International Newsflash Item – Removal of CGT discount for non-residents

Non-residents with Australian assets need to consider the impact of the Governments announcement in last weeks Federal Budget of the removal of the 50% CGT discount for non-residents on capital gains accrued after 7.30pm (AEST) on 8 May 2012. Previously, certain assets were exempt from capital gains tax and all non-exempt assets owned by the non-resident were subject to a 50% reduction in the capital gain on disposal of the asset where it was held for more than 12 months.

Those assets exempted from capital gains tax, most noticeably shares in listed public companies, are unaffected, and will remain tax free for non-residents.  However, for Australian taxable property the CGT discount will remain available for capital gains that accrued prior to this time where non-residents choose to obtain a market valuation of assets as at 8 May 2012.

Non-resident investors with asset classes effected by the change should contact us to arrange a valuation as at 8 May 2012, as the discount will still be applicable on a pro rata basis for the period of ownership.

There is no need to take action if investors hold asset classes unaffected by the new laws. We anticipate the changes will make listed equities, which remain CGT exempt for non-resident taxpayers, a more favourable investment class than, say, real property and other affected assets.

Anyone with any questions or concerns in respect of this, should contact our office.