Expats based in Australia will now lose a property sale tax break.
London, UK (Pryce Warner International) August 8th, 2012 - Previously, all non-resident taxpayers received a 50% capital gains tax (CGT) concession when selling a property in Australia. This has now been removed by the Australian government, who have backdated the decision to apply from May 8th, 2012.
If a property is owned for more than one year, all profits accruing after May 8th, 2012 and up to the point of sale will be subject to taxation, rather than just 50% of the gains. However, Expats can still use the 50% concession on any capital gain built up before the cut-off point.
In order for an individual to be able to do this, they will need to get a certified valuer to obtain an independent market valuation of the property as at May 8th. As this is a rather convoluted process, it is likely that many Expats will decide not to bother with such a valuation and simply let go of the tax break.
Steve Douglas, managing director of Australasian Taxation Services, commented: "Make sure you give your valuer proper instructions. This is not a conservative bank valuation but rather a true optimistic assessment of the best value the property is considered to be worth. "Be sure your valuer understands this as it can make a big difference in your future tax position."
The move comes as the Australian government is clamping down on tax schemes generally. There are plans to scrap the living away from home allowance (LAFHA) from October 1st 2012. Under this scheme, non-residents have enjoyed tax-free perks if they maintained a home in Australia they were not permanently living in.
By Aneil Fatania
Pryce Warner International Group
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