Budget blues

For God’s sake, Wayne Maxwell Swan, will you just rack off!

Just take a look at what he has buried deep in the 2012 Australian federal budget:

“The Government will remove the 50% capital gains tax (CGT) discount for non-residents on capital gains accrued after 7.30 pm (AEST) on 8 May 2012.  The CGT discount will remain available for capital gains accrued prior to this time where non-residents choose to obtain a market valuation of assets as at 8 May 2012.”

This statement will have great impact on the amount of property bought (and held) by Australian expatriates and other tax non-residents.

The 50% CGTdiscount has previously been available where individuals have held assets for longer than 12 months.  The government now intends to withdraw this discount for non-residents, and honour the discount in relation to any existing accrued capital gains ONLY if the non-resident obtains a market valuation for the asset as at May 8, 2012.

We join those few yet to pick up on this change to inform any expatriates and offshore investors with investment properties here in Australia that they need to obtain a market valuation as soon as possible.  Failure to do so could be extremely expensive.

And thanks for the heads up Wayne – we got heaps of notice on this one.  The practicality is that many expatriates and offshore investors may (will more likely) not hear about this change until too late.

You guys look like you will sacrifice almost anything to achieve a token $1.5 billion surplus in 2012/13.

The latest research from Colliers found that foreign capital investment made up 60% of all investments in Australia’s commercial property markets in the first quarter of this year.  There was about $2.2 billion worth of foreign investment in Australian non-residential property in the first quarter, well up from $341 million in the same quarter last year.

When it comes to residential property across Queensland, overseas buyers purchased about $400 million last financial year.  Most buyers came from China (20%); then followed by South Africa (12%); United Kingdom (10%) and New Zealand (9%).  Close to half (47%) the property bought by foreign buyers in Queensland is on the Gold Coast, followed by Brisbane with a 22% market share.

Hmmm,Wayne……just what the Gold Coast needs hey, another good kick in the teeth.

Keep up the good work.

If you want to keep your comments private and confidential contact me directly on michael@matusik.com.au

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14 thoughts on “Budget blues

  1. Christopher says:

    Excellent post there Michael.

    I’m an expat living overseas, and this is the first I’ve heard of it, so thanks for shining the light on this.

    I have 2 investment properties in Australia which I bought 10 years ago. So should I go ahead and get an appraisal on these asap so that I can lock in the 50% discount on capital gains? And so from May 8, do I no longer get this 50% discount?

    Geez… this sure sucks. Maybe it’s time to move back to Oz.

  2. Ray Strong says:

    Thanks for that insight Michael. Do you know what would happen if the property is bought while overseas by an expat but they sell it on their return to Australia. At the time of sale they are no longer a non-resident would this entitle them to the 50% CGT discount then or is it determined by their status at purchase date.

    • Christopher says:

      I would assume it would be pro-rated. That is, you only get the 50% discount for the time that you hold the property as a tax resident.

  3. Len Geary says:

    Just sent this post to CNN Asia.
    Might get some air play and comments from plenty of expats up there.
    This Government really sucks, with their sly mishandling of everything.

  4. Colin Rhodes says:

    Thanks Michael. I am enjoying your posts, very informative. As a property investor in NZ, that has been looking at diversifying into Australia in both commercial and residential, this has killed it for me.

  5. Anthony says:

    Hi there, As a New Zealander that has lived here for coming up 12 years and calls Australia home. Would this still effect me? (Or people in my position)
    As a rule the only item a New Zealand resident can’t do in Aust. compared to a Australian resident is vote.

  6. Julie Martin says:

    Anybody got Clive Palmer’s mobile number …. i am sure he would get a press conference or three out of this missive.

  7. Peter Hales says:

    What is just as bad is the timing. We act for 5 overseas investors who bought in Brisbane in the early 90’s. They all bought at about $110K and 2 years ago the properties were worth $320K. So they would have got a discount on a gain of $210K. They have stuck with the properties which are now worth about $270K. So if they get a valuation now they can only protect the gain of $160K. When values get back to $320K they will be paying CGT on an additional $30K just because Swan chose a moment when the market is down to remove the discount. It’s dishonest and typical.

  8. thanks everyone

    i have got about 25 direct emails, many from expats today too – all pretty pissed off about the change and more so the lack of notice – all had no idea that such a change was announced, let alone coming

    i really cannot help you with any more detail – best to speak to a tax expert and one firm that seems to be up to speed on this – well at least is smart enough to make sure they are the first google entry when you type in “2102 budget & expat” or similar is Exfin

    visit http://www.exfin.com/australian-budget-2012

    all the best and fingers crossed that recent events in Qld are repeated at the national level

  9. Marc says:

    Swans a suck arse sneaky little wombat eared gecko.

    How many cock-ups do we have to endure before they’re booted?

    I’m gonna squat on deserted Lindeman Island Resort and enjoy the carefree lifestyle these guys so cavalierly throw away. Let them come and try throw me off – I’m gonna dig in and resist the bastards. It belongs to us all and they’re stuffing it up every day

    bahhhhhhhh – I’ve had enough mate

  10. Anonymous says:

    I still think everyone in Australia getting less because of the Gov spend money stupidly. Cover the hole they dig by getting money from other people. Carbon tax, cut this, cut that.. you name it. Making this move will only ask non tax residents (which the main property investors) not invest in Australia property market. Instead they should attract people to invest in Australia and make the economic stronger. Hopeless for having people to run our country with no brain…….

  11. caz07 says:

    Hell, why isnt someone shouting this out on radio, tv and the media? It was sheer luck I came across this. Will now be contacting all my overseas clients asap! Thanks for picking up on this Michael.

  12. David says:

    Why should people from China, South Africa, UK, NZ (and other Australians who decided to no longer be a tax paying Australian) benefit from Australian taxpayer subsidisation?

    • rob says:

      you should read a bit more about taxation agreements worldwide …we do pay tax on our profit and we invest in australia and help many australian families enjoy prime real estate we are givers not takers what about you ?

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