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  • Changing residency

    If you become an Australian resident, or stop being one, the range of assets on which you pay CGT in Australia changes.

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    Becoming an Australian resident

    When you become an Australian resident (other than a temporary resident), you're taken to have acquired certain assets at the time you became a resident for their market value at that time.

    This does not apply to assets you acquired before 20 September 1985 (pre-CGT assets) and assets that were taxable Australian property.

    If you became a resident, the general cost base rules apply to any capital gains tax assets that are taxable Australian property.

    Ceasing to be an Australian resident

    If you cease being an Australian resident, or cease being a resident trust for capital gains tax (CGT) purposes, you're taken to have disposed of assets that are not taxable Australian property for their market value at the time you ceased being a resident.

    If you have any indirect Australian real property interests, or options or rights to acquire such interests, you're taken to have immediately re-acquired these assets for their market value.

    Changes to the law on 12 December 2019 may affect your entitlement to claim the main residence exemption on an Australian residential property if you:

    • are a foreign resident for tax purposes at the time you dispose of your residential property in Australia
    • inherited it from a foreign resident.

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    Exemption for temporary residents

    If you're a temporary resident when you cease to be an Australian resident, you're not taken to have disposed of any of your assets.

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    Exemption for short-term residents

    If you're an individual who was in Australia on 6 April 2006 and have remained here as an Australian resident since that date, you may be exempt from CGT if you cease being an Australian resident.

    You disregard the capital gain or loss if you were an Australian resident for less than a total of five years during the 10 years before you stopped being one, and either:

    • owned the asset before last becoming an Australian resident, or
    • inherited the asset after last becoming an Australian resident.

    Choosing to disregard capital gains and losses

    If you're an individual, you can choose to disregard all capital gains and losses you made when you stop being a resident.

    If you cease being a resident and you make this choice, those assets are taken to be taxable Australian property until the earlier of:

    • a CGT event happening to the assets (for example, their sale or disposal), or
    • you again becoming an Australian resident.

    The effect of making this choice is that the increase or decrease in the value of the assets from the time you cease being a resident to the time of the next CGT event, or of you again becoming a resident, is also taken into account in working out your capital gains or losses on those assets. The way you prepare your tax return is generally sufficient evidence of your choice.

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    Last modified: 01 Jul 2020QC 52303