Aussie expats go into battle over capital gains tax crackdown
The following article was published on Australian Financial Review on 20 April 2018.
expats go into battle over capital gains tax crackdown
expatriates are lobbying Prime Minister Malcolm Turnbull to overturn proposed
tax changes that will force them to pay hundreds of thousands of dollars in
capital gains tax if they sell their family home while working overseas.
powerful lobby of Australian business and education interests in Asia this week
warned the move was already making it harder to recruit staff and would damage
Australia's people-to-people engagement with Asia at a time when it was trying
to build a closer relationship with the region.
demise of the home ownership perk as part of wider measures to improve housing
affordability announced in last year's budget means foreigners would not be
entitled to a capital gains tax exemption on their main residence if they sold
the property while living overseas. The changes, currently before the Senate,
impact more than 100,000 Australians living and working offshore.
"I understand the
government needs to look at ways to kerb foreign investment but to hurt
Australians living offshore and penalising them for living offshore defies
logic," Jacinta Reddan, the chief executive of the Australian Chamber of
Commerce in Hong Kong, told the AFR Weekend.
"We are living in an increasing globalised world and the Asia diaspora is
an enormous benefit to the Australian economy. It is penalising Australians for
living and working offshore, whether it is Hong Kong, London or New York."
The chamber, which represents one of the largest concentrations of
Australian businesses overseas, is working with groups representing Australians
in other parts of the world to pressure Treasurer Scott Morrison to exempt
expatriates from the changes. Australians living
overseas have until June 30, 2019, to sell their primary residence in Australia
without being stung with CGT if they owned the property before last year's
the changes, if an expatriate made $500,000 on the sale of a property owned
over decades before returning to Australia, they could pay more than $200,000
people who return home to live in their property can regain CGT-free status
after a period, Ms Reddan said expatriates did not always have a choice about
when to sell if there was a divorce or illness involved or their parents passed
Reddan said Australian companies in Hong Kong had already expressed concern
about their ability to transfer staff to Asia under the proposed amendments.
Australian International School Hong Kong principal Mark Hemphill said the
changes meant the school would have trouble attracting Australian teachers and
feared it would lose enrolments, and even potentially close, if Australians
stopped moving to the region to work.
of our families may be affected by your decision and therefore we may lose
enrolments and the viability of our school's existence will be
jeopardised," Mr Hemphill said in a letter to Mr Turnbull.
Douglas, executive chairman of Singapore-based SMATS Group, which provides tax
advice to expatriates and foreign investors, said there were fears the move
would lead to more extreme measures such as watering down the tax-free status
for all Australians. He said the legislation would also impact Australians
living overseas who inherited a property if their parents passed away.
is so unjust, that even if you had lived in your home for 20 years, if you
happen to be living overseas for one month and sell the property while abroad,
all of the gains from the full 20 years become taxable, where normally it would
be tax free as your principal residence," Mr Douglas said.
a letter to Mr Turnbull, the chamber argued the move flies in the face of the
Coalition's Foreign Policy White Paper which talks about the importance of a
"globalised world of individuals" as it would force many Australians
to stay at home instead of working in the region.
its submission to the Senate on the issue, CPA Australia said its 163,000
members living overseas believed it was "unreasonable to effectively
penalise Australians" for moving overseas to work or for personal reasons.
Coalition argues its measures are a "scalpel" compared to Labor's
"sledgehammer" of removing negative gearing and reducing the capital
gains tax discount for all Australians.