GM Tax

Living in the UK
Disposal of Australian Property as non-resident

As a non-resident of Australia for tax purposes, you will be subject to tax in Australia on your Australian sourced income only or capital gains on an arising basis subject to any overriding provisions of the double taxation agreement.

When you sell your Australian property you must report the disposal on your Australian Tax Return in the financial year in which the disposal took place.

The disposal is also reportable on your UK Tax Return, if you are a UK resident, in the tax year in which the disposal took place.

Foreign resident capital gains withholding

Foreign resident capital gains tax withholding applies to disposals of Australian real property with a contract price of AUD $750,000 or more.  Where you, the seller, are deemed a non-resident of Australia, the buyer must pay 12.5% of the purchase price to the ATO as a foreign resident capital gains withholding payment.  Unless you make a variation claim to the ATO.  You can then claim a credit for the foreign resident capital gains withholding payment on your Australian tax return in the financial year of disposal.

  • For Australian tax purposes the cost base will be computed with reference to the value of the property on the date you acquired it (the date contract of purchase is signed).
  • If you acquired the asset after 20 August 1991 you may be able to make a claim for any holding costs for the period of time you lived in the property. Such as rates, land taxes, repairs, non-deductible loan interest and insurance premiums.
  • You can claim any improvement costs to the property which have not been fully expensed in your Australian tax return or claimed under depreciation or capital works rules and against rental income.
  • If capital works claims have been made these will need to be added back in the CGT calculation as tax relief has already been claimed.
  • If you owned your home for more than 12 months, then you are eligible to access the 50% CGT discount as an Australian resident. As a non-resident, after 8 May 2012 you are still able to claim a discount on a capital gain but the percentage is reduced for the proportion of time spent as a non-resident.
  • There are two methods of calculating the discount available to you. Market Value Method & Apportionment Discount Method you can decide which method to use.
  • When you sell or otherwise dispose of a dwelling that was your ‘main residence’ (your home), any capital gain is generally exempt from capital gains tax. This is called the ‘main residence exemption’, in which you are eligible for a full main residence exemption if the dwelling has been the family home for you, your partner and other dependents throughout the period of ownership.
  • However, changes were introduced effective from 1 July 2020 disqualifying this relief for disposals after 1 July 2020 for non-residents unless you satisfy the requirements of the life events test.

We at GM Tax provide fixed fee quotes for all tax returns and advisory work.

If you are leaving Australia or already living in the UK or have recently arrived in the UK – and would like a fixed fee proposal from a firm of UK & Australian tax advisors that understands the issues affecting new arrivals to the UK and individuals leaving and arriving the UK please complete our online enquiry via our home page or by calling a GM Tax office close to you.

Once again tax residency is fundamental to determine who has taxing rights over the Australian business profits.

For Sole Traders and Directors a person’s individual residency can affect the residency of the business.

If you are looking to do business in Australia I would recommend that you obtain professional advice to go through your options.

We at GM Tax provide fixed fee quotes for advisory work and tax returns

If you are looking to do business in Australia or have recently done business with Australia – and would like a fixed fee proposal from a firm of Australian tax advisors that understands the issues affecting expats living and doing business overseas please complete our online enquiry via our home page or by calling a GM Tax office closest to you.

GM Tax also offers the following services:

  • Tax planning advice and guidance with regards to your residency status in the UK, eligibility for split year treatment and also domicile status in the context of Inheritance Tax (IHT) planning.
  • Preparation of UK and Australian tax returns, with all returns submitted to HMRC or the ATO electronically where possible.
  • Advice on the tax position where a property in the UK is being let while a taxpayer is living overseas.
  • Assistance to ensure UK source income of those who are non-residents of the UK is properly taxed and is not taxed twice, or double taxed.
  • This last point is particularly relevant to those who have UK source income or capital gains which may also be subject to tax in the country in which the taxpayer is now resident.