✦ Plain-English Summary

Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) 2019

What it does

This law changes the tax rules around selling properties to make housing more affordable. It stops foreign residents from claiming the main residence exemption (which normally lets Australians avoid capital gains tax when selling their home), and it creates new tax breaks for developers who build affordable housing.

Why it matters

Foreign investment in housing can push up property prices. By making it less attractive for foreigners to buy homes tax-free, the government hoped to ease pressure on house prices for everyday Australians. The affordable housing tax incentives were designed to encourage builders to create more properties regular people could actually afford.

Key details

• Foreign residents can no longer use the "main residence exemption" — if you're not an Australian resident, you'll pay capital gains tax when you sell a property you lived in, whereas Australian residents don't
• Affordable housing discount — developers get an extra capital gains tax discount if they build and sell properties under certain affordability thresholds
• Commencement — most changes kicked in from the next quarter (January, April, July, or October) after the law passed; rules on foreign buyers of new dwellings took effect the day after Royal Assent

Official Description

Introduced with the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Near-new Dwelling Interests) Bill 2019, the bill amends the: Income Tax Assessment Act 1997 to: remove the entitlement to the capital gains tax (CGT) main residence exemption for foreign residents; and clarify that, for the purpose of determining whether an entity’s underlying value is principally derived from taxable Australian real property under the foreign resident CGT regime, the principal asset test is applied on an associate inclusive basis; Income Tax (Transitional Provisions) Act 1997 to provide for transitional arrangements in relation to the main residence exemption; Foreign Acquisitions and Takeovers Act 1975 to require a reconciliation payment to be made by developers who sell dwellings to foreign persons under a near-new dwelling exemption certificate; and Income Tax Assessment Act 1997 and Taxation Administration Act 1953 to provide an additional affordable housing capital gains discount of up to 10 per cent.

Committee Referrals

Senate Standing Committee for the Scrutiny of Bills

No formal division recorded

This bill passed by voice vote — parliament agreed without calling a formal count. A division is only recorded when a member explicitly requests one.

No votes yet.

No votes were recorded for this bill.