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December 2019:  Recent developments

CGT main residence exemption and foreign residents – Bill receives Assent

 

The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 received Royal Assent on 12 December 2019 as Act No 129 of 2019. The Bill, which had passed all stages without amendment, extends the foreign resident CGT regime to deny foreign and temporary tax residents access to the CGT main residence exemption as well as providing an additional affordable housing capital gains discount of up to 10%.

 

 For more information contact

 

Sean Urquhart
Director
Taxation Consulting

t +61 2 9251 4600 | d  +61 2 8264 0755 | f +61 2 9251 7138
nexia.com.au

 

November 2019: Key tax changes proposed:

 – Division 7A start 1 July 2020

The amendments were to apply from 1 July 2019, but will now apply from 1 July 2020 and will introduce:

  • a self-correction mechanism to assist taxpayers to rectify inadvertent breaches of Division 7A promptly

  • appropriate safe harbour rules to provide certainty and simplify compliance for taxpayers

  • simplified rules regarding complying Division 7A loans, including in relation to loan duration and the minimum interest rate

  • a number of technical amendments to improve the integrity and operation of Division 7A and provide increased certainty for taxpayers.

The proposed changes draw on a number of recommendations from the Board of Taxation’s Post Implementation Review into Division 7A.

 

 – Superannuation Guarantee Amnesty

 

Under existing law, if you’ve missed a payment or haven’t paid an employee’s super on time, you are required to lodge a Super guarantee charge (SGC) statement and pay the super guarantee (SG) charge on any SG shortfall amounts.

The SG charge includes a liability for the mandatory administration component of $20 per employee per quarter for SG Charge statements lodged.

On 18 September 2019 the Assistant Treasurer and Minister for Housing, the Honourable Michael Sukkar MP announced the proposed Superannuation Guarantee (SG) Amnesty (the proposed amnesty) and re-introduced the associated legislation into Parliament.

Until the proposed amnesty law is enacted by Parliament, we will continue to apply the existing law to the SGC statements you lodge with us.

 

 – Distributions of gains from a trust to a non-resident beneficiary

TD 2019/D7

 

Income tax: is the source concept in Division 6 of Part III of the Income Tax Assessment Act 1936 relevant in determining whether a non-resident beneficiary of a resident trust (or trustee for them) is assessed on an amount of trust capital gain arising under Subdivision 115-C of the Income Tax Assessment Act 1997?

 – Main residence exemption and non-residents

Your ‘main residence’ (your home) is generally exempt from capital gains tax (CGT). To get the exemption, the property must have a dwelling on it and you must have lived in it. You’re not entitled to the exemption for a vacant block.

If you were not a resident of Australia for tax purposes while you were living in the property, you are unlikely to satisfy the requirements for the main residence exemption.

If you are a foreign resident when a CGT event happens to your residential property in Australia you may no longer be entitled to claim the main residence exemption. There is a transitional period. To find out more, see Foreign residents and main residence exemption.

 

The above shouldn’t be relied upon as taxation advice.  If you want to know more, contact a Sydney accountant and tax adviser on 02 8264-0755

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