The government has introduced a housing affordability bill where CGT main residence exemptions will come in to place for foreign residents. Schedule 1  of the bill amends ITAA 97  which will:

  • Remove the entitlement to the CGT main residence exemption for foreign residents, except where certain life events (terminal medical condition, death, divorce or separation) occur within six years of the individual becoming a foreign resident; and


  • Modify the foreign resident CGT regime to clarify that, for the purpose of determining whether an entity’s underlying value is principally derived from the taxable Australian real property, the principal asset test is applied on an associate inclusive basis.


These measures apply from 9 May 2017.


Schedule 2 of the bill provides an additional 10% capital gain discount on a residential premises used to provides affordable housing. With this additional discount, investors in affordable housing can claim a discount of up to 60%  on capital gains.

This measure applies to capital gains realised by investors from CGT events occurring on or after 1 January 2018 for affordable housing tenancies that start before, on or after 1 January 2018.