Today the Albanese Government is releasing draft legislation to strengthen the foreign resident capital gains tax (CGT) regime and provide certainty for investors.
These reforms will ensure foreign residents pay a fair share of tax in Australia while providing generous concessions for investments in renewable energy.
Australia’s land and natural resources belong to all Australians.
These reforms, first announced in the 2024–25 Budget, address an area of longstanding uncertainty by confirming that CGT applies to foreign investors selling assets with a close economic connection to Australian land and our natural resources.
At the same time, the Government has engaged with the renewable energy sector to ensure these arrangements strike the right balance between supporting investment in clean energy while ensuring foreign investors pay their fair share of tax.
As a result of this consultation, the Government will provide a time-limited, targeted concession in the foreign residents CGT regime for investment in the renewables sector, helping support our clean energy objectives.
This concession balances ongoing Government support for Australia’s practical action on climate change, with the need to ensure the tax treatment of these assets aligns with the treatment of other assets in the longer term.
The draft legislation also includes targeted amendments, which apply to investments since the regime was introduced in 2006, to clarify that state and territory laws such as severance provisions in property law do not determine which assets are in scope of the foreign resident CGT regime.
Over time, the absence of a clear definition of real property in the law and interactions with state and territory property laws has created uncertainty about the meaning of real property and this legislation addresses those concerns.
The legislation brings Australia’s tax laws into closer alignment with the OECD Model Rules for the taxation of foreign residents and also brings the tax treatment of foreign investors into closer alignment with the treatment of Australian residents.
Clarifying the interaction with state and territory laws reinforces the original intent of the law and ensures that the CGT treatment for assets held by foreign investors applies consistently, regardless of which state or territory the asset is located in. State revenue laws already generally disregard severance provisions for their own tax purposes.
This will protect revenue by ensuring foreign residents disposing of an interest in large-scale infrastructure assets which are fixed on Australian land are subject to CGT. This includes buildings and energy, transport and telecommunications assets.
This reflects the Government’s commitment to improve tax fairness and make the budget more sustainable.
The Government continues to support productivity enhancing investment, including in the renewable energy sector.
Through our Capacity Investment Scheme, specialist investment vehicles such as the Clean Energy Finance Corporation’s Rewiring the Nation Fund, and the Investor Front Door we are accelerating private investment in our clean energy transition.
The Government is working to address inflation, boost productivity and resilience and make the budget more sustainable and this legislation is an important part of those efforts.
The Government welcomes feedback on the draft legislation until 24 April 2026 at: https://consult.treasury.gov.au/c2026-755475.