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Tuesday, 17 February 1987
Page: 1

Mr Keating —On 10 October 1986 (Hansard, page 1880) Mr Andrew asked a question without notice of the Acting Treasurer, Mr Hurford, concerning the capital gains tax legislation. The answer to the honourable member's question is as follows:

Under the existing provisions of the capital gains tax legislation, if a taxpayer ceases to be an Australian resident, he/she is deemed to dispose of his/her assets that would otherwise cease to be taxable under Australia's CGT (``ex-Australian assets'') and, accordingly, becomes liable for CGT on any accrued real gains on such assets. Examples of ``ex-Australia assets'' include shareholdings in Australian public companies of less than 10 per cent, ``movable'' assets such as jewellery and paintings which are not connected with a fixed business presence in Australia and all foreign assets that would be subject to CGT if the person were an Australian resident.

Following a review of the operation of these arrangements, I announced changes to the provisions on 23 December 1986. Under the new arrangements, a taxpayer, upon ceasing to be an Australian resident, can elect to treat all his or her ex-Australian assets as taxable Australian assets until the assets are disposed of or until the taxpayer resumes Australian residence status. A taxpayer may decide not to take advantage of the election, in which case the rules which were in force prior to the announcement will continue to apply.

This election will be an attractive option for a taxpayer who temporarily ceases to be an Australian resident, perhaps to obtain professional experience working in another country. It will not, however, be attractive to a taxpayer who leaves the country for an indefinite period because, under the election, capital gains which accrue during the period of absence would be subject to the CGT on realisation.

The revised arrangements apply to taxpayers who cease to be Australian residents after 19 September 1985.