Capital Gains Proposed Changes

ByRick Schafer

Has your accountant alerted you to the proposed changes brought down in the latest Federal Government Budget? In the 8th May 2012 Federal Budget the Government proposed changes to tax laws that affect non-residents (even if they are Australian Citizens).

The ICA (Institute of Chartered Accountants) has issued this statement:

‘Please note that the Government will remove the 50% CGT discount for non-residents on capital gains accrued after 8 May 2012.

In other words, for non-residents who have investment property in Australia, when the property is sold in the future resulting in capital gains, the 50% discount (i.e. only 50% of the capital gains is taxed when the property is held for more than 12 months) on the gains that accrue from 8 May 2012 will be removed.

Any gains that accrued before 8 May 2012 are still eligible for the 50% discount. Therefore, if the gains that accrue prior to 8 May 2012 are substantial, it is worthwhile to consider undertaking a contemporaneous valuation of the property as at 8th May 2012, in order to ascertain the appreciation of the value of the property from the date it was purchased to 8 May 2012, so that the portion of the capital gains that is still eligible for the 50% discount can be determined.

The valuation also serves to provide supporting documentation for the capital gains that accrue prior to 8 May 2012, in the event that the ATO challenge the calculation of the discounted capital gains in the year when the property is disposed of.’


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