Tuesday 25 September 2018

Australia’s trifecta of property taxes impacting offshore Australian citizens owning Queensland properties.

This is a copy of an article I published on Medium website 16 September 2018:

australias-trifecta-of-property-taxes-impacting-offshore-australian-citizens-owning-queensland

Queensland Labor’s Absentee ruling in 2017 combined with the Federal ‘Liberal’ government’s removal of Primary Residence Capital Gains Tax (CGT) exemption for non-residents in 2018 results in a trifecta of punitive taxes against Australian citizens owning property in Queensland (QLD).

This applies to those owners who are out of the country for over 6 months of a financial year (QLD Absentee time limit) and who fit the criteria under Commonwealth Legislation as a non-resident.

The property Tax Trifecta:

Absentee Surcharge — 1.5% of land value for any property with a land value exceeding $350,000 (QLD)
2. Land tax — charged at the highest corporate rate threshold for absentees (QLD)

3. Removal of Primary Residence Capital Gains Tax exemption for non-residents (Commonwealth)

Queensland Land Tax Absentee Surcharge Primary Residence CGT exemption Capital Gains Tax


Ordinary Australian citizens being punished as easy targets

They are sucking the financial blood out of Australians who for a multitude of reasons are overseas. The governments here have gone mad in a cash grab bonanza.

As we now know, ‘Absentees’ and ‘non-residents’ are seen as easy targets by the Australian governments. Those of us affected are not foreign nationals. We are Australian citizens, most of us whom have worked hard all our lives, paid our taxes and continue to pay. We are also not all wealthy with plenty of cash to service exorbitant tax bills. We merely hold property like millions of other Australians.

Liberal Scott Morrison was the Treasurer at the time under the command of the now deposed Prime Minister Malcolm Turnbull (the most Leftist Liberal leader to hold Prime Minister-ship in the conservative Liberal party).

They have created the ultimate nail in the coffin for many property owners — especially QLD property owners, now in a huge quandary as to decide whether or not to sell their properties before 30 June 2019 (deadline) or face non-resident CGT at Foreign Resident rates.

Many rely on an income stream from rent — often a self funded income comparative to a pension, and have life savings as well as Superannuation investments/payments tied up in the property.

These investments were planned and secured as per diligent financial advice for the long term based on legislation prior to the changes. Unraveling these changes to sell property because of the trifecta of property tax laws inevitably causes significant economic loss and economic disadvantage.

Morrison claims Liberal's changes are only a ‘scalpel’ compared to what Labor will do if they get in with their ‘sledgehammer’ approach. A pathetic response to justifying such a severe change to the legislation (Prime Minister Bob Hawke in 1985 implemented changes to the CGT laws but allowed Primary Residence exemptions to remain in place for non-resident Australian citizens — like the rest of Australians).

The mindset behind the scrapping of CGT Main residence exemption for non-residents is supposedly as part of the housing affordability measures implemented.

As reported by Joanna Mather in the Australian Financial Review (AFR) article dated 18 Dec 2017, ‘Scott Morrison credits ‘scalpel’ for Sydney house price fall’,

“ The Treasurer used Monday’s mid-year budget update to again claim credit for taming unwelcome exuberance in the property market with “measured” adjustments to macro prudential settings.”

What they fail to realise, or rather do not care to know about, is the economic fallout being caused to those affected.

The net was cast too wide and should never captured Australian citizens, many of whom had no valid impact on housing prices.

The intended targets were always against cashed up Foreign Investors, whom it was feared were artificially inflating the property market beyond the affordability of ordinary Australians. The problem is that those ordinary Australians include those who are now caught in this tax trap because of their offshore circumstances. We are being targeted in the same manner as Foreign Investors which is completely unfair.

Property downturn compounding the problem even more.

In a downturn Australian property market this 30 June 2109 deadline could not come at a worse time for non-resident Australian investors and home owners who need to now sell. People are now being backed into a wall by the tax trifecta. The window to sell now is closing and prices are falling causing an unfair disadvantage.

Queensland hammer you with increasing annual Land & Absentee taxes all the way until you have to sell.

In the meantime Aussie owning property in Queensland who are absentees need to service the rapidly increasing annual Land Tax and Absentee Surcharge.

Aussie expats, self funded retirees, long-term vacationers, people taking Long Service Leave, on Career Breaks, pensioners/retirees on lifetime dream trips, temporary off-shore workers, students/mature age professionals in offshore institutions, visiting family overseas in need, medically unable to return to Australia due to injury or illness, incarcerated whether by fault or otherwise — so many examples of why people can be overseas for more than 6 months in a financial year.

A six month time limit is such a narrow restrictive time band as well. As time goes on, the fallout from these taxes will become more and more apparent. More people will get caught up and suffer financial and psychological hardship😡.

Australia is becoming less and less desirable to invest. It is even hazardous to keep your main home to come back to live in when overseas for periods of time, due to the greedy and narrow visioned governments.

No concessions for Primary Residence CGT exemption despite owning (and even living in it) for long periods of time.

With the current brutal change to Capital Gains Tax, one could have owned and lived in their home for decades (Primary Residence), but one ‘non-resident’ event for being overseas for too long means that they are now no longer entitled to the CGT free exemption. A ‘Capital Gains Event’ has now occurred and is irreversible according to the Australian taxation laws. It can only be mitigated partly by re-establishing residency.

If you suffer hardship overseas and need to sell, you are in deep trouble. You are set for massive losses in Capital Gains Tax.

Even if one were to come back to Australia and re-establish their residency — first they need to convince the Australia government they have not come back merely to sell the property as a ‘resident’. Secondly, any period of non-residency will be taken into account and deducted from the sale as a non-resident Capital Gains Tax at the Foreign Resident Rate.

If you come back terminally ill and go straight to hospital then — warning. You may not be considered to have re-established residency and if you die in hospital, any beneficiary who receives the property and sells it will then need to pay CGT at the Foreign Resident Rate.

‘We Come from the Land Down Under’ — once a favourite song for Aussie expats abroad — replaced with bitterness and resentment to governments.

Go to any drinking establishment overseas housing Aussie expats and inevitably you would hear Men at Work’s famous hit single ‘Down Under’, a song that used to resonate with Australians being proud of their homeland and how fortunate they were citizens there. Now it is all too often a change to bitterness and resentment of Aussie expats being screwed by the governments in massive tax grabs making it impossible to live off any sort of investment to retire on.

An apt parody that comes to mind would be to change the lyrics of the The Men at Work hit single ‘Down Under’ lyrics to, “We come from the Land Down Under, where taxes flow and governments plunder”. No longer the lucky country for many now. Turning more and more into a Communist style socialist basket case.

QLD Land Tax Absentee Surcharge Capital Gains Tax Primary Residence Palaszczuk Morrison Turnbull


Another lyric, “Because we come from the land of plenty” is no longer applicable to modern day Australian colloquialism. More like, “We come from the land of empty”. No wonder we have had the highest turnover of government in Australian history. Australians we are being screwed and it is getting worse and worse.

No comments:

Post a Comment

Note: only a member of this blog may post a comment.

A $1 billion hit to the Queensland budget as property market slides

A $1 billion hit to the Queensland budget as property market slides A $1 billion hit to the Queensland budget as property market slides