Budget 2012 - Non Residents should arrange valuations on any Australian investment properties!

Valuations for Australian property

Update : On Friday, March 8 2013- some ten months after the budget announcement -  the Government has released an Exposure Draft outlining how these changes will apply and providing one month for consultation. We, or our sister site Exfin, will shortly provide details and more commentary. In short though this is another adverse tax change for expatriate Australians.

Buried within the 2012 Australian federal budget, is the following statement, which is potentially of great significance to Australian expatriates and other tax non- residents:

The Government will remove the 50 per cent capital gains tax (CGT) discount for non-residents on capital gains accrued after 7.30 pm (AEST) on 8 May 2012. The CGT discount will remain available for capital gains accrued prior to this time where non-residents choose to obtain a market valuation of assets as at 8 May 2012.

The 50% CGT discount has previously been available where individuals have held assets for longer than 12 months. The government now intends to to withdraw this discount for non-residents, and honour the discount in relation to any existing accrued capital gains ONLY if the non-resident obtains a market valuation for the asset as that May 8, 2012.

Expatriates and offshore investors with investment properties are strongly recommended to obtain a market valuation as soon as possible, except in those situations where they believe that no capital gain applies in relation to their property. A failure to do so could be extremely expensive.

If you would like to arrange for a valuation to be carried out by a national firm of professional valuers, Herron Todd White, please complete this Contact Form. You will receive a fee quotation in advance of any valuation being carried out.

Also, note that the above Budget statement applies to "assets" - we won't know until the enabling legislation is made available, but the change could affect the taxation of a range of assets, including shares, where owned by a non-resident. The impact could be potentially even more significant than suggested at first instance.

The substantial time that has elapsed since the Budget announcement engendered a hope that the Government has resiled from this change. In fact, latest news suggests that the ATO will issue an Exposure Draft, and how these changes will be administered, during the course of October.

We are very critical of the Government's lack of notice and approach in relation to this item - the practicality is that many expatriates and offshore investors may not hear about this change until too late.