Updates on Main Residence Exemption (MRE) for Foreign Residents
In the 2017/18 Federal Budget, the Australian Government announced changes that would restrict foreign residents from accessing the Main Residence Exemption (MRE) for capital gains tax. Initially proposed in a bill in February 2018, these changes faced delays and were only revisited after the Federal Election in April 2019.
Criticism and Amendments
The original bill was met with substantial criticism for its strict and retrospective approach, which lacked flexibility and adequate transitional measures. In response to the feedback, the government introduced minor amendments when they re-tabled the bill, including specific exceptions and extended transitional arrangements for foreign residents.
Transitional Grandfathering Arrangement
For CGT events occurring after 7:30 PM on 9 May 2017, the new rules generally apply. However, there is a transitional period for foreign residents who already owned a property before this date. If the property sale (CGT event) occurs on or before 30 June 2020, and the individual owned the property continuously from just before 7:30 PM on 9 May 2017 to just before the sale, they may still qualify for the MRE.
This transitional period was extended by 12 months from the original deadline of 30 June 2019, as initially announced in the 2017/18 Budget.
Need More Information?
Understanding the MRE and its exceptions can be complex. If you have questions or require further assistance, please reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or schedule an appointment through our live calendar.
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