Capital gains tax poised for overhaul

taxation/capital-gains-tax/

24 February 2016
| By Daniel Paperny |
image
image
expand image

Australia's capital gains tax (CGT) regime will be overhauled following the introduction of two key legislative changes passed by Parliament.

Assistant Treasurer, Kelly O'Dwyer, yesterday announced the revisions as part of the 92 un-enacted tax and superannuation measures that the Government inherited from the Australia Labor Party.

She said the changes were expected to improve the integrity of Australia's foreign resident CGT regime, as well as help provide "certainty and clarity" for businesses entering into earnout arrangements.

O'Dwyer said the changes will allow payments under the earnout arrangement to be treated as part of the original value of the business assets for CGT purposes instead of CGT applying to the earnout itself.

"Voluntary compliance by foreign residents is extremely low," she said.

"Compliance action is difficult once the transaction has been completed as the proceeds of sale may have been transferred overseas."

As part of Tax and Superannuation Laws Amendment (Measures No. 6) Bill 2015, the new measures are as follows:

  • Amend the capital gains tax (CGT) treatment of earnouts; and
  • Create a withholding obligation to improve compliance with Australia's foreign resident capital gains tax regime.

Under the new measures, from 1 July 2016 buyers will also be required to "withhold and remit" to the Australian Taxation Office 10 per cent of their payment when they purchase certain Australian real estate from a foreign resident.

O'Dwyer said the foreign resident capital gains tax changes are expected to generate revenue of $330 million over the forward estimates.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months ago

Entireti has unveiled the new name for the AMP financial advice businesses that it acquired last year....

4 weeks 1 day ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

3 weeks ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

1 week 6 days ago

TOP PERFORMING FUNDS