Bill denying non-residents main residence exemption passes Parliament

The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 made it through the Senate on Thursday and now awaits royal assent.

The measure removes the entitlement to the CGT main residence exemption for foreign residents in relation to CGT events happening from 7:30pm (AEST) on 9 May 2017, subject to an extended 30 June 2020 transitional date.

As a result, an individual who sells their Australian main residence and who is a foreign resident at the time of disposal (referred to as a “CGT event”) will no longer be entitled to the main residence exemption.

There is an exception to the new rules that allows foreign residents to continue to access the main residence exemption where the individual is a foreign resident for six continuous years or less and where certain life events occur during the period of foreign residency. These life events include a terminal medical condition, death of the spouse or minor child, or divorce or separation.

Who is most impacted?

The changes are mostly expected to impact Australians going overseas who sell their main residence at the time they are a foreign resident where a “life event” does not occur; after six continuous years, even where a life event occurs; or do not qualify for the transitional relief.