2024–25 budget announcement
On 14 May 2024, as part of the 2024–25 Budget, the Government announced it will strengthen the integrity of the foreign resident capital gains tax (CGT) regime to:
- ensure foreign residents pay their fair share of tax in Australia
- provide greater certainty about the operation of the rules.
The amendments will:
- clarify and broaden the types of assets on which foreign residents are subject to CGT
- amend the point-in-time principal asset test to a 365-day testing period
- require foreign residents disposing of shares and other membership interests exceeding $50 million in value to notify the ATO, prior to the transaction being executed.
This measure is not yet law.
2025–26 budget announcement
In the 2025–26 Budget, the Government announced the amendments will apply to CGT events commencing on or after 1 January, 1 April, 1 July or 1 October after the act receives Royal Assent.
2026–27 budget announcement
The government announced further changes in the 2026–27 Budget, by providing a time-limited, targeted concession in the foreign resident CGT regime for investment in the renewables sector. The concession will apply to foreign investors disposing of certain renewable energy infrastructure assets from the first quarter following Royal Assent of the law, until 30 June 2030.
The government intends to amend the law to clarity that the concept of ‘real property’ in Australia is determined by Commonwealth legislation rather than state and territory laws.
Consultation
The Treasury conducted a consultation processExternal Link seeking stakeholder views on specific implementation details of the 2024–25 Budget announcement from 23 July 2024 to 20 August 2024.
The Treasury recently consulted on the Strengthening the foreign resident capital gains tax regimeExternal Link draft legislation. Consultation ended on 24 April 2026. This draft law has not yet been enacted.
The draft law confirms, with retrospective effect, the ATO’s long-standing view and compliance approach that the term 'real property' is not limited to its narrow, technical legal meaning. This aligns with how we have administered the law. If the law is enacted, we would not expect to change our existing administrative approach.
In practice, we would continue our current compliance approach for disposals that:
- are currently subject to review
- have occurred in the past 4 years.
Generally, we do not conduct reviews on disposals older than 4 years, even if the period of review is still theoretically open. However, if an older case came to our notice for other reasons, we may review it. For example, if a taxpayer applied for a ruling that involved the amended law, we would consider any retrospective effects.
Similarly, we won't seek to re-open settlements that the parties intended to be final, except in very rare exceptions.
Therefore, we don't expect the retrospective changes to the law, if they're enacted, to affect many taxpayers. The changes will mainly clarify the law for those taxpayers already subject to review or who would normally be subject to review.
For more information, see: