Capital gains tax 'discount' on foreign investment property for Australian resident

Hi all,

In Australia, I understand that there is a 50% capital gains tax 'discount' applied to capital gains on an investment property owned in Australia if you are a resident of Australia for tax purposes. That is if you make $100k in capital gains, your tax assessable income goes up by 50% * $100k = $50k in the year that you sell the property.

A few years ago, it is my understanding that they removed the CGT 'discount' if you are a non-resident of Australia for tax purposes and you owned an investment property in Australia. That for an Aussie expat in Singapore/HK etc, they are hit with Australian income tax on the full $100k gain when selling.

That is discussed here:
CGT discount for foreign resident individuals

My question is this: If you own an apartment overseas but you are a resident in Australia for tax purposes, do you get the CG 'discount' when you sell that overseas apartment?

I found this ATO link:
Capital gains on overseas assets

It states:
"If you are an Australian resident, your capital gains on overseas assets are treated in the same way as your capital gains on Australian property. If you make a capital gain that is taxable in Australia and you have paid foreign tax on it, you may be entitled to a foreign income tax offset."

To me that implies that if an Australian resident sells a foreign apartment and makes a $100k capital gain, they are only taxed on $50k in capital gains as they can apply the CGT discount.

Is this correct?

 

This will depend on double taxation agreements because the capital gains might be taxed overseas and you might get a tax credit on the tax paid over there. I recall a case from a few years ago where this resulted in the 50% CGT not fully applying in Australia.

If there is no taxation overseas you would generally get the 50% CGT discount here.

 

Thank you for your swift answer!

 

Potentially correct. However many issues can imapct this:
1. The market value of the property on the date they become a AU tax resident if that applies. See also #3 which may also impact.
2. The AU terms value of the property cost and its sale based on ATO exchange rates
3. Whether the 6 year absence concession is available and is chosen.
4. If they have CGT losses

the lost CGT discount applies in the suituation someone is a non-resdient for Australian taxpurpsoes. None of those days allows the person to access a 50% CGT discount. But they can still acess some limited exemptions. These may end at 6 years maximum after residency changes

 

Thank you Paul for your insightful comment.