The 2017 Budget (9 May 2017) contained announcements of capital gains tax measures designed to improve Australians’ access to a home at affordable cost.
The Affordable Housing capital gains incentive provides for (up to) an additional 10% capital gains tax discount on the capital gain from residential premises used to provide affordable housing for at least 3 years (1,095 days), starting from 1 January 2018.
Based on the 3 year requirement, only sales of the Affordable Housing from 30 December 2020 (being 1,095 days from 1 January 2018) are capable of being eligible for the extra 10% discount.
The count of eligible days excludes any days as a foreign or temporary resident, and the 10% discount is apportioned to the period of ownership from 1 January 2018.
The discount calculation is expressed as a fraction of, and is in addition to, the 50% discount for properties held more than 12 months, so must meet those prerequisite conditions.
The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 became law in December 2019.
CGT Additional Discount Calculation
The calculation formula for the additional discount percentage:
(capital gain discount percent ÷ 5) × (affordable housing days ÷ total ownership days).
- capital gain discount percent is the 50% capital gain discount for properties held more than 12 months
- affordable housing days is the number of days the dwelling was used to provide affordable housing (from 1 January 2018) during your ownership period, less any days in that period as a foreign or temporary resident
- total ownership days is the number of days you held the dwelling from the time you acquired it until a CGT event occurs, less the number of days as a foreign or temporary resident after 8 May 2012.
Affordable Housing Specific Conditions
The affordable housing must have been managed by a registered community housing provider (CHP), for the provision of discounted rental housing to low to moderate income tenants.
To support an investor’s additional CGT discount claim, the CHP has to issue an affordable housing certificate in the approved form annually. Certificates are required to be issued by 31 July of each year.
The 10% discount applies in addition to the 50% discount which applies to capital gains arising from CGT assets of individuals that they hold for a minimum of 12 months.
The qualifying investment may be held by
- an individual directly
- or indirectly via a trust (including interposed entities, which may be a trust, a managed investment trust or partnership)
Public unit trusts and superannuation funds are excluded.
Tax Return Capital Gains
Capital Gains are included in the Supplementary section of the Individual Income Tax Return.
Worksheets and further information for the correct inclusion of capital gains information are in the Supplementary Instructions or from links in the Capital Gains Tax Guide updated annually by the Tax Office.
- Tax return for individuals (supplementary section) 2023
- Tax return for individuals (supplementary section) 2022
- Tax return for individuals (supplementary section) 2021
This page was last modified 2023-06-14