The Libs Sneaking Property Tax

For the people who think the Libs saved the day...think again. Whilst I did not agree with labors abolishment of neg gearing. The libs are not much better for Aussies living overseas...

'Why would we ever return?' The Aussies facing a huge property headache

 

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

 

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.

 

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.

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

 

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.

 

Pays to have a good accountant who's across these issues
Wonder how many are unaware?

 

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.

 

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

 

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)

 

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.

 

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.

 

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.

 

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.

 

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.

 

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?

 

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

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 How's good is that?

 

Lets see......

 

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

 

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

 

Burn them at the stakes! Pitch Fork Mob