Deemed Disposal on Non-Taxable Australian Properties

If you’re an Australian resident who ceases to be a resident for tax purposes, you may be required to pay capital gains tax (CGT) on certain assets that you own, even if you don’t sell them. This is known as “deemed disposal”.

Deemed disposal applies to assets that aren’t taxable Australian property (TAP). TAP is property that is located in Australia and used for a business or investment purpose.

Assets that are not TAP include:

• Personal use assets, such as your home, car and furniture
• Foreign property
• Shares in Australian companies
• Managed funds

If you’re deemed to have disposed of a non-TAP asset, you’ll need to calculate the capital gain or loss that you’ve made. The capital gain or loss is calculated as the difference between the market value of the asset on the date of deemed disposal and the cost base of the asset.

If you have a capital gain, you’ll need to pay CGT on the gain. The amount of CGT you pay will depend on your marginal tax rate. This is an area where tax return accountants can provide invaluable information and advice.

If you have a capital loss, you can offset it against other capital gains that you’ve made in the same financial year. If you can’t offset the loss against other gains, you can carry it forward to offset against future capital gains.

There are a number of ways to avoid or minimise the impact of deemed disposal. For example, you can:

• Sell the asset before you cease to be a resident for tax purposes.
• Gift the asset to someone else before you cease to be a resident for tax purposes.
• Migrate your assets to a trust before you cease to be a resident for tax purposes.

If you’re unsure about whether or not you’re required to pay CGT on a non-TAP asset, you should speak to a registered tax agent who offers tax preparation services.

At AIM S Australia, we have a dynamic team of highly qualified and committed bookkeepers and tax accountants in Melbourne who can provide tax agent services and much more.

We can help you prepare individual tax returns, sole trader tax returns, partnership tax returns, trust tax returns, company tax returns, crypto tax returns, expat tax returns, non-resident tax returns, overdue tax returns, foreign resident tax returns and investment property tax returns as well as assisting with payroll solutions, late tax filing, capital gains, company formation, business setup and BAS. Contact our experts today.