I recently sent a letter via email for the attention of Premier Palaszczuk. In my letter I outlined the special treatment granted to a Queensland property owner deemed an Absentee, whereby, although he did not meet the employment criteria of being an Absentee, he was able to be granted an exemption.

As a result I outlined my dire circumstances and although not meeting the exemption criteria either, I requested to be granted an exemption as well.

The Premier's office claimed that it was the area of the Deputy Premier Jackie Trad's office to deal with this matter.

But, the Deputy Premier then referred it to the Office of the State Revenue to respond instead. The Commissioner of State Revenue 'Elizabeth Goli' was tasked to respond to my letter.

Yesterday I received a reply letter. My request for exemption was denied.

In the OSR Commissioner's response she stated, "You have referred to the circumstances of another taxpayer who advised you that he was granted an exemption based on his personal circumstances, notwithstanding that he did not meet the requirements for an exemption. Whilst I cannot comment on the affairs of particular taxpayers, as the Commissioner of State Revenue, I am both obliged and committed to administering land tax in accordance with the Act. Where the Act provides for an exemption, this exemption will only be extended to those taxpayers who satisfy the specified legislative criteria. This ensures the legislation treats taxpayers equally, despite the variety of circumstances experienced by the individual taxpayer."

As you can see, by referring the letter to the OSR Commissioner, Premier Palaszczuk was able to abdicate her responsibility to respond to this request, to someone who does not have the power to grant exemptions and therefore can only state that they can only abide by the Act.

The Premier would of course find it uncomfortable to have to respond directly to such a request as she will be forced to outline why there was special treatment granted to someone. This may of course reveal that she has acted illegally if there is no provision to allow such exemption.

If there has been one known exemption, who else has been granted an exemption as well that is not entitled to according to the Land Tax Act?

I intend to respond, insisting on the Premier's response as well as referring this to the Ombudsman as a complaint.

I also believe that there should be an immediate inquiry into determining who has been granted an exemption, despite not being entitled to it.

My issues are: If there is special treatment being given to individuals, then why are they getting special treatment? Who are they? Are there conflicts of interest and/or linked associations to colleagues, friends or family members of the Labor Government?

We are all suffering from this horrendous double tax, which should be removed anyway. But I will not allow the government to conveniently 'pass the buck' when it comes to questions that could cause embarrassment and repercussions. We need to be all treated fairly.

If there is a provision beyond the Land Tax Act for exemption then we all need to know about it.

In my case, they think they can conveniently shirk responsibility to a bureaucrat of the OSR and a referral to Lifeline so as to cover their bases. Very disappointing. Like I have experienced in the past fighting another bureaucratic organisation, their strategy is to 'Stall, Starve, Suspend and Settle' - trying to wear you down until you give up and go away with any resolution in the complainant's favour as the very last resort.

Constitutional Law handled by QLD State Crown Law Office - representing the State

The Crown Law office in QLD deals with Constitutional Law and the legality of laws passed in QLD Parliament. They represent the State of QLD.

They have posted examples of legal challenges made against Acts passed in QLD.

Please see link below.

Crown Law QLD State link

Submission to Constitution Law Office Attorney General's Department

Here is the letter I have completed for submission to the Senior Counsel - Office of the Constitution of Law Attorney General's Department.  Acknowledgement to Facebook Group posters who already submitted their letters and provided copies in threads.  

________________________________________________

Dear Senior Counsel,

I request for you to refer to enclosed annexures outlining my dire circumstances as a direct consequence of the Queensland Land Tax and Absentee Surcharge amendments introduced by the Queensland Labor Government under the command of Premier Annastacia Palaszczuk. I am at my wits end and extremely desperate to seek intervention by the Commonwealth to deem this amended legislation unconstitutional and therefore unlawful.

This amended legislation was announced in the May 2017 budget and made retrospective to back capture absentees (as defined in the Queensland Land Tax Act) from July 1, 2016.

Uniquely, unlike any other other State in Australia that has implemented absentee surcharges, Labor decided to include Australian citizens in the definition of an Absentee, hence affecting people like me and others who own and hold a property in Queensland, who for myriads of reasons are overseas for more than six months of a financial year.

Not being an expert in the area of Constitutional Law, I apologise in advance for not being across the legislation in whole with the relevant nuances and complexities therein. But I wish to draw attention to the Queensland Land Tax Act and how this law has been implemented contrary to the Australian Constitution.

In essence, I believe that me and all others subjected to these taxes are being discriminated against and being treated unfairly and unjustly by the Queensland legislation. Referring to Section 117 of the Commonwealth of Australia Constitution Act, it is explained in an overview section on page xiii,

“Section 117 prohibits the Parliament of a State from discriminating against non-residents of that State. It provides, in effect, that a resident in, say, Victoria shall not be subject to any discrimination or disability in, say, Queensland unless the person would also be subject to that disability or discrimination as a resident of Queensland.”

I am hoping that this explanation includes extending that to the ‘non-residents’ who are also outside Australia at the time. If absentees can be included then this legislation is unfairly discriminating against them. Absentees are:

• Subjected to a much higher Land Tax rate than residents – which is calculated for absentees at a reduced threshold (from Land Valuation starting at $600,000 for residents, down to $350,000 for non-resident/absentees) and;

• Are subjected to an Absentee surcharge added on at 1.5% from threshold of $350,000.

Absentees are also subjected to the same range of numerous taxes, rates, fees and other running costs of holding a property that provide revenue to State and Federal Taxes. This is more the case for Australian citizens who have more obvious interconnections with Australia (than non-Australian citizens – foreign citizens) with savings, Superannuation, re-investments in Australia, financial supporting family members in Australia, etc.

The combined Land Tax and Absentee Surcharges well and truly exceed what a non-absentee resident would be paying in taxes. The amount of additional taxes charged to Absentees is totally disproportionate and grossly excessive.

In addition, the Land Tax and Absentee Surcharge are indexed to increase at the same percentage rate alongside increasing Land Valuations conducted and assessed annually by the QLD Department of Natural Resources and Mines.

The Queensland 2017 May budget was announced by Labor Treasurer at the time Curtis Pitt.

I refer to extracts quoted in the Brisbane Times news article titled, 'I would never have invested into Queensland property' by reporter Felicity Caldwell published online on 18 July, 2018:

• The budget papers say: "Absentee owners benefit from a high standard of services and infrastructure delivered and maintained by a broad range of taxes. The surcharge will ensure absentee owners of land make a further contribution. This will have no impact on Queensland residents.”;

• A government spokeswoman said it was Queensland’s longstanding position that absentees were subject to higher rates of land tax to account for the fact they were “generally not subject to the range of taxes used to deliver the high-quality services and infrastructure that ultimately contribute to growth in Queensland property values”. 

“These rates apply to people who do not ordinarily reside in Australia, including a person for more than six months ending on June 30, however there are also a number of exemptions for people working overseas,” she said.

These explanations to justify the amended Land Tax and Absentee Surcharge are flawed in that:

i) Absentees ARE generally subjected to the same range of taxes that non-absent residents are subjected to. I have outlined the range of taxes absentees are already paying. The only additional taxes I can think of that may not be collected by the Queensland Government would be for perhaps transport costs (whether that is public or private transport vehicle registration and relevant insurance whereby there is GST collected and whether or not the absentee uses those services in Australia anyway – their choice that should not even be part of the scrutiny used by government to determine if absentees pay enough tax), additional utility charges (electric, water, internet, telephone) that collect GST and local tax. However, absentees that have family members residing in their homes or are renting out investment property/ies would have tenants paying for those utilities, albeit connection rates and their subsequent taxes being borne by the absentee. There are several absentees as well – for instance Fly-in, Fly-out workers and periodic travellers, or who have family members still residing in their homes who would not disconnect services, would have vehicles registered and paying insurance as well.

ii) Absentees are paying additional taxes by way of the Land tax and Absentee Surcharge that well and truly grossly exceed any additional ‘ranges of taxes’ that they ‘may’ not be paying in their absence. The ‘generally not subjected to’ part of their rhetoric is a total falsehood used to hoodwink the Queensland public into buying their justification.

iii) Queensland Labor would be unable to provide evidence of the range of taxes that absentees are purportedly not paying in their absence that justifies the taxes that should only be aligned anyway to property – not to other tax revenue. I believe it is discriminatory for Labor to scrutinise what taxes an absentee may have been paying if in Australia instead. It is the democratic right for every citizen to spend their money how they deem fit and not be placed under the microscope of a government body to deem if they do or do not pay enough taxes, use particular services and utilities and spend their money in certain ways.

iv) Absentees may also reside in other Australian States and Territories outside Queensland, but own and hold a property in Queensland, therefore when in Australia any additional taxes being paid would be to the State/Territory that they reside in – on top of what they already pay in Queensland. The same applies of course for Queensland residents who own properties in other States and Territories in Australia who also do not pay additional taxes in those jurisdictions.

v) If a Queensland Australian citizen resident owning a property/ies in another Australian jurisdiction were to be absent for 6 months or more from Australia – those jurisdictions do NOT apply an Absentee Surcharge and increased rate of Land Tax. There is no Absentee surcharge for Australian citizens other than in Queensland. This is discriminatory and an unfair revenue gathering advantage taken by the QLD government.

vi) The ‘high quality services and infrastructure’ contributing to growth in Queensland properties is location specific. There would be many Queensland properties that will not benefit from infrastructure and services by ways of capital growth, because they are not in allocated catchment areas benefiting from that development and those services. This is a generalised comment that should not be used to warrant another excuse to impose these additional taxes. Regardless, the revenue collected by Queensland government was already pre-2017 budget being collected via the most relevant taxes (Commonwealth, State, Council).

vii) The ‘number of exemptions’ to the taxes are limited to only a small percentage of people who have specific employment criteria. Furthermore, there was no advance warning of this legislation pre-budget - so people already working overseas not meeting the criteria have been discriminated against as well. The stated undefined ‘numbers’ of exemptions being referred to would be insignificant compared to total absentees. The exemptions also fail to incorporate many circumstances whereby absentees through no fault of their own were already absent prior to the retrospective legislation being passed, having already significantly financially outlaid and committed to overseas movements and activities.

viii) It also fails to recognise those who for various reasons were and are unable to return within the 6 month ‘curfew’ period or who had already pre-booked/pre-planned such periods offshore. There are those who have for example (these examples are but a mere few of what would be an exhaustive list of possibilities but demonstrates real life issues):

- Are caring for sick loved ones or who are medically unfit unable to return themselves – or do so at their own peril;

- Have complex legal arrangements that are preventing them from returning on time;

- People suffering financial hardship and unable to return in time;

- People interned/imprisoned and hence unable to return within the 6 months;

- Retirees on long holidays already pre-booked and paid for, several already part way through their trips when the legislation was announced with no forewarning;

- People seeking rehabilitation overseas due to medical and psychological reasons;

- Employees who wish to take Long Service Leave, to take a career break from their jobs and travel and enjoy a period of life overseas. Some already overseas at the time when this legislation occurred and hit retrospectively too; 

- Or others taking up education pursuits or contract work – opportunities that could benefit Australia with improved skills and knowledge.

ix) What the legislation in effect creates is a massive disadvantage to all Queensland property holders who wish to take advantage of education and employment opportunities overseas. Their interstate partners in the rest of Australia now have the distinct advantage of not being bound to 6-month ‘prison sentences’ to remain in Australia and hence able to apply for and take up those opportunities. This is blatant discrimination against Australian citizens owning property in Queensland who do not meet the limited exemption criteria. Queensland property owners therefore are more inclined to forego such opportunities due to the excessive and unsustainable Land Tax and Absentee Surcharge rates for absentees.

x) Restricting the free passage and movement of Australian citizens to work, live, travel in countries outside Australia from time to time or for parts of their life is a democratic right that should not be subjected to punitive measures to punish you (which in effect it is doing). This is what Queensland Labor under the rule of Premier Palaszczuk has implemented. It does not ring true of a Democratic constitution, rather a Communist one. This is a very dangerous precedent that has been allowed to slip in, quite surreptitiously at the time (the Treasurer Pitt did not elaborate much about and the media failed to properly recognise the new amendments also affecting Australian citizens), that was made retrospective as well.

xi) There were no provisions to start the amendments to property owners holding past a particular date. The Human Rights of individuals have been taken away – with economic hardship with financial and psychological devastation as an impact. I do not understand why the Scrutiny committee that I believed would have been appointed to review this legislation allowed it to be passed in the first place. It is an atrocity of justice.

In my circumstances I believe I have been discriminated against, have been unfairly treated, have had my Human Rights violated by a government of Australia, have and still am suffering severe financial and psychological distress – damage caused by Queensland Labor government. I am now being forced to live in and out of a suitcase and the only option available to me is to split my time between Australia and overseas 6 months at a time, which is completely disrupting, costly, unrealistic long term and ruinous to my personal disability rehabilitation and convalescing goals. I am rapidly deteriorating in my health as a result.

The Queensland Labor government’s amended legislation is causing more harm than good. The fallout from this legislation is still not quantifiable in total yet, but it is obvious there are terrible outcomes for most people caught in this legislation. Over a year on and the victims are already piling up. It is only a matter of time there will be statistics – suicides as a result.

Disturbingly I must note that correspondence I received from the Property Council of Australia was that they have received communication from Queensland Labor who seemed to think that as an absentee we were therefore considered ‘rich’ and as such deserved to have to pay. In other words – to be punished.

This reveals a severe ignorance as to the various circumstances surrounding absentees, who are on the whole, not rich. And regardless of anyone’s wealth, this should not be a reason to implement such taxes, especially when the budget comments stipulated it was to ensure absentees paid taxes they generally were not subjected to (which of course is false as well).

I respectively request that action is taken to determine the legality of the amended Land tax and Absentee Surcharge legislation contained in the Queensland Land Tax Act as of 2017. I submit that it is unconstitutional. I request that if deemed unconstitutional that legal proceedings are commenced to deem the legislation illegal to be removed forthwith. I will stand as a witness if required.

I thank you Sir/Madam Counsel in advance for your time and assistance in this matter.

Link to the Attorney General's Department in Canberra: 

Attorney General's Department Canberra link  

UPDATE 20 JAN 2019:

I have just received a response from the Office of Constitutional Law Canberra. Unfortunately it is not good news. The response outlines that Queensland is able to exercise certain autonomy - Land Taxes being one of those administered by the State.  The other issue is that the Constitution "does not apply to people who are not residents of Australia or who are subject to disabilities or discrimination while they are out of Australia by the state of their residence when they are in Australia".  

If the person returns and resumes residency, but is then charged the Absentee Surcharge and Land Tax bills whilst back in Australia.  Is that an argument for discrimination under those circumstances? 

Many others do not have the circumstances that permit them to return twice a year to fulfill the non-absentee criteria.  It is disgraceful that Queensland is able to apply such punitive taxes.

Here is a copy of the letter: 

Dear Mr Lehn

Thank you for your letter of 4 November 2018 regarding the Land Tax and Absentee Surcharge amendments introduced in Queensland. I also refer to your inquiry submitted on this department’s website on 30 December 2018 following up on your letter.

I appreciate the time you have taken to bring this matter to our attention and apologise for the delay in replying.

Neither the Attorney-General nor officers of this department provide legal advice to the public. If you have legal concerns about any particular laws or have legal queries, you may wish to seek independent legal advice. However, the following general comments may be of assistance.

The Australian Constitution establishes a federal system of government, under which powers are distributed between the Commonwealth and the states. This arrangement provides states with a large degree of autonomy over their own affairs. The land tax laws about which you are concerned are state laws. As such, your concerns regarding their operation are best directed to the Queensland government as you have done.

You refer to section 117 of the Constitution. In its terms, section 117 prevents a resident of a state from being subject to certain disabilities or discrimination in any other state. It does not apply to people who are not residents of Australia or who are subject to disabilities or discrimination while they are out of Australia by the state of their residence when they are in Australia.

Thank you again for bringing your concerns to our attention.

Yours sincerely

David Lewis

Acting General Counsel (Constitutional)

Office of Constitutional Law

I implore all members and any other people impacted by the Queensland Land tax and Absentee Surcharge legislation to please submit a letter to the Premier Annastacia Palaszczuk MP. I have just submitted another letter outlining my dire situation. I know others are suffering greatly. Please don't be silent on this. They need to know how it is affecting us all.

Here is the direct link to the Premier's contact page:

QLD Premier Annastacia Palaszczuk contact page

Morrison Government to become a minority after Wentworth byelection seat won by Independent Kerryn Phelps

For those considering selling their property/ies due in part to the Liberal Party's removal of Primary Residence CGT exemption for Non-Residents:

Yesterday, 20 October 2018, the seat of Wentworth NSW fell to Kerryn Phelps - Independent, meaning now the Australian Liberal Party has become a minority government. Therefore any legislation that has not yet passed will be very challenging.

I am now uncertain as to what will happen to the removal of the Primary Residence Capital Gains Tax exemption for Non-Residents.
It may well be that the legislation will only be passed - whether in full or an amended version, until after the next election.

But as explained in previous post - for many of us we cannot hold off waiting for a decision to be made when the deadline to sell is by end of June 2019.

It seems for those who do not want to take the risk and wait, now is the time to sell pre-Christmas, with the market clearance rates dropping off after New Year. The clearance rates as they currently stand are already more challenging.

Plus the prediction of further house price corrections means holding off may mean further losses if you hold and wait too long for a decision and realise you still need to sell.

But a back-flip on the proposed legislation would mean many expats/non-residents/future non-residents would more likely not sell, ride the housing correction cycle and keep their property long term.

The problem with this legislation all along was that it was retrospective, whereas it should have protected those who had already bought properties prior to the budget. Now they have caused a whole series of problems, a lot of stress and uncertainty.

Those owning a Primary Residence in QLD of course are affected threefold with the additional corporate rate Land Tax and Absentee Surcharge to deal with.  With the increasing prospect now of the Australian Labor Party (ALP) winning the next election (which will more likely be held sooner now), Bill Shorten may attack property portfolios further with his proposal to remove negative gearing on investment properties as well as halving the 50% Capital Gains Tax Discount.  If you are a non-resident, QLD absentee and mortgage holder then you may be in for very financially challenging times ahead.

Sydney Morning Herald Article outlining repercussions of Morrison government now succumbing to being a minority:
wentworth-hiding-puts-morrison-government-on-course-for-general-election-catastrophe

HYPOCRISY OF AUSTRALIAN LABOR PARTY GOVERNMENTS REGARDING THEIR VIEWS ON RETROSPECTIVITY.

Australian & QLD Labor Parties cut from the same cloth but display opposing policy on retrospectivity and unintended consequences - hypocrisy.

(Article published on Medium website 20 October 2018 - hypocrisy-of-australian-labor-party-governments-regarding-their-views-on-retrospectivity )

The Australian (National) Labor Party and the QLD (State) Labor Party are effectively ‘cut from the same cloth’.

So why is it that both of the Labor Parties can be so opposing in certain policy views?

I refer to the recent article published 19 October 2018 by ABC reporter Nassim Khadem titled, “Expats could face large capital gains tax bills under proposed laws”. The article refers to the plight of expats who have been caught out by the Liberal government’s scrapping of the Primary Residence Capital Gains Tax exemption for Australian Non-Residents.

Link here: expats-face-large-capital-gains-tax-bills-under-proposed-laws

Chris Bowen ‘s expressed concerns over retrospectivity and unintended consequences

Australian Labor Party’s Shadow Treasurer Chris Bowen wrote to the then Treasurer at the time Scott Morrison saying that, while he supported the measure in principle, he was concerned about the “unintended consequences” it would have on expats, because of the retrospectivity.

Palaszczuk’s retrospective legislation and resulting unintended consequences

I now refer to the Palaszczuk led Queensland (QLD) Labor government and their Land Tax and Absentee Surcharge amendments in the 2017 Budget. They implemented retrospective legislation to capture the new Absentee surcharge backdated to the beginning of the financial year on 1 July 2016.

In other words, if you were outside Australia for more than 6 months before the legislation was passed, you were subject to the Absentee laws. Even if you did not even own the property yet, in the period you were overseas, they still regard you as an Absentee, and therefore still liable for the taxes.

There are many unintended consequences that have arisen as a result. Many people were caught unaware and have been financially devastated due to the extremely high taxes.

This is the absolute hypocrisy of the Labor governments and show that they cannot be trusted at all. Can Chris Bowen’s comments really be trusted as sincere concerns in the face of Premier Palaszczuk’s brutal and retrospective Land Tax & Absentee Surcharge laws?

What is Chris Bowen’s opinion on the retrospective QLD Land Tax and Absentee Surcharge on Australian citizens? And what does he think about the subsequent consequences of the amended laws? I would like to hear his comments.

It is more likely just a political point scoring attempt by Bowen with the hope/oversight there would be no policy link drawn between them.

Too late for many expats now already sold or selling their property as the deadline looms and selling opportunities reduce before proposed deadline

This is not to mitigate the Liberal government’s extremely poor form either with the way they have treated non-residents owning property as a Primary Residence, leaving them ‘hanging on a limb’ in a state of anxiety whilst still procrastinating over a Bill that is said to be most likely passed. The Australian Tax Office (ATO) believes so.

The deadline to sell your property is virtually ‘two minutes to midnight’. With the addition of falling clearance rates and a prolonged market downturn means that many have had to sell anyway.

Others like me are in the process of selling, already having outlaid thousands of dollars in preparation to sell. As a result, lives have been and are being up-heaved and disrupted.

If there were any reversal of Liberal’s proposed Bill from this point, it would be way too late for many of us. The damage has been done. This has been extremely poor treatment of Australian citizens, causing severe stress, both emotionally and financially. The negative repercussions for many are enormous.

It always seems to be the case that the governments in charge only focus on the revenue that can be raised and not the consequences. Or rather, they turn a blind eye to the latter. Both parties are guilty of this.

ABC NEWS article "Expats could face large capital gains tax bills under proposed laws"

This is a good article published online 18 October 2018 by business reporter Nassim Khadem, displaying the outcry of expats and others abroad who have been impacted by the Federal Government's removal of CGT exemption to Primary Residences for non-residents.
This of course is a triple whammy for those who also own a Queensland property as a Primary Residence (1), and are also subject to the Land tax (2) & Absentee Surcharge (3).

The severe anxiety this must be causing many Australians is obvious and is described in the article. The Federal Government is still procrastinating on this legislation as it is yet to be formally passed in Parliament, but for many, they have already had to make decisions to sell.

In the article it states,
"Shadow Treasurer Chris Bowen wrote to Scott Morrison when Mr Morrison was Treasurer saying that, while he supported the measure in principle, he was concerned about the "unintended consequences" it would have on expats, because of the retrospectivity."
- I find this hypocritical for Labor to state this when their State QLD Labor members did exactly this when they amended the Land Tax & Absentee Surcharge to tax Australian citizens, making it retrospective, plus causing severe negative unintended consequences. Chris Bowen should be having a serious talk to Palaszczuk.

Link to article is here: Expats could face large capital gains tax bills under proposed laws

To hold off selling now and hoping for any change will put many owners in a situation where they may not be able to sell their property in time before the deadline.

Also, the declining property market means that it is basically a case of selling now, because after the legislation is passed any property market upswing will be too late.

If Morrison was to back-flip on this legislation and scrap the changes, where does that leave those who have already sold up/in the process of selling?

It would be too late, having already caused financial losses, upheaval of living, retirement and working arrangements and causing others to have to invest the sales proceeds into riskier or lower income generating assets classes (for those relying on an income stream from investments).

Like the article describes, it also will have caused expats to abandon Australia, many of whom had decades of home ownership as well and had planned to return.

Personally, I am affected by both the Federal CGT exemption removal and the QLD LT&AS.

Property Council of Australia graph comparing Absentee Surcharge Land tax rate to non-Absentee rate - massive difference

The Property Council of Australia released an article on its website 5 July 2017 that reveals a graph that outlines how the new absentee rate compares to the company, trust and absentee rate prior to the Budget as well as the resident (individual) land tax rate. As you can see the Absentee rate rises sharply as the land value rises disproportionately higher than the standard individual rate.
QLD Labor expected to raise $20 Million from Absentees in 2017/2018 financial year. 😡

ABSENTEE LAND TAX SURCHARGE TAKES EFFECT

                                                 Property Council of Australia - graph 

                                                                   Blue line - Individual (non-Absentee rate)

                                                                   Red line - Company, Trust and Absentee rate before July 2017

                                                                   Dotted red line - Absentee rate from 1 July with the added 1.5% surcharge

Non-resident status Australian citizens forced into risky investments & uncertainty after removal of Primary Residence CGT exemption.

Main Residence Capital Gains Tax exemption removed for Non-Residents Australian citizens thanks to the Liberal Government under Malcolm Turnbull and Treasurer Scott Morrison.

In the 2017–2018 Liberal National Party budget, Scott Morrison, the then Treasurer, announced a raft of changes to be implemented. The leadership of the Liberal Coalition at the time was being run by the now deposed Prime Minister Malcolm Turnbull.

One of those changes that would cause severe repercussions upon Australian citizens abroad was the scrapping of the Primary Residence Capital Gains Tax exemption for Non-Residents.

Under the new law, any Australian citizen owning a property in Australia, regardless of how long they owned that property beforehand, if deemed a ‘non-resident’, will lose all Capital Gains Tax exemption when selling their property.

This new law does not take into account periods of previous ownership of property. Aussies who have for example spent a large portion of their lives in their family home, perhaps decades are not exempt.

For many retirees, they may decide to take off overseas for cost of living reasons, lifestyle, stay with other family and to enjoy their later years in another country, whilst renting out their property to help fund their self funded retirement life. It is in many cases a main income source and the sale of the property in the future will help secure survival and stability.

Others such as non-resident expats, may have taken up employment opportunities whilst keeping their family home to return to in the future.

As part of the Primary Residence requirements — non-residents, in fact any property owner who has nominated a property as a Primary Residence, was required to reside in that property every six years. This re-set the ‘clock’ again for another six years.

Under the now deposed Turnbull Prime Minister Leadership, the 2017 Budget has ruined the retirement plans of many non-residents/expats. It only requires one single ‘non-resident’ event to trigger that CGT exemption removal.

PROPERTIES A SAFE INVESTMENT FOR RETIREES — NO LONGER THE CASE

Properties have always been seen as a safe and solid investment class — a ‘bricks and mortar’ investment that is mostly low risk. It is a place to return to if needed and re-establish as your home, a place you can rent out and also to acquire capital growth over time.

Many owners have spent decades paying off mortgages to own their properties. Others have invested their life savings and Superannuation to secure a piece of property and land in their country.

What has happened now is those whose circumstances and freedom of choices have led them abroad for extended lengths of time to become a ‘non-resident’, are now left floundering in what is a huge quandary as to deal with the punitive changes implemented.

IMPLICATIONS:

Non-residents are now being forced to sell their property before the 2019 deadline date in order to still qualify for the CGT exemption. This is now one of the worst times to sell when the market is falling, putting those forced to sell at a massive disadvantage — potentially huge losses for non-residents. Decent Aussies forced to sell up and often losing their only property asset in Australia.
Non-residents who keep their property will now be subject to severe capital gains tax — that will be charged at the very high rate non-discount Foreign Resident Rate when they sell.
Yes that’s right, Australian citizens to be treated as Foreign Residents. This also means for those non-residents who die, their inheritance will also be subject to the same CGT that their beneficiaries will be charged with following the sale of the Estate.

Non-residents will need to abolish their offshore retirement and lifestyle dreams and return to Australia to re-establish residency status and mitigate the non-resident CGT period prior to selling.
For many this means resorting to the higher costs of living that they were trying to avoid, leaving friends, relationships, family, social network and any possible employment.

They will also often be resorting to a lower standard of life back in Australia due to cost of living pressures based on lower incomes. The psychological impacts are obvious with depression and despair at having to return to up-heave their lives to comply with a tax law and potential financial pressures.

Non-residents, upon the completion of the sale of their property before the 2019 deadline date now have the daunting task of having to somehow work out where else do they now invest the proceeds of the sale?
For many solely living off the cash proceeds of a sale will not see them through to their graves. This will cause many to then have to resort to riskier investment classes that are fraught with danger.

We are talking then about resorting to investments such as: into the share and currency markets, managed funds and other investment classes. Bank deposits will just not provide enough income stream. On top of all this are the obvious changes to tax implications and the inability for certain investments to not qualify for tax exemptions.

Non-residents who had previously set up their retirements based off financial advice and tax structuring around their property investment before the 2017 Budget, now have to unravel all of this.

On top of that will be the usual ruthless and often untrustworthy financial advisers and unscrupulous spruikers of various investment products that so many expats and retirees have had their lives ruined from before. The sharks will be circling to gouge the accounts of non-residents.

It is guaranteed that many non-residents/expats/retirees are going to be scammed and lose from this. It is inevitable that as a result this will cause severe psychological and medical problems and suicides from ruined lives.

Many non-residents who are retired/expats are also not financial savvy and only wanted to rely on their home/investment property for income. Many too old to now have to re-learn how to invest.

Many expats are now feeling the pain and pressure to sell. The question is why has Morrison and then Turnbull targeted a small minority of property owners who will have no impact on driving down housing prices.

All it is doing is causing stress and suffering and forcing many expats and retirees to offload their one solid link to Australia so as to apparently benefit someone else who can snap up their property for a bargain.

The other downside is that by losing a permanent place of abode in Australia, it causes the Australian Tax Office to determine easier that you are a permanent non-resident with no ties to Australia. This is problematic for those who may have only occasionally fallen into the non-resident category and trying to maintain residency status. Now it will be even harder to convince the ATO in the future.

It also means that Australian citizens returning from abroad who have been forced to sell their homes to avoid the full CGT, they will often not have a place to return to (unless they have family or friend who can put them up in a spare room temporarily etc).

They will be forced to seek accommodation if they can afford it. This will make many expats feel disenfranchised, betrayed and disconnected from Australia and may as a result decide to never return to Australia at all.

Queensland property owners — special note.

As my previous articles have already detailed, being an Australian Queensland property owner (with land value from $350,000), you are already restricted to only being allowed to be out of Australia for 6 months each financial year or face a massive annual Land Tax & Absentee Surcharge imposed by Premier Palaszczuk’s Labor Party. Therefore it is a trifecta of punitive measures to severely deplete your wealth, living and retirement prospects.

The combined effect just puts nails in the coffins for expats who are easy targets for heartless politicians, forcing massive loss of wealth and forcing people into financial and emotional distress with dire consequences.

I am afraid that the future of Australian politics and tax policies will probably only get worse for its citizens.

(Article also published on Medium Website)

As you may be aware, the Land Tax & Absentee Surcharge on Australian properties is applied in Victoria as well, however Australian (and NZ) citizens are exempt. In June 2015 a report (No, 1, 58th Parliament) was released titled 'Inquiry into the State Taxation Acts Amendment Bill 2015'. 

Inquiry into the State Taxation Acts Amendment Bill 2015

The inquiry was conducted at the Legislative Council by the Economic & Infrastructure Committee. The inquiry's intention was to look particularly at the likely impact of the Bill on housing supply & affordability. The Bill was passed.

So as to delve further into the reasoning for imposing the Land Tax & Absentee Surcharge on Australian citizens by the QLD Labor Government, I thought it helpful to see why Victoria imposed it upon Foreign investors.

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The Bill's objective for creating the Absentee Surcharge was outlined in Part 4: 

"Foreign investors do not pay local taxes (such as GST or income tax) over an extended period of time. These taxes are used by governments to provide services (such as parks, public transport, schools, etc) which can affect the value of a property. Witnesses from the Department of Treasury and Finance indicated that the purpose of the proposed surcharge was to ensure that foreign buyers contributed to the provision of government services."

During the public hearings witness Mr Michael Brennan - Economic Deputy Secretary, explained the justification for the Absentee Surcharge, 

"It is largely about ensuring that foreign investors who gain the benefit of the capital appreciation and price growth, particularly pursuant to state government investment in services and infrastructure, pay their fair share for those things. It obviously does have some bearing on housing affordability.

Both surcharges aim to ensure that foreign buyers are contributing fairly to the provision of government services. In Victoria government services are obviously funded by a wide range of commonwealth and state own source revenue lines, and local property owners contribute to many of these tax bases over an extended period of time and therefore carry a greater weight of the tax burden required to develop and maintain government services. Conversely, foreign buyers of real estate are generally limited to property-based taxes such as land transfer duty, land tax and, at the commonwealth level, capital gains tax and any tax on income earned in Australia, which may well be limited." (page 12)

He later added, 

"Both of the surcharges aim to ensure that foreigners and temporary residents contribute a fairer share to the provision of services that increase their capital growth. To the extent that either surcharge corrects for the implicit transfer from local taxpayers to foreign investors, this may remove some of the incentives at the margin for foreign investors to buy residential property in Victoria, and it may make local Victorian buyers relatively more competitive in the housing market. There may be, for example, a reduction in incentives for foreign individuals purchasing single investment properties or temporary residents purchasing homes." (page 12)

And again, 

"Mr BRENNAN—As I said at the outset, it is important to remember that the primary motivation is essentially the equity motivation, so it is to ensure that when foreign investors are purchasing property in Victoria and thereby moving forward over the longer term and benefiting from the investments made in services and infrastructure via capital growth, that they are effectively paying a fair share of that potential capital upside. 

As I say, that is the primary motivation, so it is less about discouraging foreign investment as ensuring that where foreign investment occurs, the foreign investor is adequately paying for the benefit that they will receive." (page 13)

COMMENT:

It is clear that Queensland Labor under Palaszczuk have copied and pasted this 2015 justification for imposing the Land Tax & Absentee Surcharge in Victoria into their own explanation speech, used by Treasurer Curtis Pitt. But QLD Labor extended it to include Australian citizens.

As I have explained in previous postings/articles - this justification is flawed because of the FACT that most Australian citizens who are absentees DO contribute to local taxes in many forms.

Most Australian absentees are inextricably connected to Australia in other financial ways such as through Superannuation, savings accounts and other investments - through which they are paying taxes.

Australian absentees cannot be grouped into the same category as foreign investors, which is why the Victorian government sensibly, respectfully and ethically did not include them in their Land Tax & Absentee Surcharge.

In respect to Australian absentees, the Property Council of Australia's Executive Director Chris Mountford said, "In some circumstances, they are being punished for investing foreign-earned income back into Queensland" (See article in the Brisbane Times - I would never have invested into Queensland property ). 

This is further evidence of how Australian citizens are linked to and contributing to the Australian economy and paying taxes.

Hypocritically, The Queensland Labor Government under newly elected Palaszczuk in 2015 is alleged to have declared within a day of the Victorian government's announcement of their new taxes, words to the effect of "Come to Queensland; we are not going to impose this tax" (as stated by witness Craig Whatman - see page 37 of report). 

As we know, in 2 years time she back-flipped on that comment, already having deceptively luring in many unwary investors into the trap of buying into Queensland property. They were then stung with Palaszczuk's version of the retrospectively applied Land Tax and Absentee Surcharge. If this was a company it would be charged with fraud.