Australia: Expands the Foreign Resident CGT Net

In brief

The Australian Government has proposed sweeping changes to the capital gains tax (CGT) regime for foreign residents. If enacted, the reforms would broaden the definition of “real property”, expand when disposals of interests in an entity that holds Australian real property will be subject to CGT, and require pre‑completion notification to the Australian Taxation Office (ATO) for high‑value transactions.

Unexpectedly, parts of the expanded “real property” definition would apply retrospectively from 2006, with no grandfathering rules for existing investments and limited transitional relief for certain renewable energy assets.

Foreign residents may face unexpected tax liabilities, despite ATO statements flagging an intention to limit reviews to transactions occurring in the past four years.

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