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Retrospective CGT bill derided

A parliamentary committee has hit out at the retrospective application of a bill that aims to remove foreign residents’ entitlements to the CGT main residence exemption ahead of its debate today.

Tax&Compliance Jotham Lian 26 November 2019
— 1 minute read

The Standing Committee for the Scrutiny of Bills has now given its take on the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019, expressing concerns over the retrospective application of the proposed law change.

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The re-introduced bill aims to deny non-residents the CGT main residence exemption for CGT events that happen on or after 9 May 2017, subject to an extended 30 June 2020 transitional date.

The committee is concerned about the back-dated application, noting that laws should only operate prospectively.

It notes that the first reiteration of the bill, which lapsed with the calling of the 2019 federal election, was only introduced almost nine months after the budget announcement on 9 May 2017, and that the current bill was introduced well over two years after the announcement.

“The committee has a long-standing concern about provisions that apply retrospectively, including provisions that back-date commencement to the date of the announcement of particular measures (i.e. ‘legislation by press release’), as such an approach challenges a basic value of the rule of law that, in general, laws should only operate prospectively,” said the committee.

“The committee also notes that, in the context of tax law, reliance on ministerial announcements, and the implicit requirement that persons arrange their affairs in accordance with such announcements rather than in accordance with the law, tends to undermine the principle that the law is made by Parliament, not by the executive.

“Retrospective application or commencement, when used too widely or insufficiently justified, can diminish respect for the rule of law and its underlying values.”

The committee has since asked the Senate to consider its scrutiny concerns. The bill has been scheduled for debate in the House of Representatives today.

The profession has long expressed concerns around the bill, including how it could have a retrospective impact in denying the main residence exemption as far back as 20 September 1985, when CGT was first introduced.

The government has been called to consider apportionment rules to recognise periods of residency in a bid to make it equitable for Australian expatriates.

Retrospective CGT bill derided
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Jotham Lian

Jotham Lian

Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

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