One of the hottest tax debates in Australia right now is the reform of CGT (Capital Gains Tax).
Today, Australia gives a 50% discount on the capital gain from investment assets held for more than a year. But the government is weighing whether to scrap or trim it and move to an indexation method instead.
Most people ask, “How much more tax will I pay?” But for a Korean-Australian with assets on both sides, there’s a more important question — “When should I sell?”
This article looks at the CGT reform debate alongside something every prospective returnee should know: Korea’s “5-year rule.”
The short version
- Today, a 50% CGT discount applies to assets held for 12+ months.
- The government is pushing to switch this to an indexation method.
- It is not yet finalised.
- For prospective returnees, the timing of the sale matters more than the rate.
- Selling within five years of returning to Korea is a major tax variable.
What is the current 50% CGT discount?
If an Australian individual holds an asset for more than 12 months, only half the gain is taxable. For example:
- Purchase price: $700,000
- Sale price: $1,300,000
- Capital gain: $600,000
- Current rule: $600,000 × 50% → taxable: $300,000 (the other $300,000 is not taxed)
For 25 years it’s been one of the most important tax breaks in Australian property and share investing.
What might change?
Instead of the 50% discount, the government is considering an indexation method that accounts for inflation — the idea being to tax the real gain rather than the nominal one.
It is still at the bill-discussion stage and not finalised, so there’s no need to rush to sell right now.
Jason HS Yu, an accountant covering Australian domestic tax, has also written on this CGT reform — see his Threads.
Why this matters more for Korean-Australians
Korean-Australians typically hold Australian investment property, Australian ETFs, Korean property, and Korean financial assets at the same time. So this isn’t just a CGT question — it connects to reverse migration, tax residency, moving assets, and the exchange rate.
What actually matters more: Korea’s “5-year rule”
There’s a rule many Korean-Australians don’t know. Under Korean income tax law, gains on overseas assets are taxed only on a resident who has continuously had a domicile or residence in Korea for five years or more, up to the date of sale.
In plain terms — if you’ve been back in Korea for under five years, a sale of overseas assets is less likely to trigger Korean tax. This is hugely important for returnees.
Case 1 — Selling while living in Australia
The Kims (Sydney residents, citizens, holding an investment apartment with a $600,000 gain). If they sell while living in Australia: Australian CGT applies, no Korean tax. The simplest case.
Case 2 — Selling two years after returning to Korea
Return in 2027, sell in 2029 (two years in Korea). Here they are Korean tax residents but do not meet the “continuous five years” test, so under current rules Korea’s tax on overseas-asset gains is unlikely to apply. (Review the Australian tax; Korean exposure low.) This is why many returnees pay close attention to it.
Case 3 — Selling seven years after returning to Korea
Return in 2027, sell in 2034 (seven years in Korea). Here they are Korean residents and meet the five-year rule, so Korean tax on overseas-asset gains can arise. Australian tax, Korean tax, the foreign income tax offset, and the tax treaty all need to be considered together.
The three situations compared
| Situation | Korean resident | Years in Korea | Korean tax likelihood |
|---|---|---|---|
| Sell before returning | No | 0 | Low |
| 2 years after return | Yes | Under 5 | Low |
| 7 years after return | Yes | 5+ | Can rise |
So when is the best time to sell?
There’s no single answer. But you must ask:
- When are you returning to Korea?
- When do you plan to sell your Australian assets?
- How many years will you live in Korea?
- How large is the asset?
These questions may matter more than the CGT change itself.
Not just investment property
This can affect investment apartments, ETFs, shares, and funds. Long-term ETF holders in particular should pay attention.
In closing
Watching this CGT debate, many worry “how much more tax will I pay?” But for people moving between Korea and Australia, the more important question is — “As a resident of which country, and when, will I sell my assets?”
From here on, a Korean-Australian’s asset strategy may turn less on the investment and more on residency — less on the rate and more on the timing.