Guide to capital gains tax 2020

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Capital gains tax changes for foreign investors

On 12 December 2019, the government passed amendments to the law for the capital gains tax main residence exemption for foreign residents. The changes will impact certain foreign residents.

For property held before 7.30pm AEST on 9 May 2017, the CGT main residence exemption can be claimed only for disposals that occur on or before 30 June 2020, provided other existing exemption requirements are satisfied. For disposal of property that occurs from 1 July 2020, foreign residents will no longer be entitled to the exemption unless any of the following events occur within six years of the individual becoming a foreign resident:

• the foreign resident, their spouse, or their child who was under 18 years of age, has a terminal medical condition
• the foreign resident's spouse, or their child who was under 18 years of age at the time of their death, dies
• the CGT event involves the distribution of assets between the foreign resident and their spouse because of their divorce, separation or similar maintenance agreements.

For properties acquired at or after 7.30pm AEST on 9 May 2017, the CGT main residence exemption no longer applies to disposals, unless any of the events listed above occur within six years of the individual becoming a foreign resident.

See also:

• Capital gains tax changes for foreign investors

Stapled Structures

New measures took effect from 1 July 2019 to address risks posed by arrangements involving stapled structures and to limit access to concessions currently available to foreign investors for passive income. A stapled structure is an arrangement where two or more entities that are commonly owned (at least one of which is a trust) are bound together, such that interests in them (for example, shares or units) cannot be bought or sold separately. The measures may change the rate of MIT withholding tax that is applied to trading income that is converted to passive income via a stapled structure or distributed by a trading trust.

For more information, see Stapled structures .

ATO references:
NO NAT 4151