On 2 July 2026, the Australian Federal Government introduced its long-anticipated foreign resident capital gains tax (CGT) reform bill to Parliament. The legislation aims to tighten CGT obligations for foreign residents disposing of certain Australian assets, including real property.

The bill's introduction follows years of policy signalling by Treasury and represents a significant development for non-residents, temporary visa holders, and permanent residents who own Australian property but are tax residents of another country.

The Retrospective Clause Has Been Withdrawn

One of the most contentious elements of the original proposal was a retrospective provision that would have applied new CGT rules to transactions completed before the bill's commencement date. This clause drew strong criticism from tax practitioners and property investors alike.

Following public and industry pushback, the government has confirmed the retrospective clause has been withdrawn from the bill as introduced. This means the reform, in its current form, will apply prospectively, giving property owners more certainty about past transactions.

Who Is Affected

The reform is targeted at individuals who are foreign residents for Australian tax purposes at the time they dispose of a CGT asset. This category can include:

• Non-resident Australian citizens or permanent residents living abroad.
• Temporary visa holders, such as those on Subclass 482 or 457 visas, who are classified as foreign residents under Australian tax law.
• Former Australian tax residents who have moved overseas and retained Australian real property.

It is important to understand that Australian immigration status and Australian tax residency status are determined under separate legal frameworks. Holding a permanent residence visa does not automatically make a person an Australian tax resident. Tax residency depends on domicile, ordinary residence, and other connecting factors under the Income Tax Assessment Act 1936.

Key Changes That Remain in the Bill

While the retrospective clause has been removed, the remaining provisions of the bill are still substantive. Based on the reform framework as described in legal analysis by Corrs Chambers Westgarth (published 2 July 2026), areas expected to be addressed include:

• Adjustments to the principal asset test used to determine whether indirect interests in Australian real property are taxable.
• Changes to withholding obligations for purchasers acquiring property from foreign residents.
• Modifications to the interaction between CGT and tax treaties.

The full legislative text should be reviewed carefully, and the bill remains subject to parliamentary debate and potential amendment before passage.

Practical Steps for Visa and PR Holders

1. Determine your Australian tax residency status. Do not assume your visa status determines your tax residency. Seek advice from a registered tax agent or tax lawyer.
2. Review your Australian property holdings. Identify any assets that may be subject to CGT on disposal as a foreign resident.
3. Monitor the bill's progress through Parliament. Amendments may still be made before the bill receives Royal Assent.
4. Seek professional advice before transacting. If you are considering selling Australian property, obtain specific advice on your CGT position before exchange of contracts.

Key Takeaways

• The foreign resident CGT reform bill was introduced to the Australian Parliament on 2 July 2026.
• The retrospective clause, which was the most controversial element, has been withdrawn.
• The reform applies to foreign residents for Australian tax purposes, a category that is separate from immigration status.
• Temporary and permanent visa holders who are tax non-residents may still be affected.
• Professional tax advice is strongly recommended before any property disposal.

The content of this article is intended for general informational purposes only and does not constitute legal advice. Immigration law is complex and subject to change. The information provided may not reflect the most current legal developments. For advice specific to your circumstances, please consult a registered Australian migration lawyer. For full terms governing use of this website and its content, please refer to our Website Terms and Conditions.

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