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Selling IP - non resident

Discussion in 'Accounting & Tax' started by BelezaPura, 30th Jun, 2015.

  1. BelezaPura

    BelezaPura New Member

    Joined:
    18th Jun, 2015
    Posts:
    4
    Location:
    Northern Beaches, Sydney
    I am thinking of selling my IP in Sydney. Thing is, I am an Aussie expat working overseas and my current status is "non resident for taxation purposes".

    The implication of that is that, I believe, I lose the CGT discount and will have to pay tax on 50% of the gains instead of 25% (property has been with me for over 4 years now).

    Is that correct?

    If so, and assuming I return to Australia and become a "resident" again before 30 Jun 2016, say on the 01 June 2016, would I be able to then claim the CGT discount in full?

    This may be wishful thinking as for most of the year I would have been a non-resident, but thought I should check it anyway...

    Would love to hear your feedback.
    Thanks
    BP.
     
  2. MindMaster

    MindMaster Well-Known Member

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    19th Jun, 2015
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    Location:
    China
  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,396
    Location:
    Sydney
    Whoa... Hang on. There is a lot of misinformation about non-residents and CGT.

    1. Australian property is subject to Australian CGT when sold. Its not exempt like shares in listed companies for some people.
    2. The (ALP) Govt took away the CGT discount for non-residents effective 12 May 2012. However it can also apply retrospectively but it can be addressed. You may be able to access the former CGT discount if you follow the new rulesl.
    • The non-resident can obtain a market valuation at 8 May 2012 and this protects and preserves some of the 50% CGT discount. Any gain since that date is taxable, in full however.
    I would strongly recommend a CGT estimate and obtaining a complying valuation. Unlike other CGT valuations it must be prepared by a qualified valuer.

    I suggest personal tax advice so you minimise tax on this matter
     
  4. Casteller

    Casteller Well-Known Member

    Joined:
    30th Jun, 2015
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    Location:
    Barcelona
    Regarding the 12 May 2012 date when the cap gains discount ended, if most of your capital gain has been after this date (eg Sydney) then it might be better to just pro-rata the gain rather than use a valuation from this date.
     
  5. BelezaPura

    BelezaPura New Member

    Joined:
    18th Jun, 2015
    Posts:
    4
    Location:
    Northern Beaches, Sydney
    Thanks for your replies.
    The bulk of the gains came after 2012. This is a house in Western Sydney (2770 postcode).
    How does the pro-rate method work?