In May 2012 Treasurer Wayne Swan announced a change to Capital Gains Tax for all Non-Resident taxpayers that will mainly affect Australian expatriates and foreign nationals owning property in Australia.
Under the old rules, anyone owning property in Australia and subsequently selling for a profit is liable for Capital Gains Tax on this profit. If they had owned the property more than 12 months, then half of this gain would be tax free, the remaining half taxable.
The change has proposed that all profits made after the 8th May 2012 will no longer be entitled to the half tax free concession.
Importantly this change only affects profits after 8th May 2012. Any profits prior to this date will still enjoy the 50% discount.
In order to establish the profits up to the 8th May 2012, we are meant to arrange a Sworn Valuation on our property at this date and that value will be used to establish how much of the future gain on sale will enjoy the discount.
I would not rush to arrange a valuation until such time as the final legislation has been passed through Parliament in Australia. We have made a submission to the Government to try and stop this occurring as logistically it will be difficult to administer and it may have a detrimental effect on foreign investment to Australia.
You can view our submission and join our On-Line Petition by visiting www.cgtchange.com
If the laws do come into effect, some important issues to consider include:
Are you intending to sell while living out of Australia?
If you do not think that you will sell the property until you are back living in Australia, a valuation may not be required and you will still enjoy the full 50% discount on your entire capital gain – including the period you lived out of Australia.
This is because the discount has only been removed for Non-Resident taxpayers, so if you have returned and become a Resident taxpayer once more, then you will receive the full discount.
Must Be Qualified Valuer
The Valuation must be by an appropriately qualified person and cannot be an “appraisal letter” from a local Real Estate Agent. It must be a Sworn Valuation.
We are arranging a bulk discount with Valuation groups, so if you would like some assistance on this email cgtchange@smats.net and we will ensure you have the proper valuation at a good price.
True Market Value
The instructions given to the Valuer are very important. This is not a conservative Bank valuation, rather a true optimistic assessment of the best value the property may be considered to be worth.
Be sure your Valuer understands this as it can make a big difference in your future tax position.
Don’t forget to join our fight to stop this change, we need all the help we can get to have the Australian Government see common sense and leave the tax system unchanged. Visit www.cgtchange.com for more information.
