CGT rules for non-residents

CGT rules for non-residents

Non-residents are only subject to Australian CGT on Taxable Australian Property (TAP).

TAP includes:

  • direct and indirect interests in real property situated in Australia
  • business assets used in an Australian branch
  • an option to acquire any of the above
  • a CGT asset elected by an individual to continue to be subject to Australian CGT after they cease to be an Australian tax resident

Shares in Australian resident companies are not TAP (unless the company holds real property). Accordingly, a non-resident does not generally pay capital gains tax in Australia on the disposal of shares.

While Australian resident individuals pay tax on only 50% of capital gains they make on assets held for more than a year, since 8 May 2012 this CGT discount no longer applies to capital gains made by a non-resident on their TAP. Transitional measures allow non-residents to value TAP held at 8 May 2012 and apply the 50% discount to the gain that had accrued to that date.

An important planning point for those migrating to Australia is that they become subject to Australian CGT on their worldwide assets from the date they become a permanent tax resident. Advice should be sought at that time, and obtaining valuations of some assets when becoming an Australian tax resident may be prudent.

*Correct as of April 2015

*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this article, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under professional standards legislation.

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