Assets acquired after 8 May 2012
Foreign and temporary resident individuals, including beneficiaries of trusts and partners in a partnership:
- are subject to CGT on taxable Australian property
- aren’t entitled to the full 50% CGT discount for assets acquired after 8 May 2012.
If the asset was purchased after 8 May 2012, and you were a foreign or temporary resident for the entirety of your ownership period, you aren't entitled to any CGT discount when you sell the asset.
You can claim an apportioned discount for the period you were an Australian resident if you purchased taxable Australian property after 8 May 2012 and you were both:
- a foreign resident when you sold the property
- an Australian resident for some of your ownership period of the property.
You can use the capital gains tax record keeping tool to help calculate the correct discount percentage.
Example: apportioned discount
Eliza purchased a rental property in 2013 in Australia while she was an Australia resident for tax purposes. She left Australia for the United Kingdom in 2016 and became a foreign resident. She sold the property in 2017.
Eliza can't claim the full 50% CGT discount. However, she can claim an apportioned discount for the period she was an Australian resident. She can use the capital gains tax record keeping tool to help her calculate her discount.
End of exampleAssets acquired on or before 8 May 2012
You may apply a discount to your capital gain on assets acquired on or before 8 May 2012. There are 2 methods, if both apply, you can choose which one to use:
- If you had a period of Australian residency after 8 May 2012, you may pro rata the discount for the number of days you were an Australian resident after 8 May 2012.
- If you were a foreign resident or temporary resident on 8 May 2012, you can use the market value method to calculate your discount instead of the pro rata method.
The easiest way to calculate your CGT discount is to use the capital gains tax record keeping tool.
See, Income Tax Assessment Act 1997 - Part 3-1-Capital Gains and Losses: General Topics, Section 115-115 Foreign or temporary residents - percentage for individuals for CGT discount formulas.
Example: property acquired before 8 May 2012
Violet is a resident of France. She has never been a resident of Australia. On 30 January 2011 she purchased a property in Australia for $1,000,000. On 8 May 2012 the property was valued at $1,100,000. On 1 July 2018 Violet sold the property for $2,000,000.
Violet has a discount capital gain from the disposal of the property of $1,000,000.
As Violet is a foreign resident, the discount percentage applicable to the gain may be adjusted.
Violet chooses to use the market value method. The discount percentage is worked out as follows:
Calculate the CGT asset's excess (which is the market value of the asset as at 8 May 2012 less the cost base as at 8 May 2012).
$1,100,000 − $1,000,000 = $100,000
As the amount of the gain accrued before 9 May 2012 of $100,000 is less than the total discount capital gain of $1,000,000 from the disposal of property, the discount will need to be adjusted. Violet uses the CGT record keeping tool to calculate her capital gain for the year as $950,000 with a discount percentage of 5% applied to the total gain of $1,000,000.
If the excess calculated was greater than the discount capital gain from the disposal, she would have been entitled to the full 50% discount.
End of example