Strengthening the foreign resident capital gains tax regime

Date: 23 July 2024 – 20 August 2024

The government announced a measure in the 2024–25 Budget to strengthen the foreign resident capital gains tax regime. This measure comprises 3 complementary elements to ensure that Australia can tax foreign residents on direct and indirect disposals of assets with a close economic connection to Australian land and natural resources.

The measure will also improve certainty for foreign investors on their Australian tax outcomes, by aligning Australia’s tax law more closely with the Organisation for Economic Co-operation and Development’s Model Tax Convention on Income and on Capital. The measure also aligns the treatment for non-residents more closely with the tax treatment that already applies to Australian residents.

The amendments apply to capital gains tax events commencing on or after 1 July 2025.

This consultation paper is seeking stakeholder views on specific implementation details of the Budget announcement. Following consideration of responses to this consultation paper, the government will issue and consult further on exposure draft legislation prior to introducing any legislation into parliament.

Further information is available at Treasury’s website.

 

Improving the foreign resident capital gains withholding tax regime

Date: 23 July 2024 – 5 August 2024

As part of the 2023–24 Mid-Year Economic and Fiscal Outlook, the government announced a measure to increase the integrity of the foreign resident capital gains withholding (FRCGW) regime.

This measure increases the FRCGW rate for relevant CGT assets from 12.5 per cent to 15 per cent and removes the current $750,000 threshold before which withholding applies for transactions involving either taxable Australian real property or an indirect Australian real property interest that provides company title interests.

These changes will apply to acquisitions of relevant CGT assets made on or after the later of 1 January 2025 and the commencement of this measure.

The government is seeking stakeholders’ views on the effectiveness of the exposure draft legislation and accompanying explanatory material implementing this measure.

Further information is available at Treasury’s website.

 

Comments are closed.