Removal of the capital gains tax discount for non-residents

The government will remove eligibility for the 50% discount on capital gains earned after 8 May 2012 by non-residents on taxable Australian property, such as real estate and mining assets. Non-residents will still be entitled to a discount on capital gains accrued prior to Budget night (after offsetting any capital losses), provided they choose to value the asset as at that time.

Media release

For more information, refer to the following media releases:

• Media release No 029/2013 by the Assistant Treasurer on 8 March 2013
• Joint media release No 034/2012 by the Treasurer and the Assistant Treasurer and Minister Assisting for Deregulation on 12 May 2012.

Legislation and supporting material

Draft legislation and Explanatory Memorandum was released on 8 March 2013. Submissions close on 5 April 2013.

Administrative treatment The ATO will accept tax returns as lodged during the period up until the proposed law change is passed by Parliament. Past year assessments will not be reviewed until the outcome of the proposed amendment is known. After the new law is enacted, taxpayers will need to review their positions back to the 2011-12 income year. Those taxpayers who return capital gains on the basis of the law as it currently stands will need to seek amendments. No tax shortfall penalties will be applied and any interest accrued will be remitted to the base interest rate up to the date of enactment of the law change. In addition, any interest accruing after the date of enactment will be remitted for taxpayers who actively seek to amend their assessments within a reasonable time of the enactment of the law change. Those taxpayers who return capital gains which accord with the changes will not need to do anything more. If a taxpayer anticipates the changes incorrectly, they will need to seek an amendment of their earlier assessment. If a taxpayer acted reasonably in anticipating this change, there will be no tax shortfall penalty and, if they actively seek to amend their return within a reasonable time, we will remit the general interest charge (GIC) attributable to the amendment to nil. Otherwise the full GIC will run from the date the change becomes law.

More information For more information refer to 2012-13 Budget - Federal Budget Paper No 2 (PDF 1.4MB) - page 31.