Double tax treaties and the new regime for capital gains taxation of non-residents

The Tax Laws Amendment (2006 Measures No 4) Act 2006, part of which deals with non-resident capital gains tax, took effect from 12 December 2006, the date of Royal Assent of the Act. The new CGT provisions change the manner in which non-residents are taxed on capital gains in respect of certain CGT events happening to Australian property. The law previously taxed non-residents on capital gains made from CGT events happening in respect of CGT assets with the 'necessary connection with Australia' were specifically listed in Div 136 of the Income Tax Act 1997 and included assets such as land, interests in land, and shares and units in certain companies and trusts. This article examines the effect of Australia's Double Tax Agreements on the new legislation.