Capital Gains Tax exemption
1 June 2017
The Bill to implement part of the Budget measures (CGT) was introduced yesterday. As we suspected, it clarifies that the measures will only prevent foreign tax residents from claiming the CGT main residence exemption, and not temporary residents.
New Zealanders are not foreign residents, and therefore not captured by the proposed CGT changes. In any event, and without getting into the intricacies of defined terms, New Zealanders are captured by the definition of Australian Residents in the Income Tax Assessment Act.
The above has been confirmed by the Treasurers office via our political contacts and separately via diplomatic contacts, that the proposed changes are not intended to apply to New Zealanders.
Use the Department of Home Affair's VEVO system to verify your residency status.
09 August 2017
The example below is taken from the Housing Tax Integrity Bill 2017 - Explanatory Memorandum.
Example 1.1: Residency status of working visa holder
James, a New Zealander, obtains a Special Category Visa and comes to Australia. He purchases a dwelling and establishes it as his main residence. He is a resident of Australia for taxation purposes while he resides here. James continues to reside in the dwelling for several years. He signs a contract to sell the dwelling, departing Australia several months later (to return to live in New Zealand). James was an Australian resident for taxation purposes when he signs the contract to sell it. As James was not a foreign resident he is entitled to the main residence exemption in respect of his ownership of the dwelling.