My wife and I have been living in Australia for 12 years and are looking to sell our New Zealand investment property which we have owned for 13 years. We are not Australia citizens but we live and work full time in Australia. We both fall under the Special Category visa - subclass 444. If we sell our property in New Zealand from Australia will be be liable to pay the Australian government capital gains tax?
Hey @james_chris,
Selling your property in New Zealand and whether capital gains tax will apply comes down to your tax residency in Australia. If you're a tax resident, then capital gains tax will apply.
We've has this question asked on our forum before. You may like to check out our detailed response here.
Hey @james_chris,
Selling your property in New Zealand and whether capital gains tax will apply comes down to your tax residency in Australia. If you're a tax resident, then capital gains tax will apply.
We've has this question asked on our forum before. You may like to check out our detailed response here.
Kia Ora James,
New Zealanders are treated differently to other overseas migrants. When New Zealand citizens enter Australia using their New Zealand passport, they are issued a 'Special Category Visa' allowing them to remain and work in Australia, but not re-enter Australia if they leave (hence it is a temporary visa).
The Social Security Act definition of a resident is quite complex. However, most New Zealand citizens who have lived in Australia since before 26 February 2001 will be residents for the purposes of the Social Security Act.
A New Zealand citizen who migrated to Australia after 26 February 2001 (and entered on a special category visa) and has not applied for a permanent resident visa or Australian citizenship, would not be an Australian resident for the purpose of the Social Security Act. If they do not have a spouse that is an Australian resident for Social Security purposes, they will be deemed temporary residents for tax purposes.
That being said, you and your wife will not be subject to CGT on property sales in NZ as long as you and your wife remain citizens of Atearoa only.
Cheers,
Nina
Hi @james-chris,
Check out your residency for tax purposes and CGT and let us know if you have any further questions. We don't look at the social security act to work out your residency.
I've found that the information on this subject (on the more general subject of whether 444 visa holders living in Australia are exempt from declaring overseas income on their Aus tax returns) is extremely difficult to find.
Firstly, and just to confuse us even more, there is a difference between type of residency (permanent, temporary) for CITIZENSHIP purposes, versus residency for TAX purposes.
There are multiple articles on the web stating that NZ citizens living in Australia with special category visa status (444) in 'most' cases do not have to declare overseas income in their Australian tax returns (apart from income you earn from employment or services performed overseas).
And in the same or other articles there is a warning for such people to watch out if they are considering applying for Australian citizenship, especially if at the time, they hold overseas assets such as property. Because what you were (knowingly or unknowingly - likely the latter as I think most kiwis living in Australia aren't being told this information) previously exempt from declaring in your Australian Tax return (regarding overseas income) will change as soon as you are granted Australian citizenship. Though, I am still a little confused about this point - does the change happen earlier i.e. once you become a permanent resident (and if yes, see next point)?
However (adding another layer of confusion), many (I think it depends on how long you have lived here for) 444 visa holders living in Australia are now considered permanent residents for CITIZENSHIP purposes -
"New Zealand citizens holding an SCV are considered permanent residents for citizenship purposes"
See https://immi.homeaffairs.gov.au/citizenship/become-a-citizen/permanent-resident
One would think that to seek clarification on this issue, this information should be easily found on the ATO site as this is all about TAX residency status (which impacts tax requirements and tax exemptions).
@AnitaATO it should be easy to work out if you are a temporary resident for TAX purposes on the ATO site but it isn't (and the calculators are not sufficient for this particular issue).
Update:
I found this on the ATO site (see info under Temporary residents):
@AnitaATO could you please confirm that this section is about working out your TAX residency?
And do you have to fulfil both conditions (under 'Temporary residents') in order to be considered a temporary resident for tax purposes?
Secondly, if someone fulfils both conditions i.e. they hold a temporary visa and they (and their spouse) are also NOT *Australian residents within the meaning of Social Security Act 1991, then does this mean they are temporary residents for tax purposes?
And how do temporary residents for tax purposes complete their Australian tax returns if they have have received overseas income (excluding income you earn from employment or services performed overseas )?
I assume that they simply do not have to declare it. Is this correct?
*For anyone that is trying to work out if they are an Australian resident 'within the meaning of Social Security Act 1991', here is the answer:
Hi @RochelleB
Yes. That section talks about temporary residents and how you'd be able to determine you're considered one.
Yes, you'd need to meet both conditions.
Yes, other foreign income and capital gains don't need to be included in the income tax return.
I know I'm a little late to the party but there is a lot of confusion for NZers on a non-protected SCV. I hold a non-protected SCV, living in Australia for a number of years.
Firstly the ATO reponses are correct in that residency is different under the social security act than it is for tax purposes. They (ATO) have their own definition which can be found on their website (admittedly this may not have been easy to find at the time of the original posts). Basically, in my case, as I hold a non-protected SCV, I am an Australian resident for tax purposes BUT (and it is a clear BUT), I am also a temporary resident because I hold a temporary visa (the non-protected SCV) and am not an Australian resident within the meaning of the Social Security Act. So being a temporary resident has its own variations under the general Australian resident for tax purposes rules.
So in some of the ATO responses where they say "if you are an Australian resident for tax purposes then you are subject to CGT", you also need to determine if you are also a temporary resident, in which case you may not be subject to CGT on the NZ property
To answer the original question, if you and your wife are non-protected SCV holders then you may be considered temporary residents (but also still considered Australian residents for tax purposes) and are not subject to Australian CGT on your NZ property. As far as I am aware NZ property is not taxable Australian property and does not need to be declared. This is an advantage of not becoming an Australian citizen or permanent resident of Australia whilst enjoying living in Australia.
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