Saturday 22 December 2018

Expat Property owners in Australia left in limbo over proposed changes to Capital Gains Tax exemption bill - Queensland face additional challenges

Palaszczuk Morrison Trad non-resident CGT scalpel Labor Liberal Australian government



NO NEWS YET ON BILL REGARDING SCRAPPING OF CGT TAX EXEMPTION FOR NON-RESIDENT OWNING A PRIMARY RESIDENCE

No news it seems yet on the Morrison government's implementation of legislation regarding the CGT exemption removal for Primary Residence holders who become non-residents. All set to go by end of June 2019. I for one have sold off a property in anticipation of the bill being passed so as to avoid a future 'non-resident' Capital Gains tax at the Foreign Resident Rate (nil CGT discount allowed). They only grandfathered this until next year but many expats are still in extreme anxiety and uncertainty as to what to do - they cannot sell their properties because of the severe market downturn, but do not want to have to sell their properties when deemed non-residents either. But because of the market downturn expats are being forced to sell their properties at a huge loss, instead of holding. The ATO website still outlines the new laws but states:

"In the 2017-18 Budget, the government announced that foreign residents will no longer be entitled to claim the main residence exemption when they sell property in Australia. This change is not yet law and is subject to parliamentary process.

If the law is passed and you are a foreign resident when a CGT event happens to your residential property in Australia, you may no longer be entitled to claim the main residence exemption. This will apply to you:"

Capital-gains-tax International-issues - Foreign-residents-and-main-residence-exemption

Great that they can just keep everyone in a perpetual limbo. It may be the case the bill is never passed through the senate and I and several others have sold their properties for nothing and at a considerable loss of capital/loss. Extremely unfair. Was only implemented as part of Morrison (Treasurer at the time) and Turnbull's strategy to take the heat off the housing market - yet again Australian citizens are caught up in the net. Well. we all know how that's panned out with a massive housing crash enveloping Australia. There was no need and there is no need for this CGT exemption removal to continue. Forcing expats to ditch Australia and move cash into riskier assets classes to draw income streams.

As I have outlined before - owning a property in Queensland and being an Absentee under QLD Law, being a Non-Resident under Federal Law and owning a Primary Residence - you are set to the be worst off property owners in all of Australia. Triple taxes stacked against each and every one of us wishing to stay overseas with a damned 6 month travel limit.

Not to mention Foreign Resident income tax with zero tax-free threshold. Then there are local taxes you pay in the countries you are staying in plus usual taxes and other holding costs of your property/ies in QLD.


Wednesday 19 December 2018

2015 Palaszczuk boasts no Absentee Surcharge to lure foreign investors to Queensland - back-flips in 2017

QLD foreign investor investment property Labor government


How many Queensland Property owners here bought their properties after the Palaszczuk election win in 2015 and prior to the 2017 Budget?

I refer back to a post I submitted below dated 9 October 2018 where I discussed the Victorian 'Inquiry into the State Taxation Acts Amendment Bill 2015', that was released on June 2015 (report No 1, 58th Parliament). The report can be accessed from that post. It relates to examining the impact of the Absentee Surcharge and the reasoning behind it.

Evidence was provided by witness Craig Whatman that the newly elected QLD Premier Palaszczuk declared within a day of the Victorian government's announcement of their new Absentee taxes directed at Foreign Investors, words to the effect of
"Come to Queensland; we are not going to impose this tax" (see page 37 of report).

This comment made by Palaszczuk was directed towards Foreign Investors as an invitation to invest in QLD property, It was clear that she meant Queensland State government were not going to apply an Absentee Surcharge to investors.

I would like to see further evidence of Palaszczuk making this or similar comments, to corroborate witness Whatman's statement, because this is very damning against Palaszczuk.

As we know, in 2017 her Labor government back-flipped on that promise. It is undeniable that many foreign investors between Palaszczuk's 2015 announcement and before the 2017 Budget announcement, on Palaszczuk's word, would have invested into Queensland property instead of Victoria due to their Foreign Investor Absentee Surcharge.

I believe that those investors would have a valid legal case against the Palaszczuk government.

I believe that Australian citizens who bought into Queensland property as well after Palaszczuk's guarantee of "we are not going to impose this tax", would also have a case against the government.

Palaszczuk deceptively lured investors to buy into Queensland property, whilst all along there was a plan hatching to follow Victoria's lead in the 2017 Budget - but also add Australian Citizens to the Absentee Surcharge with the hiked Land Tax at the Absentee rate (reduced threshold).

Palaszczuk's alleged comment is effectively a guarantee of 'safe passage', an open invitation, an assurance of being able to invest into Queensland property without fear of financial loss, without fear of punitive taxes. It was a guarantee that there would be NO ABSENTEE SURCHARGE.

Anyone who bought on her words have been slapped in the face by this black widow and her webs of deceit and lies. She needs to be held to account. This particular piece of evidence needs to be reported.

UPDATED 21 MARCH 2019 - Link added below to article I published on Medium website:
2015-palaszczuk-boasts-no-absentee-surcharge-to-lure-investors-to-queensland-back-flips-in-2017

Saturday 8 December 2018

The 'Ordinarily Reside' test a risky bet to rely on for Absentee exemption

QLD ordinarily reside exemption 6 months


The 'ordinarily reside' test - do not rely on this as a way to seek an exemption from being an Absentee for more than 6 months.

I have been in 'discussions' with a few members on a Property Chat forum (not good for the blood pressure mind you!). One of the members appears to be a tax accountant states,

"Someone who can demonstrate being ordinarily resident in Australia is not subject to the absentee rules and the 6 month test isn't applicable ON APPLICATION - Form LT16. Merely being absent from Australia on a holiday is not a taxing concern even if its 6 or 7 months."
"All persons away 6mths + must apply and provide evidence for the Commissioner."

He has referred to the appropriate section of the QLD Land Tax Act which I am also familiar with - Section 31:

"If you have lived outside of Australia during the financial year, we will consider several factors to determine if you usually live in Australia, such as the reason for your absence and the time spent in and out of the country. If we are not satisfied that you mainly resided in Australia, you will be an absentee if you:
were away from Australia at 30 June or
have been away from Australia for more than 6 months in total during the financial year before 30 June.
31 Meaning of absentee
(1) An absentee is a person who does not ordinarily reside in Australia.
(2) An absentee includes a person who—
(a) can not satisfy the commissioner that he or she ordinarily resides in Australia; and
(b) when ownership of the person’s land is decided for this Act—
(i) is absent from Australia; or
(ii) has been absent from Australia for more than half of the 12 month period"

I have argued the problems experienced with trying to apply the 'ordinarily resides' argument to the LT16 and subsequent Objection lodged - both of which were rejected.
The OSR Commissioner is extremely strict in its application of this test and more likely than not the application will be rejected.

It would be at great peril to take a risk of hoping the OSR will agree to your 'ordinary residence' argument and waive your Absentee Surcharge & hiked Land tax. Not only that, you will need to report to the OSR upon your return and submit all documents to support your claim against the Absentee charges.

In my case my application was rejected - despite me arguing that Australia was my main residence. My downfall was that I spent my time in one country and had some mail redirected there for convenience. I was on a tourist visa - definitely not permanent and staying in temporary rented accommodation. The added complication of falling ill requiring hospital treatment and being certified as 'Not Fit to Fly' for 3 months was also a factor for me.
The non-resident test set by the Federal Government legislation is far more relaxed and caters for many different scenarios. I was not deemed a non-resident by the ATO but not for QLD.

So, yes there is a clause in the section to allow for people to be out of Australia longer than the 6 months, but the chances of being able to convince the OSR that you ordinarily reside in Australia is not guaranteed. And from current feedback it appears that rejections are the norm, not the exception.

Of course for those who are expats or workers residing overseas permanently then Absentee taxes apply anyway, even if you satisfy the resident test with the ATO.

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