the topic for more information (link here).
Recently ABC News asked the current Treasurer Josh Frydenberg if the government’s proposal on the CGT main residence exemption would be revisited after its recent lapse. His response was that “this remains our Government’s policy”.
While this comment doesn’t provide a lot of information, it does suggest that we will see this bill return in the future. Whether this will be in its previous form or will contain changes, is yet to be revealed.
The proposed changes have already caused many Aussie expats to sell their former homes due to the now lapsed transitional provisions allowing use of the existing main residence exemption rules up until 30 June 2019.
The relatively small time frame provided in the now lapsed proposal have caused many expats to make massive financial decisions regarding their Australian properties to avoid punitive tax treatment.
Atlas Wealth Management will continue to monitor this topic and the situation as it unfolds.