Australia

Details

  • Service: Tax, International Executive Services
  • Type: Regulatory update
  • Date: 6/02/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Priscilla Tang

Priscilla Tang

Senior Manager, Tax

+61 2 9455 9021

ptang@kpmg.com.au

Removal of CGT discount for foreign residents 

by Priscilla Tang, IES Tax Specialist
 
The Australian Government announced on 8 May 2012 that the 50 percent capital gains tax (CGT) discount concession will not apply to foreign residents, for the portion of the discounted capital gain that accrues after 8 May 2012.

Legislative amendments to remove the 50 percent CGT discount concession for foreign residents (which has been extended to include temporary tax residents) have now been enacted and applies retrospectively to the disposal of CGT assets after 8 May 2012.

 

The amendments seek to apportion the CGT discount percentage, to ensure that the full 50 percent CGT discount is only applied to periods where the CGT asset was held:

 

  • prior to 9 May 2012
  • after 8 May 2012, when the individual is an Australian tax resident.

 

Individuals who make a discounted capital gain indirectly as a beneficiary of a trust are also caught by the amendments.

 

Australian taxpayers, who are foreign tax residents and temporary tax residents, should consider how the amendments may have impacted the 2012 and 2013 Australian tax returns that have already been lodged as well as any future impact on their assets.  Some considerations include:

 

  • whether or not to make the election out of the Australian 'deemed disposal rules' when becoming a foreign tax resident.
  • whether or not to obtain a market valuation of CGT assets as at 8 May 2012. Where the CGT asset is considered 'Taxable Australian Property', the taxpayer must obtain a market valuation to ensure that the portion of the gain that accrued on the CGT asset prior to 9 May 2012 remains eligible for the full CGT discount. Where a market valuation is not obtained, no CGT discount on gains that accrued before 8 May 2012 will be available at all.

 

If you would like to discuss this further, contact us or your KPMG IES tax specialist.

 

Share this

Share this

Tax

Our Tax Team assists with corporate tax, transfer pricing, indirect tax, international executive services, R&D incentives, superannuation and more.

International Executive Services

KPMG’s International Executive Services offers employment-related tax planning, compliance and administrative services, locally and around the world.