Carolyn Griffin, Director Edney Ryan Chartered Accountants

Foreign residents and Australians who have lived abroad may be affected by recent changes to the capital gains tax (CGT) discount.

This will have implications for many of our Expat clients, who will not fully realise the capital gains tax discounting expected upon sale of a property.

Previously if you had a capital gain, for example from the sale of an investment property, you may have been able to claim a 50% CGT discount.

Following the tax law changes, foreign or temporary residents, and Australian residents with a period of overseas residency, may no longer receive the full discount, rather the level of CGT discount will be determined by a number of criteria including:

  • whether the CGT event occurred before or after 8 May 2012,
  • the number of days foreign residents had a period of Australian residency,
  • number of days Australian residents had a period of foreign residency,
  • the duration of time the investment was held pre- or post- 8 May 2012.

Generally speaking the 50% CGT discount is pro-rated for the time spent as an Australian resident after 8 May 2012.

However there are some complicating factors, and we would encourage you to seek accounting advice specific to your situation. Give us a call on +61 2 9908 9888 for advice.