Tuesday, May 18, 2021

Where’s it at?** Capital gains tax and non-resident beneficiaries

Following recent posts it is worth remembering that historically, non-resident individuals could access the 50% capital gains tax (CGT) discount on capital gains on the disposal of Australian real property or shares in land rich entities, provided that there was an ownership period of more than 12 months. 

However, for any capital gains made after 8 May 2012 by a non-resident disposing of a taxable Australian asset, regardless if the asset was owned by the individual or via a trust, there is no access to the 50% CGT discount. 

The 50% CGT discount is still available for any capital gains accrued, but not crystallised prior to 8 May 2012, although an independent valuation is likely to be required. 

Trustees of trusts with non-resident beneficiaries will need to be particularly mindful of issues such as the following: 
  1. having a mixture of capital gains on taxable and non–taxable property when distributing to a non-resident;
  2. if a beneficiary becomes a non–resident after 8 May 2012 and the relevant asset disposed of was acquired prior to that date; and
  3. ensuring the benefit of accessing the 50% CGT discount on accrued gains as at 8 May 2012 by obtaining a valuation.
** for the trainspotters, the title today is riffed from the Beck song ‘Where’s it at’. View hear (sic):