New capital gains tax (CGT) rules for foreign residents disposing of certain Australian assets will take effect from 1 October 2026.
The government’s Strengthening the Foreign Resident Capital Gains Tax regime measure has received royal assent and will introduce changes intended to improve the integrity of the foreign resident CGT regime and provide greater certainty about which Australian assets are subject to tax.
The changes will apply to disposals of Australian real property and real property interests held through shares, trust units or other membership interests. This may affect foreign residents with investments in Australian companies and other entities, as well as interests involving water entitlements and investments where state or territory severance provisions may have applied.
From 1 October, foreign vendors providing a non-Indirect Australian Real Property (IARP) interest declaration to a purchaser for an asset disposal, including related transactions, valued at $50 million or more must complete a form notifying the ATO. Purchasers will also need to consider whether they reasonably believe a vendor declaration is false at any time between receiving the declaration and settlement.
The changes will introduce a new Commonwealth definition of real property covering land, rights and interests relating to land, assets fixed to land, and leases or licences over those assets. The new definition will not apply retrospectively to disposals that have already settled. The point-in-time principal asset test will also become a 365-day testing period.
A temporary 50% CGT discount will apply to eligible non-individual foreign residents disposing of certain renewable energy assets. The ATO is preparing a new notification form, which will be available to download from its website and submitted by email. Tax professionals will be able to submit the form on behalf of a client.
Before the rules commence, the ATO said it will publish information about changes that may affect tax paid on direct and indirect investments in Australian real property, including when foreign clients must notify the ATO about disposals of shares and other membership interests exceeding $50 million.
The ATO is also considering whether formal public advice and guidance products are required. It will work with relevant stewardship groups to develop any draft guidance and seek feedback through public consultation. Further guidance may clarify the real property definition, how the updated principal asset test will operate, and how the renewable energy asset discount will apply.
Last updated: 23rd Sept 2026
About the Author
Ro Elvinia is ABN Australia's Customer Success and Marketing Manager. She holds a bachelor’s degree in mass communication, majoring in journalism, and also has an academic background in civil engineering. With over a decade of experience in professional writing and a background spanning journalism, Australian immigration, and business services, Ro brings a unique mix of communication and analytical expertise. She works closely with international clients and contributes to ABN Australia's content strategy, helping global businesses stay informed and confident as they navigate the Australian market.
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