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Brit_Lad(Initiate)Initiate
16 June 2022

Hello,

Thanks for this opportunity to ask a few questions:

  1. I hope to sell a property (house) I have owned since 1998 (the only one I have in Australia; I was born in Oz but now live in the UK since marriage). I want to understand how the double tax agreement that Australia has with UK works. If I sell the property, can I pay any capital gains tax to the British tax authorities direct and avoid paying them in Australia although I am Australian citizen, I now live in the UK and pay tax in the UK? If that is possible, please can you add any links to forms I would need to fill.
  2. If the above is not possible, is there any CGT discount for me to apply as I have owned the property for more than 20 years?
  3. How does the foreign capital tax withholding (12.5%) work in relation to Question 1?
  4. What is the minimum time a person must spend in Australia to be considered a resident for tax purposes? Is it 6 months?

I hope you can help answer these questions.

Thanks

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JodieR_ATO(Community Support)Community Support
20 June 2022

Hi @Brit_Lad,


If you own an Australian taxable property you'll be liable for CGT when you sell or dispose of the property. If you pay tax on it overseas you can put the information under foreign income tax offset, you can report 0 at Other foreign income label, then the amount of tax paid overseas. The FITO section will then appear. You report your capital gain or loss at the Capital gains and losses section on the return.


If you're a foreign resident when you sell the property, you can't claim any main residence exemption unless you meet the life event's test. For the CGT discount for foreign residents, you'll either be able to use the worksheet or you may not be entitled to a discount. Use the link for guidance on this.


The FRCGW is where the buyer will withhold 12.5% of the sale price if you don't supply a clearance certificate to them. You can look at eligibility for this from here. There's also a link to FRCGW variations on the webpage.


If you were to move back to Australia and sell the property as an Australian resident, there's residency tests to say whether you'll be looked at as an Australian resident for tax purposes. This is approx 6mnths.


You can look at the information under Tax treaties from here.

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JodieR_ATO(Community Support)Community Support
20 June 2022

Hi @Brit_Lad,


If you own an Australian taxable property you'll be liable for CGT when you sell or dispose of the property. If you pay tax on it overseas you can put the information under foreign income tax offset, you can report 0 at Other foreign income label, then the amount of tax paid overseas. The FITO section will then appear. You report your capital gain or loss at the Capital gains and losses section on the return.


If you're a foreign resident when you sell the property, you can't claim any main residence exemption unless you meet the life event's test. For the CGT discount for foreign residents, you'll either be able to use the worksheet or you may not be entitled to a discount. Use the link for guidance on this.


The FRCGW is where the buyer will withhold 12.5% of the sale price if you don't supply a clearance certificate to them. You can look at eligibility for this from here. There's also a link to FRCGW variations on the webpage.


If you were to move back to Australia and sell the property as an Australian resident, there's residency tests to say whether you'll be looked at as an Australian resident for tax purposes. This is approx 6mnths.


You can look at the information under Tax treaties from here.

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Brit_Lad(Initiate)Initiate
5 July 2022

Dear Jodie,

Many thanks for these responses.

I hope you do not mind if I ask about the residency tests.

Do you need to meet all of the tests or just one?

If it is only one, then it appears in theory that the 183 day test could apply to me. So if I was to live in Australia for 183 days to spend time with my family as I have not seen them since the covid lockdowns, I could sell my property during the 1 July to 30 June period and the ATO would treat this as my primary residency when I sell this sole property I have in Australia (which I bought back in 1998) and I would not be liable for capital gains tax.

Is that a correct interpretation of the rules? I would be grateful for your insight!


Another question from me if you can help me on this too. If I was unable to go to Australia and decided to sell this property while I lived in the UK. Would I need to obtain a valuation of my property for 8 May 2012 to apply for a CGT discount as I obtained this property in 1998? What sort of discount could I expect to see?


On the matter of the double tax agreement between Australia and the UK, it sounds like you do not have to pay CGT tax in the UK if I have paid the CGT tax in Australia--is that right? Your response was a little bit unclear for me.


I look forward to seeing your response.


Thanks again








JodieR_ATO(Community Support)Community Support
6 July 2022

Hi @Brit_lad,


If you determine you're a resident for tax purposes using a residency test then you can declare this on your return. You do not need to meet all residency tests to prove residency. If you sell the property as a foreign resident you won't be entitled to any main residence exemption unless you meet the life events test.


You also won't be entitled to a full CGT discount. You'll need to use the worksheet to determine what % of CGT discount you can apply.


If you pay CGT in Australia you'll need to check with the relevant UK taxing authority what your obligations are over there.

Brit_Lad(Initiate)Initiate
26 Aug 2022

Hello Jodie_ATO

Thanks for this very useful information indeed.

I would like to better understand the rules around CGT.

I bought this property in 1998 and the title deed is solely in my name.

Some 4 years later, I signed a private agreement with a sibling, giving them a 30% ownership stake in the property. I am still reviewing the validity of this document, but in the meantime, I would be most grateful for insight:

  1. As the title deed is in my name only@Jodie_ATO , would the capital gains tax burden fall completely on me from the ATO perspective? When I sell the property, I would need to give my sibling a share after the sale, but does my sibling have to pay CGT or would she treat this as a gift from me only?

Many thanks again for all your useful advice!


JodieR_ATO(Community Support)Community Support
1 Sept 2022

Hi @Brit_Las,


Apologies I didn't see this post sooner. In relation to your question, if legal ownership is 100% in your name then generally we'd expect you to declare 100% rental income and deductions in relation to the property. Along with declaring your capital gain or loss when you sell or dispose of the property.


There's also information under having an ownership interest where an individual may have a legal or equitable interest in a property. We may view it differently in certain circumstances, you can view this here.


If you want written confirmation on whether your sister would also be liable for CGT, you can contact our tailored technical assistance area. You'll just need to provide them with your specific circumstances, they may also request a copy of the document.

UKBS7resident(Newbie)Newbie
10 Mar 2023

dear @Jodie_ATO


I hope it is OK to jump in here rather than start a new question. (if not i apologise and will start a new thread) My wife and myself are planning to sell a plot of land in Australia. We lived and worked in Australia for 2 periods of 1 year and 2 years 3 months. 3 years after we left in June 2002 we bought a plot of building land in WA. Since leaving in 1999 we have lived in the UK where we are resident.

my questions are

  1. on the CGT discount for foreign residents worksheet referred to above there are the following terms: 'Market value of the CGT asset on 8 May 2012' and 'Unindexed cost base of the CGT asset at the end of 8 May 2012'. What is an unindexed cost base please and how do I go about establishing this and the market value for the asset on 8 May 2012 please?
  2. how do I go about establishing tax file numbers for my wife and myself to prepare ourselves for a tax return for our Australian CGT ahead of the sale of the land/plot.


AriATO(Community Support)Community Support
14 Mar 2023

Hi @UKBS7resident


Some assets are eligible for indexation. The cost base is adjusted by the rate of inflation. When asked for the unindexed cost base it's just the cost base without indexation. To establish market value at a point in time you can ask a professional in that area. If you need the value of land in WA then a property valuer can assist with that. Check our website about how to obtain market value.


When you were in Australia last time did you and your wife have TFN's? Those TFN's will still apply to you both. You can read more about how you can find your TFN on our website.

UKBS7resident(Newbie)Newbie
14 Mar 2023

@AriATO


many thanks - that's helpful


does this mean the unindexed cost base is what we paid for the plot of land or does the unindexed cost base include deductions for costs incurred up until8th may 2012


regarding finding our TFNs the link you gave requires logging in to myGov and linking that to the ATO - the latter process requires either an Australian mobile number /device or an Australian passport or visa - none of which we have - is there another way to proceed please?

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