Latest news with #taxrules
News.com.au
4 days ago
- Business
- News.com.au
‘Too long': Call to flip major tax breaks for property owners
Thousands of new houses could be built in the next five years with tweaks to tax rules that Labor has resisted 'for too long', experts say. Increasing tax breaks for investors in new properties is needed for Australia to meet its 'ambitious' 1.2 million home target by 2030 according to a new research paper by The McKell Institute. Four tweaks to capital gains tax – including an increase to the 50 per cent discount for new units but a reduction on discounts for detached dwellings – are being put forward as a 'circuit breaker'. The paper will be submitted to the federal productivity roundtable forum, which Treasurer Jim Chalmers is promoting as a way to build consensus on long-term economic reform. 'Labor has resisted change to the CGT discount for too long,' McKell chief executive Edward Cavanough said. 'The CGT tax discount is neither good nor evil, but it should be better calibrated to actually achieve our social aims.' 'Instead of encouraging property investors to bid up the price of existing housing stock we should be encouraging them to contribute to the construction of new dwellings.' Capital gains tax is paid when you buy an asset and then later sell it for a profit; the profit you make is taxed as income. The capital gains tax discount kicks in when, if you own an investment property for 12 months and then sell it, you only pay tax on half the profit you made. The richest 10 per cent of Australians reap the benefits of more than half the capital gains tax discounts, government data shows. Sale of the home you own and live in is exempt from capital gains tax. The plan projects up to 130,000 extra new homes could be built by 2030. 'A key problem with our existing tax settings on property is they orient too much investment toward established dwellings at the cost of new supply,' Professor Holden said. 'There is nothing wrong with the commonly held desire of everyday investors to secure their future by investing in the housing market. 'But this desire should be harnessed to achieve our national objectives on housing supply.' The federal government has set a lofty goal of 1.2 million new houses being built by 2030 that would require 220,000 new dwellings per year. About 160,000 new homes are built each year. The monthly new home target has been met just once since the target was set in early 2023, and even the federal Treasury has suggested the target will not be hit under the current policy settings. In tune with the McKell research, a group of rank-and-file Labor members has also thrown their voice behind a proposal to curb the tax discounts, with Labor for Housing saying a reduction in the discounts would help build more houses. Mr Chalmers has billed the roundtable meetings as a chance to set in motion aspirational reform. In June, Mr Chalmers said changes to capital gains tax was not something the government was 'looking at right now' but acknowledged there was appetite. 'I think it is really important we don't narrow that, limit that, those ideas people put forward. We've had a view about that in the past. I do suspect people will raise it, and we'll listen respectfully when they do,' he said.
The National
17-07-2025
- Business
- The National
How British expats can make a tax-efficient move back home
The UK tax system is complex. The rules are changing constantly. This year, we have seen one of the biggest shake-ups in tax rules for more than 200 years. Seeking professional help is your key to making a tax-efficient move to the UK. Over my career, I hear the same questions asked over and over again and see people repeat the same mistakes as they begin to plan their move to the UK. Most commonly asked questions The most common question is 'when will I become a UK resident?' If you are a non-resident (and have been for more than five years), generally you will only pay tax on UK income or if you sell land or property in the country. However, if you are a UK resident, you could be fully exposed to local tax (at rates as high as 45 per cent) on your worldwide income and gains. Understanding the date you will become a resident under the very complicated 'split year treatment' provisions is the starting point for planning a tax-efficient move to the UK. Another question that crops up frequently is 'should I sell my UK home before I return to the UK?' Your home is likely to be one of your most significant assets and can have strong emotional ties, so any decision to sell needs to be carefully considered. As a long-term non-resident, you are only taxed on the gain that has accrued on your UK home since 2015. But once you are a UK resident, you will be taxed on the gain accruing since you purchased your property. Therefore, if you have owned the property for many years, it may be better to sell the property while you remain non-resident as you may pay less capital gains tax. However, you could consider a special capital gains tax relief that may reduce your tax bill. You can maximise this tax reduction by living in your property once more after returning to the UK. Seeking expert advice to consider your options and achieve the best outcome is essential. I am often asked if there is anything that can be done to protect a person from UK tax. Moving from a low tax environment to the complicated and confiscatory UK tax regime (with income tax as high as 45 per cent, inheritance tax at 40 per cent and capital gains tax at 24 per cent) is a big concern. But, with careful planning, it is possible to be tax-efficient in the UK. There are actions you may be able to take while you remain non-resident that will save you UK tax in the future. For example, selling investments standing at a gain while you remain non-resident is a simple strategy to reduce your future UK tax bills (but be aware of any taxes that may be due elsewhere). As UK residents, a simple win is to ensure that the whole family is using their available tax allowances every year. Most common mistakes Under the complex Statutory Residence Test, there are up to six different dates that will trigger a UK tax residence status in the year that you move to the UK. Without careful planning, it is possible to become a tax resident (and possibly liable to UK tax on your worldwide income and gains) many months before you arrive in the UK. People get this wrong and it can come as a very nasty surprise. Another common mistake I see is not to consider the impact of UK tax on your finances. The UK tax system is complicated and confiscatory. Income tax at 45 per cent and national insurance contributions on earnings can eat up almost half of your salary. Moving from a low tax jurisdiction, which may not tax investment income and gains, to the UK where your investment returns and gains are taxed in full is often a shock. Finally, the biggest mistake I see is leaving it too late to speak to an adviser about your move to the UK. From time to time, I receive a call out of the blue with someone asking for advice because they are moving to the UK in two weeks' time. That is far too late in the day. They could already be a tax resident under the complicated split year treatment rules or not have enough time to restructure investments and assets for UK tax efficiency. For example, the best tax outcome might be achieved by selling a UK property while being non-tax resident. Seeking advice well before your move to the UK is strongly recommended.
Wall Street Journal
05-06-2025
- Business
- Wall Street Journal
Congress Cleans Up Biden's Global-Tax Mess
Surprise, surprise: America's latest 'trade war' has nothing to do with President Trump. Commentators and European pols are clamoring that Washington has kicked off a global conflict over tax rules. But this fracas isn't about Mr. Trump's protectionist leanings. Rather, Congress is trying to clean up after one of the Biden administration's dumber gimmicks. You'll have read over the past couple weeks that the House version of the One Big Beautiful Bill Act—the budget behemoth bouncing around Capitol Hill—includes a retaliatory tax on nationals of some foreign countries. The provision, known as Section 899, creates a punitive surtax (starting at 5%, eventually hitting 20%) on companies and individuals hailing from countries that have imposed 'unfair foreign taxes' on U.S. companies. Cue a noisy, and silly, freak-out.
Telegraph
03-06-2025
- Business
- Telegraph
How to avoid a capital gains tax sting when you sell your home
Email Mike: taxhacks@ When we sell our home, we generally assume that there will be no tax to pay on the capital gain. This arises from the principal private residence (PPR) exemption that has existed in the legislation since capital gains tax was introduced in 1965. In the run up to the general election, Sir Kier Starmer was forced into making a commitment that the relief would continue throughout this parliamentary term. It is such a fundamental part of our tax rules that it seems unlikely to me that any political party could expect to be elected without making this pledge, estimated to be worth about £31bn a year to homeowners. Nevertheless, that does not stop HM Revenue and Customs (HMRC) from attempting to raise tax where it can. Although the basic legislation has changed little over the past 60 years, the complexity of the rules means courts have been kept busy with a series of cases. I will highlight some of the main issues that arise in the hope that it will help you avoid a dispute with HMRC. You must have lived in the property Firstly, the property must be a residence. This may sound like an obvious issue, but it all depends on the facts. The courts have determined that in order for a property to be a residence, you need to live there with a degree of permanence. The leading case on this is Goodwin v Curtis, with which I had an early involvement, and is summarised in the HMRC manuals at CG64460. The crux of the issue here was the fact that during the month he lived in the property concerned, it was the only residence of Mr Goodwin, but at the time he bought it, he had already planned to move elsewhere. So, while there is no set period required in order to qualify for PPR, occupation must not be of a temporary nature. If there is any doubt about the position, you should make sure you have evidence of permanent occupation, such as registration with a local doctor and dentist, council tax and where you are registered to vote. Of equal importance is the absence of evidence to the contrary. I replied to a reader about this in a recent article. For full relief, the property must be your main residence throughout your period of ownership – with the exception that the final nine months will qualify if at any time it was your PPR. If the property is your PPR for only part of the time, the relief is time apportioned. Where you have two residences, you can nominate which is to be treated as your main residence for capital gains tax purposes by sending HMRC a notification, but this must be done within two years of the second purchase. Make your intentions clear When we buy a home, we generally do so with the hope and expectation that it will increase in value and with no tax to pay on the profit. We may also spend money improving the property in the hope that it will increase the profit on sale. Some worry that this could give HMRC the opportunity to argue that it has become a trading venture, thereby catching the profit for income tax. However, in the vast majority of cases, this will not be a problem. The reason is explained in the HMRC manuals at CG65200 and CG65210 which say: 'Anyone who buys a dwelling house is likely to hope that, in the fullness of time, they will make a gain on its disposal. It would be unreasonable and restrictive to apply the legislation in this way. The subsection should only be taken to apply when the primary purpose of the acquisition, or of the expenditure, was an early disposal at a profit'. Court judgments have also made it clear that what matters is the intention at the time the property is acquired. The intention of the taxpayer can be hard for HMRC to prove in the absence of supporting facts. This was the main issue in the case we reported on last month. Mr and Mrs Eyre paid £9,750,000 for a property in Chelsea in 2010, which they then demolished. They replaced it with a much larger house, which they then sold in November 2014 for £27,150,000, realising a substantial profit. They lived in the property between July 2013 and February 2014. The inspector argued that they were developing the property as a trade. However, the judges decided otherwise on the basis that when they bought the property it was with the intention of it becoming their home. The judges also ruled that the redeveloped property had become their residence. This was partly on the basis that it was designed to suit their personal needs, including a cellar to store their 2,000 bottles of Chateau Montrose. They kept their previous home throughout, but crucially had submitted letters to HMRC nominating their Chelsea property as their main residence. What is of particular relevance in these cases is whether there is documentary evidence available to HMRC of an early intention to develop for a profit. I remember one case where the taxpayers were so pleased with their development that they invited a glossy magazine to run an article explaining their decision to buy and redevelop the house, and their plans to repeat the exercise with their next purchase. Unfortunately for them, the inspector had a copy of the magazine. I am not going to speculate whether tax inspectors usually read glossy magazines, but they have research teams that do so for this reason. I would also add that appearing on one of those TV property programmes is to be avoided. Where HMRC inspectors cannot establish trading, they may have an alternative line of attack, as explained in CG65246. This rule does not deny PPR relief in full, but it can restrict the relief on the part of the gain that has arisen as a consequence of expenditure incurred. I have seen this argued by HMRC on occasions, usually where a large property is converted into flats. I note that HMRC did run this argument in the Eyre case above. Don't forget the garden The PPR rules provide an exemption for a residence together with garden and grounds up to half a hectare, being an acre pre-decimalisation. However, the relief can be extended – as explained in CG64818 – where a larger area is required for the reasonable enjoyment of the house as a residence, having regard to its size and character. The rule was illustrated recently in a case where the court granted full relief. Again, you should retain evidence to support this, such as pictures of your children riding their ponies on the paddock. You should also keep the whole area connected, and avoid splitting up part of the property with walls. Finally, take care if you use part of your property for non-residential purposes, such as having a room set up as an office for your business. Fortunately, the restriction only applies where this is for exclusive use. The key therefore is to ensure that the room is also used on occasions for domestic purposes, such as letting the children use it for a playroom at weekends – if you dare! Mike Warburton was previously a tax director with accountants Grant Thornton and is now retired. His columns should not be taken as advice, or as a personal recommendation, but as a starting point for readers to undertake their own further research.
Arabian Business
31-05-2025
- Business
- Arabian Business
Eid Al Adha 2025 dates announced; UAE petrol prices change; new tax rule revealed; Dubai real estate tokenisation – 10 things you missed this week
The UAE has announced Eid Al Adha holiday dates for the public and private sectors next week. The long-awaited announcement came during a week which also saw updated tax rules, the imminent change of petrol prices, a Dubai real estate tokenisation project and more. Catch up on 10 of the biggest news stories this week, as selected by Arabian Business editors. UAE announces Eid Al Adha 2025 holidays The UAE has announced Eid Al Adha 2025 holidays for the public and private sectors. The holidays will begin on 09 Dhu Al-Hijjah 1446 AH, corresponding to Thursday, June 05, 2025, and will continue until 12 Dhu Al-Hijjah 1446 AH, corresponding to Sunday, June 08, 2025. Official work will resume on Monday, June 09, 2025. UAE petrol prices to change for June 2025 The UAE is set to announce petrol prices for June 2025 this week. Petrol prices increased fractionally in May, following two months of increases, although prices for motorists filling up on Super 98, Special 95, E-Plus 91 and diesel have remained stable. It is currently significantly cheaper to fill up a tank than year ago, with all categories becoming more affordable, despite prices fluctuating throughout the past 12 months. The UAE Ministry of Finance has issued a Cabinet Decision introducing a new tax treatment option for unincorporated partnerships. The move is part of the government's ongoing efforts to enhance tax transparency and improve the business environment. Under the Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses, unincorporated partnerships are generally regarded as tax transparent entities. New Dubai road to cut journey times from 20 minutes to just 3.5 A new road in Dubai will slash journey times in one neighbourhood from 20 minutes to less than four. The Roads and Transport Authority (RTA) is set to open a new entry and exit point to Al Warqa directly from Sheikh Mohammed Bin Zayed Road early June 2025, aiming to facilitate smoother access to and from the neighbourhood. Once complete, the project will increase road capacity by 5,000 vehicles per hour, reduce travel time by 80 per cent—from 20 minutes to just 3.5 minutes—and cut trip distances from 5.7km to 1.5km. The initiative is being implemented in collaboration with the Virtual Assets Regulatory Authority (VARA), the Central Bank of the United Arab Emirates (CBUAE), and the Dubai Future Foundation (DFF) as part of the Real Estate Sandbox. Zand Digital Bank has been appointed as the banking partner for the pilot phase. Binghatti Holding Ltd has acquired freehold land spanning over 8 million square feet of gross floor area for its first large-scale master-planned residential community in Dubai. The Dubai-based real estate developer, known for luxury-branded residences, expects the development to have a total value exceeding AED 25 billion. The land sits in Nad Al Sheba 1 within Dubai's Meydan district. The area previously housed the Nad Al Sheba Racecourse, which served as the former venue for the Dubai World Cup. The location maintains connections to major roads and sits near Dubai's key landmarks. Disneyland Abu Dhabi triggers real estate shift: Price moves, investor interest and new hotspots identified Disney recently announced a theme park in Yas Island, Abu Dhabi, marking its seventh destination globally. According to real estate experts, the announcement is already positively impacting the capital's property market. While the project is years from completion, early signs point to growing investor interest, increased inquiries for off-plan units, and early price adjustment discussions. 'Even for an established, world-class tourism and leisure hub, Yas Island's recent announcement of Disneyland Abu Dhabi is a major touristic coup, and yet another reason why Yas is one of Abu Dhabi's most dynamic residential investment destinations. The news has put Yas firmly in the spotlight and immediately boosted investor confidence in this world-class destination,' Riyad Magdy, Chairman and Founder, Oia Properties, said in an exclusive interview with Arabian Business. EXCLUSIVE: Dubai real estate giant Sobha Realty eyes 3 Texas cities for major U.S. expansion Dubai-headquartered luxury property developer Sobha Realty has revealed more of its plans to expand into the United States market, with Texas cities forming the 'cornerstone' of its international growth strategy. The company, which has operated in the UAE since 2013, will focus on Dallas, Houston, and Austin for its U.S. debut. In an exclusive interview with Arabian Business, Ravi Menon — Chairman of Sobha Group — cited the cities' rapid population growth, strong economic fundamentals, and demand for luxury residential developments as key factors in the decision. UAE malls in 'non-prime' areas could face pressure from Chinese goods diversion amid U.S. tariffs The new U.S. tariffs imposed by Donald Trump could create 'ripple effects' throughout global supply chains that could eventually reach the UAE market, according to PP Varghese, Head of Professional Services at Cushman & Wakefield Core. 'While the UAE doesn't heavily import directly from the US, many products pass through complex international supply chains where tariff-related price increases get passed down,' he told Arabian Business. UAE takes legal action against 30 domestic worker recruitment rulebreakers The UAE is penalising domestic worker recruitment offices over rule breaking and violations of guidelines. The Ministry of Human Resources and Emiratisation (MoHRE) has taken legal action against 30 domestic worker recruitment offices across the UAE after confirming their involvement in 89 violations flagged during the first three months of 2025. The measures form part of the Ministry's ongoing efforts to implement its integrated field and digital monitoring system, which aims to identify and address any violations by domestic worker recruitment offices and ensure their compliance with relevant legislation.
