In the 2017 Budget on 9 May 2017, the Government announced a proposed change to the CGT main residence exemption as that exemption applies to foreign and temporary tax residents.  If enacted the announced change removed the CGT main residence exemption for foreign and temporary tax residents with effect from Budget night (9 May 2017).  For temporary and foreign residents owning a dwelling that was their main residence on Budget night, a transitional rule provided that they could continue to claim the exemption until 30 June 2019.

In August 2017, Treasury released an exposure draft of the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 with the exposure draft differing to the Budget night announcement in limiting the main residence exemption removal to foreign residents only. While the target of the change was foreign residents, the practical impact would largely have been on Australians living abroad as foreign residents who (before the proposed change) could claim the main residence exemption under the ‘six-year absence’ rule on their Australian residence. However, the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 introduced to the Parliament in October appears without notice or explanation to have dropped this measure. 

What has happened?  Submissions to the Treasury on the exposure draft legislation queried the proposed measure as the change would affect Australian citizens who become foreign residents for a period.

Has the measure been dropped permanently or will it reappear in a later Bill (perhaps with a different scope and reach)?

We await any further developments ...

To discuss this further or for more information please contact:

Neil Brydges
Special Counsel | Accredited specialist in Tax Law
Sladen Legal
M +61 407 821 157 | T +61 3 9611 0176
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia  
nbrydges@sladen.com.au

Sam Campbell
Associate / Business Law
Sladen Legal
M +61 423 515 454 | T +61 3 9611 0135
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
scampbell@sladen.com.au