Accountant can work out on the status of main residence exemption for Capital Gain Tax purposes. You can inform accountant about the travel taken during the year so the accountant can easily assess the main residence exemption status for foreign residents.
If foreign resident clients sold property after 30 June 2020, they are not entitled to the main residence exemption from CGT unless they satisfy the requirements of the life events test.
If a foreign resident taxpayer doesn’t meet the life events test, they aren’t entitled to any main residence exemption, even if they were a resident for some of the ownership period.
Only foreign residents who sold property prior to 30 June 2020 may be eligible for the main residence exemption.
Foreign residents and the 50% CGT discount
When a foreign or temporary resident sells Australian property, the 50% CGT discount can only be applied to part of their capital gain when either of the following occurred:
- they acquired the asset on or before 8 May 2012
- they had a period of Australian residency after 8 May 2012.
If either of these apply, you may pro rata a portion of the discount for the number of days the client was an Australian resident after 8 May 2012. This is done by calculating the total number of residency days, divided by the overall ownership days in the ownership period and calculating it as a percentage.
If the property is purchased after 8 May 2012 and remains a foreign or temporary resident for the entirety of ownership, they aren’t entitled to any CGT discount when they sell their property.
