If you are an Australian foreign resident for tax purposes and are planning on selling your main residence in Australia, there are some important new laws that you need to be aware of.

Until recently, non-residents could claim an exemption for capital gains tax (CGT) when selling their main residence in Australia. However due to new legislation passed late last year, this is no longer the case. The new laws mean that non-residents who purchased their main residence before the 9th of May 2017 have the option to sell their property before the 30th of June 2020, or lose their ability to claim the CGT main residence exemption. Unfortunately, for properties purchased after the 9th of May 2017, the new CGT laws already apply and sellers are unable to claim the CGT exemption on the sale of their property.

So what are the financial effects of being unable to claim the CGT exemption? The answer to this question is different from case to case, however the new laws have the potential to severely impact expatriates living abroad when selling their home. In some cases there is the possibility that non-residents will be required to pay CGT on their property as far back as 1985, since the CGT is calculated from the date of purchase and not the date that the resident relocated abroad. This will no doubt result in a substantial tax bill for some.

If you believe that the new laws could impact you, there may be options available to reduce or avoid financial impacts. These options may need to be addressed before the 30th of June 2020, so please do not hesitate to contact the team at HQB for some advice.

Posted 11.02.2020

 This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.

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