Foreigners to Gain Exemptions from Capital Gains Tax on Australian Assets

The Australian government is poised to pass a law that will exempt foreigners from paying capital gains tax on the sale of Australian assets, except for Australian property. The Tax Laws Amendment (2006 Measures No.4) Bill is expected to be reintroduced to the Senate after being postponed due to concerns from the government's own backbench. The bill has the support of the Labor party, despite some remaining concerns, and is expected to remove disincentives to foreign investment in Australia.

Key Takeaways:

• The Tax Laws Amendment (2006 Measures No.4) Bill will exempt foreigners from paying capital gains tax on the sale of Australian assets, except for Australian property.
• The bill aims to remove disincentives to foreign investment in Australia and ensure consistency with other OECD nations' tax laws.
• The government expects the law to attract millions of dollars in investment projects.
• Nationals senator Barnaby Joyce has vowed to vote against the bill, citing concerns that it gives unfair advantages to foreigners.
• Family First senator Steve Fielding has called the bill a "tax rort" and expressed concerns that it will lead to Australia being swamped by foreign equity firms.
• Opposition revenue spokesman Joel Fitzgibbon says Labor has some remaining concerns with the bill and the government has failed to provide adequate costings.

Statistics:

• The bill is expected to attract millions of dollars in investment projects.
• Foreigners will no longer have to pay capital gains tax on the sale of Australian assets, except for Australian property.
• Kohlberg Kravis Roberts, a foreign equity firm, made an $18.2 billion bid for Coles Myer, which was rejected by the board.

Sources:

• "Foreigners to gain exemptions from capital gains tax on Australian assets". Asia Pulse, 2006.
• "Government to re-introduce bill exempting some foreigners from capital gains tax". AAP, 05-12-05.