The government has announced that they wish to extend the current 2 year “Brightline” test from 2 to 5 years.
They have introduced a Supplementary Order Paper to the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Bill, which incorporates the change.
The current rules require tax to be paid on capital gains made on certain property transactions where the property has been bought and sold within 2 years. The new rules will see the 2 year period extended to 5 years.
The 5 year period will only apply to properties where the date the buyer acquires an interest in the residential land, is on or after the date on which the legislation receives Royal assent – this is expected to be in March 2018. The 2 year period will continue to apply to properties where the first interest was acquired before the date of Royal assent.
So generally this means that if you have a signed sale and purchase agreement before the date of Royal assent (expected to be March), then the existing 2 year rules will apply.
So if you were contemplating a property transaction that would normally fall under the existing 2 year rules (eg restructuring a rental property), there is a small window to execute the transaction before Royal assent, and be subject to the 2 year timeframe rather than 5 years.
The Brightline rules do have exceptions but can be a bit brutal (eg imposing tax on capital gains on holiday homes).