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Kath_143 Nov 25th 2018 10:42 am

Introduction of Main Residence Exemption Tax 1.7.19
Hi everyone,
Are you aware of the new tax Main Residents Exemption Tax at 12.5% that you could pay if you sell your property whilst living abroad? It is on the Australian government website and there are many articles written on this.

I am am trying to move back to the UK to look after my father. I am trying to sell my home which I built, have lived in for 4yrs and paid taxes in Australia for 30yrs. If I don’t sell it before the 30th June 2019 I have an estimated tax exposure of $135k+. I am a single parent with two dependents and just want to do the right thing by my Dad.

I am trying to canvas federal parliament to make amendments to this tax by creating exemptions for people who have lived in their home and paid taxes. This is going to affect many expats and I know a number who are now extremely worried by this blanket calculation. I imagine they felt it a good idea to target those who just bought property as a foreign investment and have not thought of the many people who want to move overseas who live here and potentially want to sell their home whilst overseas.

We have limited time and it would be great if people were to write to their local MP’s to seek these amendments. Would be very interested in your thoughts. This tax can potentially ruin my chances of buying anything in the UK to help us settle properly,

Alan Collett Nov 28th 2018 12:24 am

Re: Introduction of Main Residence Exemption Tax 1.7.19
Methinks you may be misunderstanding the position.

This is a withholding tax for non-Aus residents who are selling property in Australia.

It is repayable once your tax return for the year of the disposal is processed if you have no CGT to pay on the disposal.

Best regards.

louie Nov 29th 2018 4:32 am

Re: Introduction of Main Residence Exemption Tax 1.7.19

Originally Posted by Alan Collett (Post 12600488)
Methinks you may be misunderstanding the position.

Is she? The 12.5% may be withholding tax but as far as the actual exemption itself, this page from the ATO website seems to confirm her view. And this one says:

"The government has announced that the main residence exemption will not be available to foreign resident vendors in the following circumstances:
  • For property held before 7.30pm (AEST) on 9 May 2017, the exemption will only be able to be claimed for disposals that happen up until 30 June 2019 and only if they meet the requirements for the exemption. For disposals that happen from 1 July 2019 they will no longer be entitled to the exemption
  • For property acquired at or after 7.30pm (AEST) 9 May 2017, the exemption will no longer apply to disposals from that date.
If the law is passed, this change will only apply if the person is not an Australian resident at the time of the disposal (the contract date). Their residency status in earlier income years will not be relevant. There will be no partial main residence exemption available in these circumstances".

So if Kath doesn't manage to sell before the later of her ceasing to be Australian-tax resident and 30 June 2019, it looks to me as if she'll be stung for tax on 100% of her capital gain. Seems remarkably unfair not to have a partial exemption available.

Alan Collett Nov 29th 2018 4:39 am

Re: Introduction of Main Residence Exemption Tax 1.7.19
Thanks Louie.

I was simply focusing on the withholding tax question - but I agree there is a yet to be legislated attempt by the Federal Government to tax non residents on the entirety of a capital gain, disregarding any period of occupation of a property as a main residence,

I very much doubt that the Government has the numbers to get this legislation through the Parliament, with fairly widespread opposition to the measure.

Agreed that a lobbying of MPs is a worthwhile exercise for all who are concerned.

Best regards..

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