Kiwi concerns over Australian CGT

Kiwi expats are concerned about another Australian policy change which could affect them. Photo: Lynn Grieveson.

Kiwi officials are talking to their Australian counterparts in an attempt to assuage fears expats could be hit by a significant capital gains tax across the ditch.

As part of a range of housing measures in Australia’s recent Budget, foreign and temporary tax residents will lose access to the exemption from paying a capital gains tax (CGT) on their main residence.

People who owned their home before the announcement can sell it before June 2019 without paying the CGT.

OzKiwi chairman Tim Gassin told RNZ the tax could mean Kiwis lose up to 50 per cent of the profit from selling their home.

While most Kiwis living in Australia were not classified as foreigners, some could be considered as temporary tax residents - who were also required to pay the CGT.

“What we're really trying to determine is, did [the Australian government] actually think this through? Was this intentional or have Kiwis just been caught up in what's really a policy that is supposed to be targeting foreign property investors, rather than people who are based here?” Gassin told RNZ.

Labour leader Andrew Little said the policy was another blow to Kiwi expats, following recent controversy over changes to immigration and education policies.

“They’ve contributed hugely, they’ve worked their butts off for Australia and they get treated the way they do and it’s no wonder that more and more Kiwis over there are thinking: ‘Gee, this is not a friendly-looking government, it’s not really in line with the Anzac spirit that we expect’.”

Discussions with Australia

Foreign Minister Gerry Brownlee said the Government was talking to Australian officials about the intent of the CGT, but it was too early to say that Kiwis would be affected.

“Well I don’t know whether or not Kiwis are caught in their net at all - there is no legislation at the moment, so the OzKiwi position is a little premature.”

Kiwis had had “a long exclusion” from being considered as foreigners for land purchases in New Zealand, and Brownlee said the Government was emphasising that fact in discussions.

Prime Minister Bill English said the Government wanted Australia to “provide certainties” about the entitlements of Kiwis living in Australia, but financial pressures were behind the changes.

“They’re under all this pressure with deficits, that’s why they’re having these discussions as well as other discussions about things they want to cut and taxes they want to raise.”

The Australian government had agreed to let their New Zealand counterparts know about any significant changes for Kiwis, “so we anticipate in this case there won’t be much change”, English said.