The Albanese Labor Government is making sure foreign residents pay their fair share of tax, advancing important new measures to improve the integrity of the foreign resident capital gains tax rules.
Building on the Government’s work to improve tax compliance, the reforms will make sure foreign residents who own property in Australia pay tax when they sell these properties.
As part of draft legislation released today, we will increase the withholding rate on foreign resident capital gains from 12.5 to 15 per cent, and cut the transaction threshold before withholding applies from $750,000 to $0.
Announced in the 2023–24 MYEFO, these changes will ensure foreign residents comply with their tax obligations in Australia – and complement the Government’s initiatives to improve housing affordability for Australians. The reforms will apply from 1 January 2025.
Consultation on the draft legislation and explanatory materials is open until 5 August 2024.
The Government will also bring our foreign resident CGT rules into line with international best practice, by aligning the treatment for non‑residents more closely with the tax treatment that already applies to Australian residents.
This means Australia can tax gains on assets that have a close economic connection to Australian land or natural resources – in line with OECD standards and international best practice.
Foreign residents will be required to notify the ATO prior to the transaction occurring when they dispose of certain high‑value assets, so the ATO can make sure that tax is appropriately paid in Australia.
The changes were announced in the 2024–25 Budget and will apply from 1 July 2025, providing time for foreign residents to prepare.
The consultation paper seeks views on implementation details. Consultation is open until 20 August 2024.