Non Residents - Main Residence Exemption Changes

Loads of people are asking - Will this law be passed ?

Good news is no it won't. Back a few weeks ago the Asst Treasurer was quoted by media when asked about this long delayed bill - Whats happening ? He said :
Sometimes things get announced and dont get progressed and its best to just leave it that way. But the Bill wasnt withdrawn either. However have no fear.

Further good news. Parliament WILL NOT SIT again prior to the election.

So the Bill is dead. Gone, Kaput. Ended. That law is effectively no more. It dies with a writ for a election.

BUT......

It can be expected in the future some similar law may be proposed. We know the ALP didnt oppose the concept of the change and despite no policy being stated lets assume the ALP could introduce similar laws. It wont be able to be backdated so set that question aside. Lets hope IF a new law is drafted it wont repeat the harsh elements that retrospectively affect prior tax residents to strip accrued and historical exemptions.

 

Election called so death certificate on this bill has been issued.
This whole debacle has cost me a hefty sum not to mention the worry and frustration, revenge will come at the ballot box...

 

This law will return. Maybe not quite as aggressive. Maybe it will be. And I have encountered many who have UK property who face the whammy of the UK changes which penalise retention of a former home too. Expats in the UK are seeking to bail on Australian property more for the UK issues than the AU issues on top. Its fairly inevitable that people who depart AU will be adversely affected for the main residence exemption. Its now a further uncertain period. Killing the law hasnt addressed that.

I advised someone yesterday that has saved a massive sum as a result. Clarity in the law position is now far more clear (subject to new government and its take on the issue for at least 6-12 months). Remember TREASURY proposed the law change. And they will also be pushing for new residency tests in the new parliament.

This is a further example of the common response to all policy - Lets see what the laws actually say. We often see announced changes that are very different from what is announced eg Div 40 depreciation changes. All Govt must balance the need to set a effective date when they announce measures and then often must tailor or amend laws based on the parliamentary process.

99.9999% of voters wont be affected or even have a care in the world.

 

From PwC:

Australia: Proposals regarding main residence capital gains tax exemption and residency rules
The Australian 2019-20 Federal Budget did not reference the Government’s proposal to remove the main residence exemption from capital gains tax for foreign residents. The changes were proposed to apply to the sale of all main residences by foreign residents after June 30, 2019. However, the legislation to give effect to this measure has not been enacted and has now lapsed, due to the Federal election. Affected individuals now will have to wait until after the election when Parliament resumes to see whether the proposal will proceed in its current form.

The Government also has not commented on proposals to reform Australian tax residency rules put forward by the Board of Taxation. Meanwhile, the Commissioner of Taxation has sought special leave to appeal to the High Court of Australia on a recent decision that was lost on the issue of residency.

 

I can see the ALP or Coalition depending who wins deferring action and likely introduce a new non-residency taxation regime at the same time as reframing the CGT issues.