Proposed changes to Capital Gains Tax

09 August 2017

Update

New Zealanders are not foreign residents, and are not captured by the proposed CGT changes. New Zealanders are Australian Residents as defined in the Income Tax Assessment Act.


14 May 2017

The 2017 Budget includes proposed changes amending tax laws around the Capital Gains Tax (CGT) main residence exemption. Currently when a person sells their main residence, the profit is not subject to CGT. What the 2017 Budget has proposed is that ‘temporary residents’ will have to be pay CGT on the sale of their main residence.

However, no Bill has been drafted, so it is known who constitutes a temporary resident for the purpose of the proposed tax law amendments. New Zealanders residing in Australia are generally considered permanent residents for tax purposes.

Certain professionals and individuals have assumed that SCV New Zealanders, permanently residing in Australia, will be classed as ‘temporary residents’ for the proposed tax changes because the SCV is a temporary visa.

It is very important to note that the definition of resident under tax law is not the same as definition under migration law. Even more importantly, there is no universal definition of a ‘Resident’ that applies to all Australian law.

Although the policy change may apply to New Zealanders, the Bill is yet to be tabled in Parliament let alone passed into law, so it is irresponsible for anyone to state that the proposed change will apply to New Zealanders.

Unless the individuals informing people that this policy will apply to New Zealander’s, have received information that the rest of us have not, they are in no position to be saying that this will apply to New Zealanders. Until we see the Bill, no one but the Government, and possibly officers within the Federal Treasury and ATO, know who this proposed policy will apply too.

Rather than being alarmist, we are currently making our own enquiries and will let our supporters know what the position is when we have further information.

If the proposed changes to the main residence exemption will apply to New Zealanders, we will address this with politicians and Governments officials along with the other issues around the proposed citizenship changes and the Education Reform Package.

Related

Are you an Australian resident for tax purposes? See Example 5 – New Zealander who decides to stay indefinitely.

Work out your residency status for tax purposes

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