Know your tax residency status
You can be an Australian resident or a foreign resident for tax purposes. In either case your treatment for tax purposes will be modified if you are also a temporary resident.
It is important to check your tax residency status because we don't use the same rules as other government agencies.
For example, you:
- can be an Australian resident for tax purposes without being an Australian citizen or permanent resident
- may have a visa to enter Australia but are not an Australian resident for tax purposes.
How your residency affects CGT
Generally, foreign and temporary residents are subject to CGT only on taxable Australian property, such as real estate in Australia and assets used to carry on a business in Australia.
The full 50% CGT discount is generally not available to foreign and temporary residents for assets acquired after 8 May 2012. However, an apportioned discount may be available if you had a period of Australian residency before you became a foreign resident.
Foreign residents are not entitled to the main residence exemption, unless they satisfy the requirements of the life events test.
If you become an Australian resident, or stop being one, the assets on which you pay CGT in Australia will change.
Assets you acquired before CGT started on 20 September 1985 are not subject to CGT.
For Norfolk Island residents:
- your asset is exempt from CGT if
- you acquired the asset on Norfolk Island before 24 October 2015
- a CGT event occurred immediately before 24 October 2015 and the capital gain or loss would have been disregarded on the basis of you being a resident of Norfolk Island
- all other assets are subject to the normal CGT rules.
Selling Australian real estate
Foreign resident capital gains withholding (FRCGW) may apply when selling your property. For more information on FRCGW, see Foreign resident capital gains withholding overview.