The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 2) Bill 2018 which lapsed on the calling of the Federal election, was reintroduced into the House of Reps on 23 October 2019 (with slightly changed name) – with one major amendment.

The original bill contained measures to deny the CGT main residence exemption to foreign residents which, controversially, also captured “Australian expats”.

For example, Jack and Jill purchase a home in Perth in 1998. They live there until they leave Australia in 2019 to live in Singapore. They become foreign residents for tax purposes. In 2022, they sell their Australian home. The proposed law will include the full capital gain, subject to the extent of the availability of the 50% discount, made on the sale in their Australian tax returns.

Proposed amendment
The proposed amendment will provide an exception to the original “denial” measures where a “life event” occurs during the period that a person is a foreign resident — provided the person has only been a foreign resident for a continuous period of six years or less.

These defined “life events” are:

  • Terminal medical condition — which requires that during the period of a person’s foreign residency, either they, their spouse or their child who was under 18 years of age is certified with a “terminal medical condition” (in terms of the relevant requirements in the Income Tax Assessment Regulations 1997).
  • Death — which covers the death of a person who is a foreign resident, their spouse or a child under 18 years of age during the period of the person’s foreign residency.
  • Divorce or separation — which requires a disposal or dealing in the main residence between the foreign resident and their spouse  in the event of divorce or separation or similar maintenance agreements (but only where such dealing would be entitled to CGT marriage or breakdown roll-over relief under Subdiv 126-A). Readmore