Foreign residents in Australia will lose the existing capital gains tax (CGT) exemption on their main residence in the country from 1 July.
The impending deadline comes despite a long-running campaign to extend the current deadline.
The new regulation allows for one exception: for any foreign resident who experiences a "life event," the definition of which includes a terminal illness or if the real estate sale is because of a divorce.
The rules are essentially retrospective, as they can operate to deny the tax exemption on the increase in value of properties acquired since 20 September 1985, and not only on gains related to the period the owner is a foreign resident."
Only expats who have been foreign-resident for less than six years at the time of sale can qualify for the exemption.
Atlas Wealth Management is among the financial advisory firms that has been pushing for the current deadline for Main Residence Exemption Changes to be changed to later than 30 June (Main Residence Exemption transition period for those Australian expats overseas as at the 9 May 2017).
Atlas has argued that many expats have faced insurmountable obstacles that no one could have foreseen. Atlas pointed out that, although the bill was first proposed in the federal budget in 2017, Australian expats have only had since 12 December 2019 to make a fully informed decision as that was when the bill received royal assent.
With the implementation of Stage 2 Restrictions by the federal government, a ban on real estate auctions and open house inspections now makes it "almost impossible for an Australian citizen to sell their property within the required time frame," according to a statement on Atlas' website.
The situation means that, as reported by International Investment in February, thousands of Australian expats have until 30 June to sell their family homes or face being slapped with a hefty capital gains levy, after the Canberra government reversed its position for exemptions.
II wrote: "CGT tax exemption on [expats'] family homes is to be scrapped under the A$581m federal government plan. It is estimated that the change will hit the wallets of up to 100,000 Australians working overseas."
Deloitte Australia said on its website: "The rules are essentially retrospective, as they can operate to deny the tax exemption on the increase in value of properties acquired since 20 September 1985, and not only on gains related to the period the owner is a foreign resident."