Expats worry about losing capital gains tax exemption

Australian expats are worried about being forced to sell their homes by June 30 this year, a Hong Kong business leader says.

Australian expats are becoming increasingly worried about being forced to sell their homes by June 30, unless proposed laws before federal parliament are scrapped, the Australian Chamber of Commerce in Hong Kong says.

The chamber’s chief executive, Jacinta Reddan, yesterday called on the government to scrap the proposal that would see many Australians hit with capital gains tax on the sale of their homes in Australia.

The measure, which removes the capital gains tax exemptions for non-resident Australians selling their family home while they are living overseas, was announced in the 2017 budget as part of a package of housing affordability measures.

Under transitional arrangements provided for in the law, people who bought their homes before the 2017 budget have been given until June 30 to sell their properties under existing capital gains tax rules.

The legislation was introduced into parliament early last year but remains in the Senate. It is estimated to ­affect as many as 100,000 Australians living overseas.

Ms Reddan said Australian ­expatriates were worried about being forced to sell their homes in a declining market despite the fact that the law had not passed.

She warned that the legislation could put added downward pressure on housing in Australia as ­expats rushed to sell their houses.

“For Treasury to continue to pursue this bill while markets are falling — with the Treasurer himself warning of the impacts of further cooling measures — is extraordinary,” she said.

Ms Reddan said expats were faced with the almost impossible situation of having to decide now whether to serve notice to their tenants, get their homes ready for sale and complete the transaction by June 30.

She called on the government to clarify its position on the legislation, which will lapse if it is not passed in the limited sitting days before an expected May election.

The situation was a “cause of real concern and heartache for Australians living overseas who are anxiously awaiting clarity”.

Ms Reddan said the legislation was “penalising Australians for taking a risk and gaining invaluable international experience — whether it be in London or Silicon Valley or Hong Kong — which ultimately makes the nation stronger and more nimble”.

Melbourne-based tax expert and advocate Robyn Jacobson, of TaxBanter, yesterday described the legislation as “draconian, retrospective and unfair”.

“The matter is critically ­important and time sensitive,” she said. “The start date for the legislation has already passed for those who cannot use the proposed transitional rule, and the June 30 deadline is fast approaching for those who can.”

Budget papers show the legislation is expected to bring in $580 million over four years.