The proposal has 2 components that would tax the net wealth of Australian residents and non-residents.

For Component 1 and 2, net wealth would be calculated as follows.

• For Australian residents, net wealth would be equal to the value of all assets minus all liabilities and include any taxable assets held by their children.
• For non-residents, net wealth would be equal to the value of Australian assets minus liabilities.

Assets, both financial and non-financial, over the value of $50,000 would be included in the net wealth calculation.

Component 1 – Levy on net wealth

This component would introduce an annual tax levied on the net wealth of Australian residents, regardless of where their assets are held, and the net wealth of non-residents who hold Australian assets from 1 July 2022.

The following features of the tax would apply to both residents and non-residents:

• The tax would be levied at 6% on the individual’s net wealth amount above $1 billion.
• The assessable net wealth would be calculated as at 30 June of each financial year.
• Initial net wealth valuations would be determined as at the date of policy announcement.
  • Non-residents would only be able to move a maximum of 10% of their initial Australian net wealth offshore each year. Any additional Australian net wealth moved offshore would remain subject to the tax.
• Each year the amount of tax that arises from a single real estate holding could be deferred – and secured against the title of the property – up to an amount equal to 80% of the value of the property. Once 80% is reached, all additional tax derived from real estate would be payable when each year’s tax is due.
  • The deferred tax liability would be limited to a single property (or single group of properties for agricultural holdings) for each individual.
• Real estate would be considered first in the calculation of net wealth for tax purposes. This means that up to $1 billion of real estate would be exempt from the tax and the tax would not need to be deferred as outlined in the previous point.

The Australian Taxation Office (ATO) would publish each individual’s aggregate net wealth figure and tax paid each financial year on a national wealth register.

Component 2 – Pandemic levy

This component would introduce a one-off pandemic levy of 50% on the increase in individual net wealth between 11 March 2020 and 10 March 2021 for individuals with net wealth above $1 billion as at 30 June 2021.

• The levy would apply to Australian adult residents, regardless of where their assets are held, and non-residents who hold more than $1 billion worth of Australian assets.
• For individuals whose net wealth was less than $1 billion on 11 March 2020 and above $1 billion on 30 June 2021, the tax would only apply on the amounts above $1 billion.
• Liabilities would be issued on 1 July 2023, and individuals would be required to pay the levy in full within 2 years.
• Individuals that experienced a decrease in net wealth in the period specified would not be subject to the levy.