The Assistant Treasurer on Fri 8.3.2013, released for consultation exposure draft legislation and explanatory materials to remove the CGT discount for non-resident individuals on taxable Australian property, such as real estate and mining assets announced in the 2012-13 Federal Budget. The proposed measures will apply where an individual has a discount capital gain, including a discount capital gain as a result of being a beneficiary of a trust, from a CGT event that occurred after 8 May 2012 and the individual was a foreign resident or a temporary resident at any time on or after 8 May 2012.
In summary, the effect of the measure will be to: (a) retain the full CGT discount for discount capital gains of foreign resident individuals to the extent the increase in value of the CGT asset occurred prior to 9 May 2012; (b) remove the CGT discount for discount capital gains of foreign and temporary resident individuals accrued after 8 May 2012; and (c) apportion the CGT discount for discount capital gains where an individual has been an Australian resident and, a foreign or temporary resident, during the period after 8 May 2012. The discount percentage will be apportioned to ensure the full 50% discount is applied to periods where the individual was an Australian resident.
Importantly, where an Australian resident becomes a foreign resident, the amendments will only apply in circumstances where the assets are taxable Australian property, including where the individual has chosen to disregard any capital gains under CGT event I1 triggered by their change in residency status on making the election under s 104-165. In addition, the proposed measures will ensure capital losses will continue to be offset against capital gains and net capital losses may still be carried forward.
COMMENTS are due by 5 April 2013.
Source: Assistant Treasurer’s media release No 029, 8 March 2013
[LTN 46, 8/3/13]