Guide to capital gains tax 2017

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What's new

Foreign resident capital gains withholding payments

The foreign resident capital gains withholding regime applies to transactions entered into on or after 1 July 2017.

A 10 percent withholding obligation will apply to the disposal of:

• taxable Australian real property with a market value of $2 million or more
• an indirect Australian real property interest
• an option or right to acquire such property or interest.

Where the vendor of these Australian assets is a foreign resident, the purchaser must pay 10 per cent of the purchase price to the ATO as a foreign resident capital gains withholding payment.

A vendor can claim a credit for the foreign resident capital gains withholding payment the purchaser has made to the ATO by lodging a tax return for the relevant year.

See New legislation for more information about foreign resident capital gains withholding:

• obligations
• exclusions, and
• exceptions.

Transitional CGT relief

Transitional CGT relief is available for funds to provide temporary relief from certain capital that might arise as a result of individuals complying with the new transfer balance cap and Transition-to-Retirement Income Stream (TRIS) reforms, both of which commenced on 1 July 2017. It applies to certain CGT assets held by a complying SMSF at all times from 9 November 2016 to 30 June 2017.

CGT relief is not autmatic; it must be chosen by a trustee for a CGT asset. If CGT relief is chosen, the trustee will need to advise us in the CGT schedule on, or before, the day they are required to lodge their fund's 2016-17 income tax return. The decision is irrevocable.

For more information regarding transitional CGT relief, see LCG 2016/8 Superannuation reform: transfer balance cap and transition-to-retirement reforms: transitional CGT relief for superannuation funds.

Norfolk Island residents

From 1 July 2016, CGT applies to CGT assets acquired by Norfolk Island residents after 23 October 2015. If you were a resident of Norfolk Island on 23 October 2015 you may be able to disregard any capital gain or loss made on a CGT asset you held at that time. For more information see Other exemptions - Norfolk Island residents) and Norfolk Island tax and super - Capital gains tax .

Early Stage Innovation Company Investors

From 1 July 2016, if you invest in a qualifying early stage innovation company you may be eligible for a modified capital gains tax (CGT) treatment, under which you may disregard capital gains on qualifying shares that are continuously held for at least 12 months and less than ten years.

If you are an investor who acquired newly issued shares in a qualifying early stage innovation company and you make a capital gains on these shares from a CGT even that takes place in 2016-17, then that gain will be subject to ordinary CGT treatment.

You must disregard capital losses made on your investment in a qualifying early stage innovation company that is held for less than ten years.

Small business restructure rollover

Small business restructure rollover applies to transfers of active assets from one entity to one or more entities on or after 1 July 2016.

The rollover applies to the transfer of active assets that are CGT assets, trading stock, revenue assets or depreciating assets. For more information, see: Small business restructure rollover

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 applies from the date of announcement.

Properties held prior to this date will be grandfathered until 30 June 2019. Legislation is being developed for this measure. For more information see: Capital gains tax changes for foreign investors

ATO references:
NO NAT 4151