Part 1—Main residence exemption

Income Tax Assessment Act 1997

1  Section 118‑100

After “this exemption”, insert “may not apply if you are a foreign resident, and”.

2  At the end of section 118‑105

Add:

Note:          The exemption may not be available for the main residence of a foreign resident.

3  Paragraph 118‑110(2)(a)

Omit “I1, I2,”.

4  At the end of section 118‑110

Add:

             (3)  However, this section does not apply if, at the time the *CGT event happens, you:

                     (a)  are an *excluded foreign resident; or

                     (b)  are a foreign resident who does not satisfy the *life events test.

             (4)  You are an excluded foreign resident, at a particular time, if:

                     (a)  you are a foreign resident at that time; and

                     (b)  the continuous period ending at that time for which you have been a foreign resident is more than 6 years.

             (5)  You satisfy the life events test, at the time a *CGT event happens, if:

                     (a)  the continuous period ending at that time for which you have been a foreign resident is 6 years or less; and

                     (b)  you are covered by any of the following subparagraphs:

                              (i)  you or your *spouse has had a *terminal medical condition that existed at any time during that period of foreign residency;

                             (ii)  your *child has had a terminal medical condition that existed at any time during that period of foreign residency, and that child was under 18 years of age at at least one such time;

                            (iii)  your spouse, or your child who was under 18 years of age at death, has died during that period of foreign residency;

                            (iv)  the CGT event happens because of a matter referred to in a paragraph of subsection 126‑5(1) involving you and your spouse (or former spouse).

5  Subsection 118‑145(4) (example)

Omit “(again renting it out), at the end of which you sell the house.”, substitute “(again renting it out). You then move back into it for 3 years, after which you sell the house.”.

6  At the end of section 118‑155

Add:

             (5)  However, this section does not apply if, just before the individual’s death, the individual was an *excluded foreign resident.

7  Subsection 118‑170(4) (example)

Omit “You and your spouse own”, substitute “You and your spouse (who are Australian residents) own”.

8  Subsection 118‑178(2) (at the end of example 1)

Add “if, at the time the dwelling is sold, Susan is an Australian resident”.

9  Subsection 118‑178(2) (at the end of example 2)

Add “if, at the time the dwelling is sold, David is an Australian resident”.

10  Subsection 118‑185(2) (example)

Omit “You bought a house in July 1990 and moved in immediately. In July 1993, you moved out and began to rent it. You sold it in July 2000, making (apart from this Subdivision) a capital gain of $10,000.”, substitute “You bought a house in July 2020 and moved in immediately. In July 2023, you moved out and began to rent it. You sold it in July 2030, making (apart from this Subdivision) a capital gain of $10,000. At the time you sold the house, you were an Australian resident.”.

11  At the end of section 118‑185

Add:

             (3)  However, this section does not apply if, at the time the *CGT event happens, you:

                     (a)  are an *excluded foreign resident; or

                     (b)  are a foreign resident who does not satisfy the *life events test.

12  After paragraph 118‑195(1)(b)

Insert:

             ; and (c)  the deceased was not an *excluded foreign resident just before the deceased’s death.

13  After subsection 118‑195(1)

Insert:

          (1A)  For the purposes of a provision of this Subdivision that applies the table in subsection (1):

                     (a)  disregard paragraphs (a) and (b) in column 3 of item 2 of the table if, just before the deceased’s death, the deceased was an *excluded foreign resident; and

                     (b)  disregard paragraph (c) in column 3 of item 2 of the table if, at the time the relevant *CGT event happened, the individual was an excluded foreign resident.

Note:          The other provisions that apply the table include paragraph 118‑192(3)(b), subsection 118‑200(2), paragraph 118‑225(3)(c) and section 118‑260.

14  Paragraph 118‑195(2)(a)

Omit “I1, I2,”.

15  Subsection 118‑200(2) (after paragraph (a) of the definition of non‑main residence days)

Insert:

                    (aa)  if the deceased acquired the ownership interest on or after 20 September 1985 and, just before the deceased’s death, the deceased was an *excluded foreign resident—the number of remaining days in the deceased’s ownership period; and

16  After paragraph 118‑200(3)(c)

Insert:

            ; and (d)  the deceased was not an *excluded foreign resident just before the deceased’s death.

17  At the end of subsection 118‑200(4)

Add:

             ; and (c)  the deceased was not an *excluded foreign resident just before the deceased’s death.

18  At the end of section 118‑205

Add:

             (4)  Add to the component non‑main residence days in the formula the number of days in the period applicable under subsection (2) that the *dwelling was the main residence of an individual who:

                     (a)  owned the dwelling; and

                     (b)  was an *excluded foreign resident;

just before the individual’s death.

19  Paragraph 118‑210(5)(a)

Omit “I1, I2,”.

20  At the end of section 118‑210

Add:

             (6)  However, this section does not apply if, just before the deceased’s death, the deceased was an *excluded foreign resident.

21  Section 118‑215 (note)

Omit “Note”, substitute “Note 1”.

22  At the end of section 118‑215

Add:

Note 2:       The exemptions may not apply if the principal beneficiary of the trust is a foreign resident.

23  At the end of subsection 118‑218(1)

Add:

Note:          This section may not apply if the principal beneficiary of the trust is a foreign resident (see subsection (5)).

24  At the end of section 118‑218

Add:

             (5)  Despite subsection (1), this section does not apply if, at the time the *CGT event happens, the *principal beneficiary of the trust:

                     (a)  is an *excluded foreign resident; or

                     (b)  is a foreign resident who does not satisfy the *life events test.

25  At the end of section 118‑225

Add:

             (5)  However, subsection (2) does not apply if, just before the deceased’s death, the deceased was an *excluded foreign resident.

26  After paragraph 118‑227(1)(c)

Insert:

             and (ca)  the deceased was not an *excluded foreign resident just before the deceased’s death;

27  Section 118‑240 (note)

Omit “Note”, substitute “Note 1”.

28  At the end of section 118‑240

Add:

Note 2:       The exemption may not apply at all if you are a foreign resident.

29  At the end of section 118‑245

Add:

No exemption if you are an excluded foreign resident

             (3)  However, this section does not apply if, at the time the *CGT event happens, you:

                     (a)  are an *excluded foreign resident; or

                     (b)  are a foreign resident who does not satisfy the *life events test.

30  Subsection 128‑15(4) (cell at table item 3, column headed “For this kind of CGT asset:”)

Repeal the cell, substitute:

31  Subsection 995‑1(1)

Insert:

excluded foreign resident has the meaning given by subsection 118‑110(4).

life events test has the meaning given by subsection 118‑110(5).

Income Tax (Transitional Provisions) Act 1997

32  Before section 118‑195

Insert:

Part 2—Principal asset test

Income Tax Assessment Act 1997

34  Subsection 855‑30(4) (table item 1)

Repeal the item, substitute:

35  After subsection 855‑30(4)

Insert:

          (4A)  For the purposes of working out the *total participation interests held by the holding entity and its *associates under item 1 of the table in subsection (4), take into account:

                     (a)  a particular *direct participation interest; or

                     (b)  a particular *indirect participation interest;

held in the other entity only once if it would otherwise be counted more than once because the entity holding it is an associate of the holding entity.

36  Application of amendments

The amendments made by this Part apply in relation to CGT events happening at or after 7.30 pm, by legal time in the Australian Capital Territory, on 9 May 2017.