Expats brace for tax changes by Canberra and Beijing
The federal government is facing growing calls to scrap or overhaul
controversial changes to capital gains tax (CGT) exemptions for Australian expats, but tax watchers say now is the time to plan ahead and avoid getting slugged.
Set to affect about 100,000 Australians living and working overseas, the changes would deny CGT exemptions for homes sold while the owner was outside Australia, a retrospective slug as far back as September 1985 for some owners.
The existing laws would apply for any property sold before June 30, 2019, provided it was owned before budget night on May 9, 2017.
Some experts have labelled the moves
a new death tax for expats who die overseas and the beneficiaries of their will.
HLB Mann Judd Sydney tax partner Peter Bembrick says Australians overseas should take careful steps to avoid bill shock from the ATO.
"It may sound like a dream come true — you've been offered a fantastic job and the opportunity to live in, say, London or New York or Singapore for a few years," he explains.
"The changes mean that anyone who moves overseas and rents out their family home, and then decides to sell the home back in Australia while they stay on overseas, will need to pay CGT on the proceeds of the sale. While these changes haven't yet been passed into law, they have the support of both parties and should be considered as inevitable."
Bembrick says the laws are a significant change from the previous "six-year absence" rule, which meant that if the home was sold within six years of moving overseas, it would be exempt from CGT.
The new rules could apply from July 1, 2019, but Labor has asked the government to reconsider in light of potentially unintended consequences.