Legislation to remove CGT main resident exemption delayed

Legislation currently before Parliament, the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 2) Bill 2018, proposes, among other things, to implement 2017-18 Federal Budget measures to remove the entitlement to the CGT main residence exemption for foreign residents that have dwellings that qualify as their main residence. Therefore, any such capital gain or loss arising upon disposal of a foreign resident's main residence would need to be recognised. The Bill had passed the House of Reps without amendment and is currently before the Senate.

The change to the main residence exemption is designed to ensure that only Australian residents for tax purposes can access the exemption, however it has proved contentious and concerns have been raised as to unintended consequences that will result. It is now understood that the Government will delay passage of the Bill to further consider its implications.