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Last updated 16 June 2019

Capital gains tax changes for foreign investors

On 9 May 2017 the Government announced that Australia's foreign resident capital gains tax (CGT) regime will be extended to deny foreign and temporary tax residents access to the CGT main residence exemption.

This change will apply from 9 May 2017. For properties you held prior to 9 May 2017, you have access to the main residence exemption until 30 June 2019. The change is not law yet.

Expanding tax incentives for investments in affordable housing

On 9 May 2017 the Government announced it will provide up to an additional ten percentage point CGT discount for resident individuals who invest in qualifying affordable housing. This will increase the CGT discount to up to 60% for qualifying investors.

It is intended that this change will apply from 1 January 2018. However, this change is not law yet.

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Downsizer contributions and capital gains tax

A downsizer contribution allows people who are 65 years old and older at the time of making the contribution, to sell their home and make a contribution to superannuation based on the proceeds of the sale. This also applies to people who may otherwise be prevented from making contributions into superannuation due to:

  • age
  • work status, or
  • contribution cap restrictions.

There are various criteria to be eligible to make a downsizer contribution.

To make a downsizer contribution, the capital gain or loss from the sale of the home must be disregarded, in whole or part, because the property has been treated as your main residence (for the purposes of the main residence exemption for CGT). A partial main residence CGT exemption (for the purposes of the downsizer contribution eligibility) may apply in a variety of situations, including where the home:

  • was not your main residence for the entire period of ownership
  • was used to produce assessable income (in whole or part) for a period of time during the ownership, or
  • is on land greater than two hectares.

You may not have a capital gain or loss to disregard because, for example:

  • your home was a pre-CGT asset (that is, if it was acquired before 20 September 1985), or
  • your spouse owned the home that was sold.

If your home was a pre-CGT asset you can still make a downsizer contribution if would be entitled to such an exemption if your home was a CGT asset rather than a pre-CGT asset.

If your home that was sold was only owned by one spouse, the spouse that did not have an ownership interest may also make a downsizer contribution, or have one made on their behalf, provided they meet all of the other requirements

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