Main Residence Exemption Bill Passes Senate – Detour Ahead For Expats – after an exhaustive period that has caused much confusion and angst amongst Australian expats the Australian Senate today voted to pass the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 which will see the Main Residence Exemption entitlement removed for Australian expats.
Australian expats who already live overseas and currently own a property that was a former Principle Place of Residence (PPR) have now reached a detour in the road with respect to managing their property.
They will either have to decide to sell their property before the 30th of June 2020 to retain either a full or partial entitlement to the Main Residence Exemption or to retain the property until they return to Australia and elect to become a resident for tax purposes.
Whilst the stated aim of the bill is to improve housing affordability at no point has Canberra or Treasury officials outlined how they see this being achieved.
Leading specialists, including Atlas Wealth Management, have time and again highlighted the inadequacies of the bill and the punitive nature of the changes, which unfortunately was to no avail.
The changes to the Main Residence Exemption were first announced in the 2017/18 Federal Budget which was 940 days ago.
A small amount of comfort can be gained thanks to the lobbying efforts by ourselves and our colleagues who were able to halt the original form of the bill before it was passed and were able to have it amended to include the life event terms but the changes did not go far enough.
To learn more about the amended changes click here – Australian Expats Targeted Again Under Changes to Property Tax
The main concern that we have is the retrospective nature of the bill which potentially could trigger capital gains tax as far back as the 20th of September 1985 when the CGT regime was introduced.
Whilst some of the damage can be mitigated by the Australian diaspora seeking Australian expat tax and financial advice our concerns are for those Australian expats who are unaware of these changes and act on the assumption that the Main Residence Exemption is still in place for Australian expats.
With Australian expats spread throughout the world, and a large percentage of them owning Australian property, it is highly likely that the news of the changes will not filter through to them which could lead to a massive tax liability.
Now that the bill has passed both the lower and upper house we will await for it to receive Royal Assent.
Atlas Wealth Management will be holding a live webinar in January for Australian expats in all time zones to hear about the new changes to the Main Residence Exemption.