Australia's new tax draft targets foreign residents with AUD 50 million threshold

What Treasury put on the table

Australia's Treasury released exposure draft legislation on April 10 that rewrites the foreign-resident capital gains tax rules under Division 855 of the Income Tax Assessment Act 1997. The draft is open for consultation and isn't yet law, the Australian Taxation Office confirmed.

The headline change: a much broader statutory definition of "real property" and taxable Australian real property that pulls in interests, options, licences and anything fixed or installed on land for most of its useful life. Wind turbines, solar panels, batteries, mining equipment and transmission infrastructure fall inside the net. The clarified definition would apply retrospectively to CGT events from Dec. 12, 2006, the date Division 855 first took effect.

The draft also stretches the principal asset test from a point-in-time check to a 365-day testing period and overrides tax-treaty references to "immovable property" so the wider domestic definition controls. Foreign residents disposing of shares or interests above AUD 50 million must notify the ATO before executing the deal.

CPA Australia called the reach back nearly 20 years "deeply problematic" for tax certainty. The ATO says it doesn't expect the retrospective elements to affect many taxpayers, focusing on cases already under review.

Who gets pulled in

The rules target foreign residents for Australian tax purposes, which includes Australian citizens living abroad as non-residents, not just foreign nationals. Tourists and short-term visitors aren't affected because CGT triggers on disposal of an asset, not on entry.

Expats and long-term nomads holding Australian real estate, business assets or significant equity in land-rich Australian entities sit squarely in scope. The AUD 50 million notification rule mainly hits founders, high-net-worth individuals and corporate investors.

Foreign companies and funds investing in Australian renewable energy assets get a sweetener: a 50% CGT discount on eligible disposals before June 30, 2030.

Dates, costs and next steps

Prospective amendments start on the first Jan. 1, April 1, July 1 or Oct. 1 after the bill receives Royal Assent. No fixed date exists yet.

Separately, the foreign resident capital gains withholding rate rose from 12.5% to 15% on Jan. 1, 2025 and now applies to all taxable Australian property disposals by foreign residents with no AUD 750,000 threshold.

Non-resident asset holders should review past disposals since 2006 with an Australian tax adviser before the consultation closes. Track the Treasury consultation page for submission deadlines and follow ongoing nomad news for the Royal Assent date.

Read our full Australia guide for the complete picture.