Non Resident CGT Changes

I wondered why the Govt abruptly shelved the proposed laws to impact the main residence CGT exemption for people who departed Australia on the very day the Senate passed the Bill....Strange thing to do, it seemed at the time.

Seems its part of a broad proposed concept to change all tax residency / non-residency laws and there is a Tax Advisory Board quietly proposing changes and seeking input from tax agencies at present. Media report a range of considerations (all too soon for true discussion) but a common aspect is a far tougher test for tax residency.

I suspect a broad rewrite to make it harder to access tax concessions incl CGT discounts, CGT exemptions, residency thresholds, residency tax rates and also entity taxation and residency issues. This could even have impact on some state tax laws too (ie land tax surcharges, duties etc) Since the present tax laws were enacted in the 1930's and later, the world has changed and we have a more mobile world where its possible for some to argue they lack residency anywhere. And for others to evade taxes by seeking shelter in havens which have no double tax treaty while also playing with jurisdictions and regularly maintaining limited contact with Australia.

I dont see good news for those who departed Australia. Its possible a far tougher test of tax residency could emerge. And media report shorter and more understandable tests for in/out bound persons rather than vague common law views that are now considered unworkable and complex to understand. I question whether this could emerge before the next election however.

 

the report that has been submitted is actually quite fair and considered

the current tests are overly complex and already extremely tight. read dempseys case. you dont think that is tight ?

 

No, based on initial feedback I think the proposals are ideal and the current model is outdated and doesnt reflect people like even yourself Mike who can cross borders and call other places "home" for a time. People can move around these days and even a domicile isnt what it used to be. I have had a small number of clients who travel a LOT for work however and one proposal to count days similiar to the UK / NZ can have impacts that could be detrimental to some. There has been a bit of criticism of so called bright line tests in some countries. I welcome finding a new range of tests or ways to count residency that dont shift complexity to new methods of appeal and confusion.

The issue of "am I resident" is costly advice at times and not always clear. I have seen people pay significant money to appeal ATO views on residency (even Paul Hogan is also a good example) and that seems wrong to have a system that is so complex a court or tribunal must arbitrate a disputed decision and determine a simpler fundamental method to assist taxpayers complying with tax law. I welcome a simpler approach. Regrettably when ever a system is simplified some people are harmed. Thats what I dont welcome.

I can see the migration towards a new Commonwealth definition may also have flow through (in time) to so many other areas eg state duties, land tax, benefits, CGT events, super, pension benefits, departing australia super benefits, age pensions and entitlements, death benefits, ASIC & Corporations Law, licensing, IP and even legal matters like wills and estate planning.