Claims by the Australian government to introduce restrictions for foreign investors have now been clarified, in addition to consultation periods opening up to the public.
Following the announcement regarding the travel and plant and equipment depreciation changes and the consultation period opening, a similar announcement has been made regarding restrictions for foreign investors, and how it differs from the law previously.
At a glance, foreign investors were essentially treated as Australian residents when it came to exemptions, but proposed changes to the law will mean that those various exemptions will not be available to foreign residents.
The principal asset test is also set to change, where if foreign residents hold membership interest in another entity, membership interest is treated as two assets: a TARP asset and a non-TARP asset. The market value of the TARP asset will be considered as nil, however, if the total participation interests held by the holding entity’s and its associates in the other entity is less than 10 per cent.
In a joint media release between Treasurer Scott Morison and Assistant Minister to the Treasurer Michael Sukkar, these changes were stated to be a part of a package which has been estimate to contribute $600 million towards Australia's economy.
If successful, the legislation will come into effect from 9 May 2017. Foreign investors who already hold property can continue to claim the main residence CGT until 30 June 2019.
The consultation period is open until 15 August and is accepting submissions electronically via the Treasury website and by mail.