Urban Development Institute of Australia (UDIA) welcomed the opportunity to provide our comments on the Non-Resident CGT paper, “Strengthening the foreign resident capital gains tax regime – July 2024” (Non-Resident CGT Paper).
We note, the current paper does not provide a lot of the necessary specifics around the proposals and so we reserve our position on the detail.
UDIA strongly supports a smooth transition to effective reform on Non-Resident CGT to ensure:
- the rules recognise our reliance on foreign capital and especially its unique role in establishing new/greenfield markets and projects in Australia where domestic capital is more risk averse;
- any new rules do not reduce the investment in infrastructure we need for liveable, sustainable cities, due to potentially extensive expansion of CGT tax for non-resident investors; and
- the rules operate to ensure there is a transparent, accountable and reviewable methodology for determining non-resident CGT tax payable that does not rely solely on one Government agency.
UDIA is broadly supportive of the concept of amending Australia CGT provisions to provide a more consistent set of outcomes, and it is vital that the proposals:
- contain an appropriate transitional regime;
- create an appropriate concessional outcome for renewables, other Green related buildings and projects, other than those which fall within scope of the green building MIT rules;
- provide for clearly defined outcomes which are not over-burdened with harsh, unworkable, integrity and reporting provisions; and
- do not result in the ATO becoming a final, decision making, regulator.
It is also important that the interaction of the rules with Australia’s double tax treaties be fully considered. As has been seen in other contexts, changes in law can lead to quite different outcomes under Australia’s double tax treaties (which are now also subject to the MLI).
Our submission provides some straight forward insights and can be downloaded at the download button below.