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ARTICLE · 07 JULY 2026

Australia's Foreign Resident CGT Reforms: Retrospectivity Removed

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The Australian Government has introduced legislation to reform its foreign resident capital gains tax regime, removing the controversial retrospective application of expanded 'real property' definitions while maintaining prospective changes that will significantly broaden the CGT base for foreign investors in Australian land, infrastructure and energy assets.

AustraliaTax
Dhanushka Jayawardena
Dhanushka Jayawardena
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The Australian Government has taken a significant step towards reforming its foreign resident capital gains tax (CGT) regime, introducing the Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Othe Measures) Bill 2026 (Bill) into Parliament following its exposure draft legislation in April 2026 (exposure draft). The reforms aim to strengthen the current framework and have important implications for foreign investment in Australian land, infrastructure and energy assets.

The most contentious feature of the exposure draft was the proposed retrospective application of an expanded definition of ‘real property’ to CGT events occurring on or after 12 December 2006, the date on which Division 855 of the Income Tax Assessment Act 1997 (Cth) (ITAA 97) commenced. The Bill now removes that element – a significant departure from the exposure draft.

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