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Oakmere(Newbie)Newbie
27 Feb 2025

I am planning to return to NZ where I am a citizen. I have lived and worked in Australia for the last 16 years. I am eligible to qualify for the NZ Transitional Residency which grants 4 years of tax free grace on most types of overseas tax including CGT. We have a rental property which will make a substantial capital gain if we sell. Does anyone know what the Australian tax position will be if by that stage we are NZ tax residents under the Transitional Tax Residency agreement.

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YellowPotato(Taxicorn)Taxicorn
27 Feb 2025

It would depend on your circumstances and your tax residency for Australian tax purposes. I don't think the NZ tax residency affects Australian tax. You can be dual tax residents.


CGT calculation for total capital gains shouldn't change.


What changes would be the CGT discount, you are entitled to CGT discount on the days as Australian tax resident during the ownership period. So if there were days you were foreign tax residents, you would need to dilute the discount. Generally it would be 50% x (days as Australian tax resident) ÷ (total days owned the property).


Your tax residency at the time you sell [day of contract] will affect which tax rates you pay. Australian resident tax rates, Foreign resident tax rates

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Most helpful reply

YellowPotato(Taxicorn)Taxicorn
27 Feb 2025

It would depend on your circumstances and your tax residency for Australian tax purposes. I don't think the NZ tax residency affects Australian tax. You can be dual tax residents.


CGT calculation for total capital gains shouldn't change.


What changes would be the CGT discount, you are entitled to CGT discount on the days as Australian tax resident during the ownership period. So if there were days you were foreign tax residents, you would need to dilute the discount. Generally it would be 50% x (days as Australian tax resident) ÷ (total days owned the property).


Your tax residency at the time you sell [day of contract] will affect which tax rates you pay. Australian resident tax rates, Foreign resident tax rates

Oakmere(Newbie)Newbie
27 Feb 2025

Thanks for your reply. Much was as I thought but thanks for pointing out the pro rata dilution of the CGT discount. I suppose I was really hoping that the 4 year Transitional Residency offered by NZ to encourage people to return, would mean I might not have to pay any CGT in Australia as that is sort of what it suggest in the wording about offshore tax

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NZ Citizen Returning to NZ, how is CGT treated on Australian rental property | ATO Community