Foreign Resident CGT Regime

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The government had announced that Australia’s foreign resident CGT regime would be extended to deny foreign and temporary tax residents access to the CGT main residence exemption in May 2017.

Following consultation, the government had also amended the change to the main residence exemption to ensure that only Australian residents for tax purposes could access the exemption. Thus, temporary tax residents who are Australian tax residents would be unaffected by the change.

A new Bill, Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019, was introduced into parliament on 23 October 2019.  The changes impact certain foreign residents as follows:

  • for properties held before 9 May 2017, the CGT main residence exemption will only be able to be claimed for disposals that happen up until 30 June 2020, provided they satisfy the other existing requirements for the exemption. For disposals of these properties that happen from 1 July 2020, at the time of the CGT event, they will no longer be entitled to the exemption unless any of the following life events occur within a continuous period of six years of the individual becoming a foreign resident:
    • either the foreign resident, their spouse, or their child who was under 18 years of age, has a terminal medical condition
    • their spouse, or their child who was under 18 years of age at the time of their death, dies
    • the CGT event involves the distribution of assets between the foreign resident and their spouse because of their divorce, separation or similar maintenance agreements.
  • for properties acquired at or after 9 May 2017, the CGT main residence exemption will no longer apply to disposals from that date unless certain life events (listed above) occur within a continuous period of six years of the individual becoming a foreign resident.