The Libs Sneaking Property Tax

Discussion in 'Accounting & Tax' started by sash, 15th Feb, 2020.

Join Australia's most dynamic and respected property investment community
Tags:
  1. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    12,684
    Location:
    Sydney
    Lindsay_W likes this.
  2. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    5,692
    Location:
    The beautiful Hills District, Sydney Australia
    Its very rare tax changes are applied retrospectively. Even what labor proposed for NG was grandfathered, but the coalition attacked the proposal as being retrospective.... POT. KETTLE. BLACK - actually, worse than that. I have to admit - first I have heard of this. I don't recall seeing any media coverage about these changes .... they have certainly done it on the very quiet and failed to inform anyone of the changes it appears
     
  3. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    18,473
    Location:
    Sydney
    There are three effective strategies

    1. Sell asap prior to 30 June 2020.
    2. Do NOT sell and retain. When you recommence AU tax residency then the property could be contracted for sale and you are not disadvantaged
    3. Uncertainty if you are unsure of return. However the complex 6 year period contains some limit exceptiosn to allow a sale without triggering the tax impact.

    Each taxpayer needs to consider their intentions. For someone not truly considering return who does not own CGT free (pre 86) real property option 1 may be prudent.
     
    Lindsay_W and craigc like this.
  4. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    12,684
    Location:
    Sydney
    This is what Scomo and crew do all the time!

    Can't wait till these clowns are voted out...hopefully labor has not stupid policies this time. :rolleyes:

    Its all spin with the Coalition...the economy is pretty much ******.....

     
  5. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    18,473
    Location:
    Sydney
    The ALP didnt oppose the plan and went to the election in full support of it and expected the law to pass prior to the election and as a consequence had no reason to indicate a policy any different. They certainly didnt oppose it - Even Pauline Hanson supported it. The Parliament as a whole supported this law despite lobbying etc.
     
    iloveqld, Lindsay_W and craigc like this.
  6. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    3,600
    Location:
    QLD/Australia Wide
    Pays to have a good accountant who's across these issues
    Wonder how many are unaware? :eek:
     
    Last edited: 20th Feb, 2020
  7. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    18,473
    Location:
    Sydney
    Loads of people.
    The lucky ones will have a employer who engages a big practice who offer equaliisation and advice services to those headed offshore. They may be forewarned.
     
    Lindsay_W likes this.
  8. FredBear

    FredBear Well-Known Member

    Joined:
    7th Aug, 2018
    Posts:
    384
    Location:
    Sydney & Abroad
    That's not correct, here is the voting record for this bill in the house of representatives:
    Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019
    AYES, 76
    Mr Alexander
    Ms Flint
    Mr Littleproud
    Mr Sharma
    Dr Allen
    Mr Frydenberg
    Ms Liu
    Mr Simmonds
    Mrs K. L. Andrews
    Mr Gee
    Mr McCormack
    Ms Steggall
    Mr K. J. Andrews
    Dr Gillespie
    Mrs McIntosh
    Mr Stevens
    Mrs Archer
    Mr Goodenough
    Dr McVeigh
    Mr Sukkar
    Ms Bell
    Dr Haines
    Mrs Marino
    Mr Taylor
    Mr Broadbent
    Ms Hammond
    Dr Martin
    Mr Tehan
    Mr Buchholz
    Mr Hastie
    Mr Morrison
    Mr Thompson
    Mr D. J. Chester
    Mr Hawke
    Mr Morton
    Mr Tudge
    Mr Christensen
    Mr Hogan
    Mr Ted O’Brien
    Mr van Manen
    Mr Conaghan
    Mr Howarth
    Mr L. S. O’Brien
    Mr Wallace
    Mr Connelly
    Mr Hunt
    Mr Pasin
    Mrs Wicks
    Mr Coulton
    Mr Irons
    Mr Pearce
    Mr Wilkie
    Mr Drum*
    Mr Joyce
    Mr Pitt
    Mr R. J. Wilson
    Mr Dutton
    Mr C. Kelly
    Mr Porter
    Mr T. R. Wilson
    Mr Entsch
    Mr Laming
    Ms Price
    Mr Wood
    Mr Evans
    Ms Landry
    Mr Ramsey*
    Mr Wyatt
    Mr Falinski
    Mr Leeser
    Mr Robert
    Mr Young
    Mr Fletcher
    Ms Ley
    Ms Sharkie
    Mr Zimmerman

    NOES, 64
    Mr Albanese
    Mr Dreyfus
    Ms M. M. H. King
    Ms Rishworth
    Dr Aly
    Mrs Elliot
    Dr Leigh
    Ms Rowland
    Ms Bird
    Mr Fitzgibbon
    Ms McBride
    Ms Ryan*
    Mr Bowen
    Dr Freelander
    Mr Marles
    Mr Shorten
    Mr Burke
    Mr Georganas
    Mr B. K. Mitchell
    Mr D. P. B. Smith
    Ms Burney
    Mr Giles
    Mr R. G. Mitchell
    Mr Snowdon
    Mr Burns
    Mr Gorman
    Dr Mulino
    Ms Stanley*
    Mr M. C. Butler
    Mr Gosling
    Ms Murphy
    Ms Swanson
    Ms T. M. Butler
    Mr Hayes
    Mr Neumann
    Ms Templeman
    Mr Byrne
    Mr Hill
    Mr O’Connor
    Mr Thistlethwaite
    Dr Chalmers
    Mr Husic
    Ms O’Neil
    Ms Thwaites
    Mr Clare
    Mr Jones
    Ms Owens
    Ms Vamvakinou
    Ms Coker
    Ms Kearney
    Ms Payne
    Mr Watts
    Ms Collins
    Mr Keogh
    Mr Perrett
    Ms Wells
    Mr Conroy
    Mr Khalil
    Mrs Phillips
    Mr J. H. Wilson
    Mr Dick
    Ms C. F. King
    Ms Plibersek
    Mr Zappia

    Very clearly the ALP voted as a block against this legislation
     
    shorty likes this.
  9. danielcannan

    danielcannan Well-Known Member

    Joined:
    21st Feb, 2018
    Posts:
    55
    Location:
    Adelaide
    I've seen two people this week who have had big practices advise them on taxation while working overseas. I wouldn't describe the clients as lucky. Both have complained about how poor the service has been, and were unaware of this law change. (small sample size, I know)
     
  10. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    18,473
    Location:
    Sydney
    I would describe the fact they have been given (complex) tax advice a fortunate event v's assuming all is OK and will sort itself out. Yes they are lucky. Most people accepting a offer of offshore work would have no idea. They also likely need to be given personal advice on whether they are even a non-resident as in many cases they may panic about something that is no concern.

    I worked for a major bank with offshore jobs commonly offered. Most people think is wonderful to spend several years in NY when the realities can be different and involve complex and confusing tax and income equalisation arrangements and fringe benefits and so much more. And often really really expensive living costs incl health care and education with restrictions on spouses working too. Nearly everyone accepts the post then later finds out about the complexities and the catches.

    I would think many companies who send staff offshore for periods of time will look at their practices to safeguard these key people. There are ways. This is different to someone who applies to work offshore which may be harder to address.

    I love the loophole which exists for some Govt employees. You can send a person to work at a consulates for 6 straight years and they are exempt. Yet a bank worker isnt. That is unfair and hopefully will be addressed in the rethink on residency and non-residency.
     
  11. danielcannan

    danielcannan Well-Known Member

    Joined:
    21st Feb, 2018
    Posts:
    55
    Location:
    Adelaide
    I've found the employers have been very good to their staff, but the Big4 advice has been (at best) incomplete. Mostly handled by junior staff, or a 'tick box' exercise. But again my experience with this is limited to what I hear from my clients.

    Agree re: the govt employees exemption, that it is unfair. But I doubt it will be changed any time soon. Perhaps I'm too cynical.
     
  12. tedjamvor

    tedjamvor Well-Known Member

    Joined:
    22nd Oct, 2019
    Posts:
    195
    Location:
    Melbourne
    If you live overseas and keep a PPOR in Australia, you are REDUCING housing supply.

    This is a good move, either you rent out your property whilst you're away or you sell it.
     
  13. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    18,473
    Location:
    Sydney
    The complexity of the advice is something junior staff should not be handling.

    In the emotional outcry the fact is that if the people propose to return then the strategy of renting it and not selling until after they return does not disadvantage anyone provided they return within 6 years. If its after 6 years then the CGT discount after 6 is lost but the main residence exemptions of the past are not.

    There is a rational basis to this. If someone wants to leave and plan to keep a property for CGT exemption without plans to return why should our taxpayer fund that ? And if they plan to return they arent disadvantaged.
     
  14. FredBear

    FredBear Well-Known Member

    Joined:
    7th Aug, 2018
    Posts:
    384
    Location:
    Sydney & Abroad
    So you approve of retrospective legislation that takes away all the years, in our case 20+ years, when we lived in Australia in our PPOR and imposes a BIG NEW TAX on that period just because we sell after moving abroad?

    Not forgetting that our PPOR was rented while abroad, rental income being taxed at 32.5% from the first dollar, CGT discounts lost, $28k p.a. NSW land tax paid etc etc.
     
    Lindsay_W likes this.
  15. Undervalued

    Undervalued Member

    Joined:
    22nd Dec, 2015
    Posts:
    23
    Location:
    Sydney
    If you think it’s bad for Aussie nationals, spare a thought for your Kiwi cousins, like me.

    I lived in Sydney, got married in Sydney, had my first child in Sydney, brought her home to a lovely place my wife and I bought. Circumstances then had us leaving Sydney for work, so this place has been rented.

    While overseas, we find out first about the great land tax surcharge for ‘foreigners’ (just how much of a foreigner is an Aussie in NZ or vice versa??) which wipes out any financial return at all - 20k per annum.

    Then this lovely piece of legislation. With the nasty last minute switcheroo to apply CGT from date of purchase! We’ve been away for 2.5 years and would most likely be returning. But there’s always uncertainty, yet the tax laws are now fairly certain. Faced with a tax bill of quarter million bucks (if we need to sell in the future) and now a negatively geared property....So of course, we’re selling.

    It’s a heartless piece of ill-thought out legislation. I agree with moves to curb speculation but am I really the speculator the state and fed governments want to be targeting??

    And as if that was bad enough, the cricket comes on... when’s a Kiwi gonna get a break over there?
     
  16. ttn

    ttn Well-Known Member

    Joined:
    9th Sep, 2016
    Posts:
    487
    Location:
    Sydney
    ALP has no chance Sash ;) cant even win last year from the really stuffed up LNP during the Turnbull-Abbott-Turnbull era so better to forget about the next election too just like those did not buy properties in Sydney years ago, it's too late now :rolleyes:

    There are still lots of voters like no retirees tax, negative gearing, 50%CGT, coal mining, tax cuts and interest rates always lower under LNP and property prices had been more than double since 2013 :D How's good is that? ;)
     
  17. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    12,684
    Location:
    Sydney
    Lets see......

     
  18. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    18,473
    Location:
    Sydney
    Many Kiwis are exempt. Those who did not apply for a visa would be treated like all foreign persons WHILE resident here. You can and should obtain a s32 Visa as the surcharge will continue to apply even after moving back without it. ie There are two limbs. 1. You must satisfy the migration requirement AND also be resident and
    2. a 200 day "resides" test applies.

    Definition of a foreign person

    If you return to Australia and recommence tax residency here THEN sell then the CGT changes will have no impact
     
  19. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    18,473
    Location:
    Sydney
    One of the first matters to consider is - Am I still a tax resident of Australia ?? As this will determine if and when the CGT changed rules may impact.

    I recently found a good ATO example of how different people can have different outcomes based on personal situations. It is framed more for inwards than outbound examples however. Bronwyns example is more typical.

    Examples of residents and foreign residents
     
  20. Gen-Y

    Gen-Y Well-Known Member

    Joined:
    8th Nov, 2015
    Posts:
    2,560
    Location:
    Brisbane - Sydney
    Burn them at the stakes! Pitch Fork Mob :mad:
     

PFA Property Expo is designed in a way that visitors can gather maximum real estate knowledge with added benefits. Different speakers will be presenting on different topics as where to buy, when to buy in this market...