The Australian Government has announced that it will introduce a 60 percent capital gains tax discount (CGT) for investors in affordable rental housing.
The Government has released draft legislation to implement a number of housing affordability policies.
From January 1, 2018, residents investing in eligible affordable housing will be entitled to a CGT discount of up to 60 percent if they hold the investment for at least three years. The standard discount rate is 50 percent.
The Government also intends to permit managed investment trusts (MITs) to invest in affordable housing. Effective July 1, 2017, MITs will be permitted to hold affordable housing for the purpose of deriving long-term rent, and to derive other eligible business income from investments including shares or commercial property. MITs will be allowed to construct or develop the affordable property within the MIT.
Consistent with current MIT withholding tax rules, eligible foreign residents will generally be able to take advantage of a reduced withholding tax of 15 percent on investment returns, including income from capital gains. However, this concessional rate will not apply to capital gains income derived from selling affordable housing held for less than 10 years.
However, from 16:30 AEST on September 14, 2017, MITs will not be permitted to acquire residential property, unless it qualifies as affordable housing. The aim is to prevent MITs from investing in houses, units, and apartments to hold for long term rent (other than affordable housing). It is also intended to clarify the long-standing convention that the primary purpose of the MIT concessional tax treatment is to apply to passive investment income.
MITs currently holding residential property will be provided with a transitional period until October 1, 2027, for their existing property assets.
To qualify for the higher discount and MIT concessional tax treatment, affordable housing tenancies will need to be managed by a registered Community Housing Provider. Housing providers will determine the tenant eligibility criteria, including the rent charged, consistent with state and territory affordable housing policies.
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Treaty Update: Russia - Japan
Russia and Japan signed a DTA on September 7, 2017.
Treaty Update: Isle of Man - Turkey
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Treaty Update: United Kingdom - Belarus
The United Kingdom and Belarus signed a DTA on September 26, 2017.
Treaty Update: Morocco - Togo
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Treaty Update: Morocco - Bahrain
Morocco on September 21, 2017, published a notice in its Official Gazette to ratify and bring into effect the DTA Protocol signed with Bahrain in April 2016.
Treaty Update: Luxembourg - Sri Lanka
At a meeting on September 27, 2017, Luxembourg and Sri Lanka committed to expediting the negotiation of a Protocol to their double tax agreement.
Treaty Update: Burkina Faso - Turkey
Burkina Faso and Turkey initialed a DTA at the conclusion of three-day negotiations on September 22, 2017.
Treaty Update: Kuwait - Turkey
Kuwait and Turkey signed a DTA Protocol on September 15, 2017.
Treaty Update: South Africa - Cameroon
An order to bring into force South Africa's DTA with Cameroon was published in the nation's Official Gazette on September 1, 2017.
Treaty Update: Paraguay - Uruguay
Paraguay and Uruguay signed a DTA on September 8, 2017.
Treaty Update: Spain - Paraguay
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Treaty Update: Liechtenstein - Monaco
Liechtenstein's Government has approved a double taxation agreement with Monaco, according to an August 23 announcement.
Treaty Update: South Africa - Cameroon
South Africa on September 1 confirmed that a new DTA with Cameroon entered into force on July 13, 2017.
Treaty Update: Thailand - Cambodia
Thailand and Cambodia signed a DTA on September 7, 2017.
Treaty Update: Brazil - Paraguay
Brazil and Paraguay agreed on the need to negotiate a DTA at a high-level meeting on August 21, 2017.
Treaty Update: Estonia - Japan
According to preliminary media reports, Estonia on August 24, 2017, approved the signing of a DTA with Japan.
Treaty Update: Switzerland - Zambia
Switzerland and Zambia signed a DTA on August 29, 2017.
Treaty Update: Hong Kong - Saudi Arabia
Hong Kong and Saudi Arabia signed a DTA on August 24, 2017.
Treaty Update: New Zealand - China
New Zealand and China held a second round of DTA negotiations on August 14.
Treaty Update: New Zealand - India
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Treaty Update: Croatia - United Arab Emirates
Croatia and the United Arab Emirates signed a DTA on July 13, 2017.
Treaty Update: Canada - Grenada
Canada and Grenada signed a TIEA on July 14, 2017.
Treaty Update: United Arab Emirates - Cameroon
The United Arab Emirates and Cameroon signed a DTA on July 16, 2017.
Treaty Update: Grenada - Canada
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