CGT Reform for Expats and Foreign Residents: How the 1 July 2027 Changes Apply if You Live Overseas

General information only. This is not tax or financial advice. Cross-border CGT involves Australian law, foreign tax law, and tax treaty interpretation — consult a registered tax agent familiar with your country of residence before acting.

Budget 2026’s CGT reform does not have a separate carve-out for people living overseas. From 1 July 2027, foreign residents and Australian expats holding Australian assets get the same split treatment — cost base indexation plus a 30% minimum tax on the post-1 July 2027 portion of the gain — as resident taxpayers.

But the reform sits on top of several pre-existing foreign-resident rules that have nothing to do with the discount. The combined effect is what matters:

1. Foreign-resident denial of the main residence exemption (since 12 December 2019) — your former home in Sydney is fully taxable if you sell while a foreign resident.
2. 15% foreign resident CGT withholding (FRCGW) on Australian property sales — collected at settlement unless a clearance certificate or variation is in place. Threshold removed from 1 January 2025; applies to all property values.
3. Tax treaty residency tie-breakers — for Australian property, most treaties give Australia primary taxing rights regardless. For shares, treaty position varies.
4. Foreign tax credits in your country of residence — usually claimable on the Australian tax paid, but capped at the foreign-country liability on the same gain.

This article walks through how the 1 July 2027 reform stacks with each of those pre-existing rules.

The short version

Live overseas? The CGT reform still applies to your Australian assets — same split-treatment math, same indexation table, same 30% minimum.

If you’re a foreign resident selling Australian property, you’ve already lost the main residence exemption since 2019. The reform now also removes the 50% discount on the post-1 July 2027 portion. Plus 15% withholding continues at settlement.

The combined hit for a typical foreign-resident expat selling a long-held investment apartment after 2027 is bigger than the headline reform impact because the discount was already worth less to you. For a foreign-resident investor buying NEW Australian property after 1 July 2027, the math runs straight under the new rules with no legacy share.

Three groups affected (and how the rules differ)

The reform plus the pre-existing rules apply differently across three taxpayer groups. Where you sit depends on your tax residency at the date of the CGT event (usually contract date for property), not your citizenship.

Group	Description	Reform applies?	Main residence exemption?	FRCGW withholding?	Marginal rate basis
Australian expat (still AU tax resident)	Working overseas but maintaining Australian tax residency (e.g. temporary posting, family + home still in Australia, no permanent overseas tax home)	Yes — same split treatment as any AU resident	Yes — full exemption still possible if other tests met	No — clearance certificate available	Australian resident brackets (incl. tax-free threshold)
Former Australian resident (now foreign resident)	Left Australia, established tax residency abroad (Singapore, London, Hong Kong, etc.). Most expats fall here after 2-3 years overseas.	Yes — same split treatment	No — denied since 12 Dec 2019 unless narrow life-events exception	Yes — 15% on full sale price unless variation	Australian non-resident brackets (30% from dollar 1; no tax-free threshold)
Non-resident investor (never been AU resident)	Foreign nationals holding Australian property or shares as an investment. Common from Singapore, Hong Kong, Malaysia, China, UK, US.	Yes — same split treatment	N/A — never their main residence	Yes — 15% on property; varies on shares	Australian non-resident brackets

The first group keeps every discount, exemption and bracket an Australian resident has. The reform hits them exactly as it hits any resident. The second and third groups face the reform stacked with the foreign-resident regime — which is where the combined impact gets meaningful.

The hardest cases sit on the boundary. Tax residency for individuals is determined by the four ATO tests (resides test, domicile test, 183-day test, Commonwealth superannuation test) — none of which is bright-line. A taxpayer who is “out of Australia” for 18 months but still owns the family home, sends school fees to the kids in Sydney and intends to return is usually still a tax resident. A taxpayer who sold the Sydney house, packed the family up, signed a 4-year contract overseas and started paying tax in the destination country is usually not. Get this nailed down with a tax agent before any disposal — the reform makes the answer materially more expensive.

Timeline — when each change takes effect

The Budget 2026 reform dates apply equally to expats and foreign residents. The pre-existing FRCGW and main-residence-denial rules run in parallel.

Date	What happens	Why it matters for expats / foreign residents
12 May 2026	Budget 2026 announces CGT reform	Foreign-resident vendors should start planning sale timing. Same anti-avoidance hints that apply to residents apply to non-residents — don’t try to shift gains across 1 July 2027 in artificial structures.
30 June 2027 (Wed)	Last day for full legacy 50% discount on disposals	For foreign residents, the discount was already restricted (no main residence exemption since 2019). The 50% discount on investment gains is still worth taking before this date if a sale is imminent.
1 July 2027	Reform begins — applies equally to foreign residents	Split-treatment apportionment starts. The 1 July 2027 cost-base valuation rules apply to assets owned by foreign residents the same as they apply to residents.
Ongoing	15% FRCGW continues unchanged	The withholding regime is separate from the discount reform. It still applies at settlement on property sales. Foreign resident vendors still need a variation or to wear the cashflow hit.
Ongoing	Main residence exemption still denied to foreign residents (post-12 Dec 2019)	Reform doesn’t restore this. If anything, the reform makes foreign-resident property sales relatively worse — you lose both the exemption AND a chunk of the discount.
1 July 2042	First new-build 15-year carve-outs expire	If you (resident or foreign resident) bought eligible new residential property as first owner from 1 July 2027 onward and held continuously for 15 years, the 50% discount option is retained.

The key practical date for any expat or foreign-resident vendor is still 30 June 2027 for sales already in the pipeline. After that, the reform applies regardless of where you live.

How time changes your tax bill — the expat angle

The same two timing levers that drive resident outcomes drive foreign-resident outcomes — holding-period split and years past 1 July 2027 at disposal. The math is identical. What changes for foreign residents is how the resulting taxable gain interacts with the rest of the rules.

Holding-period split — identical math, different downstream rate

For an asset bought on 1 July 2022 and sold on dates after 1 July 2027:

Sale date	Years owned	Days pre-reform / total	Legacy share	Reform share
1 July 2028	6 yrs	1,826 / 2,192	83.3%	16.7%
1 July 2030	8 yrs	1,826 / 2,922	62.5%	37.5%
1 July 2032	10 yrs	1,826 / 3,653	50.0%	50.0%
1 July 2037	15 yrs	1,826 / 5,479	33.3%	66.7%

For a foreign-resident vendor with a 10-year hold (5 yrs pre + 5 yrs post 1 July 2027), the gain splits 50/50 — half taxed under legacy rules (foreign resident still gets the 50% discount on the legacy portion), half taxed under reform rules.

Foreign residents who became Australian non-residents BEFORE 12 December 2019 had a transitional grandfathering window (sales settled by 30 June 2020 could still claim the main residence exemption on a former home). That window closed long ago. Foreign-resident main-residence treatment from 2020 onward is denial.

Indexation table is the same

The CPI uplift table from the master article applies unchanged. At 2.5%/yr assumed CPI, an asset’s reform-portion cost base is uplifted by:

Years between 1 July 2027 and disposal	Indexation factor
1 yr	1.025×
3 yrs	1.077×
5 yrs	1.131×
10 yrs	1.280×
15 yrs	1.448×

For a foreign-resident vendor with a 5-year reform-portion hold, the cost-base uplift on that portion is 13.1%. On a $100k post-1 July 2027 portion at $720k cost base allocation, that’s roughly $94k of uplift, leaving ~$6k real gain to tax on the reform side. The math is identical to a resident’s.

The 30% minimum doesn’t bind the same way

For Australian residents, the 30% minimum tax is a binding floor for taxpayers whose marginal rate would otherwise drop below 30% on the reform portion — typically retirees or low-income earners.

For foreign residents, the 30% minimum is largely inert. Australia’s non-resident brackets start at 30% from the first dollar of taxable Australian income. There’s no $18,200 tax-free threshold and no 16% or 19% bracket. So the minimum is already met before it could “bind”. The reform portion of a foreign resident’s gain is taxed at 30% if their total Australian taxable income falls within the 30% bracket (up to $135k), then 37% above that, then 45% above $190k.

For Australian expats who remain AU tax residents (smaller group), the 30% minimum behaves the same as for any AU resident — it bites if your marginal rate would otherwise have been under 30%.

Four sensitivity scenarios for typical expat archetypes

Gain $400,000 nominal on a 10-year hold straddling 1 July 2027 (5 yrs pre, 5 yrs post). 2.5% CPI. Compare old rules (50% discount, foreign-resident no-discount where applicable) vs reform (split treatment).

Archetype	Tax basis	Old rules CGT	Reform CGT	Difference
AU expat, AU tax resident, 39% MTR on the gain	Resident brackets	$78,000	$93,300	+$15,300 (+20%)
Former AU resident, now foreign resident, all gain in 30% bracket	Non-resident brackets (no 50% discount available even pre-reform)	$120,000	$114,720	−$5,280 (−4%)
Foreign-resident investor in 37% bracket portion	Non-resident brackets	$148,000	$141,488	−$4,400 (−3%)
Foreign-resident high-net-worth, 45% bracket dominant	Non-resident brackets	$180,000	$172,080	−$4,000 (−2%)

A surprising result: for already-foreign-residents, the reform can produce a marginally LOWER tax bill on long-held appreciating assets in the 5+5 archetype, because they already paid no 50% discount under the old rules (the discount is denied to non-residents on gains accrued during non-resident periods under the 8 May 2012 rule), and the indexation uplift now gives them some relief. The reform takes a real disadvantage of theirs and partially smooths it.

But this comfort evaporates if:

• You acquired the asset AS a foreign resident (Bucket C, no pre-2027 legacy portion at all — full new rules, no 50% to lose because you never had it).
• You held the asset across an Australian residency period that pre-dates 8 May 2012 (rare these days).
• Your marginal rate skews into the 37%/45% portions and the indexation uplift doesn’t materially shelter the gain.

The math is non-trivial. Run actual numbers in the CGT calculator.

Three-bucket transition for expats

The standard A/B/C bucket structure from the master article applies, with foreign-resident specifics overlaid:

Bucket	Description	Foreign-resident treatment
A — Bought AND sold before 1 July 2027	No change. 50% discount applies (where eligible).	Foreign resident on the gain-accrual period: 50% discount denied for the foreign-resident period of accrual (Subdivision 115-C apportionment, 8 May 2012 rule). FRCGW 15% applies at settlement on property.
B — Owned before 1 July 2027, sold after	Split treatment. Pre-1 July 2027 portion: legacy discount rules (with 8 May 2012 apportionment for foreign-resident periods). Post-1 July 2027 portion: indexation + 30% min.	Most existing foreign-resident long-term holdings sit here. The legacy portion is already less generous to foreign residents than to residents because of the 8 May 2012 rule. The reform portion is straight new rules. FRCGW continues.
C — Bought after 1 July 2027	Wholly new rules — indexation + 30% min across the full holding period.	New foreign-resident investments (HK / Singapore / UK / US buyers purchasing post-2027) get the new rules from day one. No legacy portion. FRCGW continues at settlement.

The 8 May 2012 rule pre-dates this reform and is easy to miss: since that date, foreign residents have lost the 50% discount on gains accruing during their foreign-resident periods, even pre-reform. So the “legacy” side of the split treatment for a long-time foreign resident is often already at a non-discounted base.

Foreign-resident-specific rules that continue (not changed by reform)

These rules are independent of the discount reform and continue unchanged. The new rules layer on top of them.

Main residence exemption — denied since 12 December 2019

If you are a foreign resident at the date of the CGT event (typically contract date) and you sell your former main residence, the exemption is fully denied. There is a narrow life-events exception (terminal medical condition, death of spouse/child, divorce involving the property, compulsory acquisition) within six years of becoming a foreign resident. If the exception doesn’t apply, the full gain is assessable.

This rule was unchanged by Budget 2026. The reform sits on top of it — your former home is fully taxable AND now half-discount, half-indexed if held across 1 July 2027.

Full background in Selling Your Home as an Expat: The Main Residence Exemption Trap.

Non-resident brackets — no tax-free threshold

Australian non-resident tax brackets (2027-28 settings):

Income	Rate
$0 – $135,000	30%
$135,001 – $190,000	37%
$190,001+	45%

There is no $18,200 tax-free threshold and no 16% or 30% transitional bracket. A capital gain of $300,000 to a foreign resident with no other Australian income is taxed at 30% on the first $135k, 37% on the next $55k, and 45% on the balance — total around $89,950 before the discount/indexation analysis. This base structure makes the 30% minimum tax inert for most foreign residents (already met) but doesn’t reduce the absolute Australian liability.

15% FRCGW continues unchanged

The foreign resident capital gains withholding (FRCGW) regime is separate from the discount reform. Key parameters since 1 January 2025:

• Rate: 15% of the gross sale price (not the gain)
• Threshold: None — applies to all property sales regardless of value
• Mechanism: Buyer withholds at settlement, remits to ATO the next day, vendor claims credit in their tax return
• Australian-resident vendors: Apply for a free clearance certificate from the ATO at least 28 days before settlement to avoid withholding entirely
• Foreign-resident vendors: Apply for a variation if expected actual liability is materially below 15% — otherwise wear the cashflow until refund at lodgement

Full mechanics in Foreign Resident CGT Withholding: 15% Rate From 1 January 2025.

Tax treaty positions

Most Australian double tax agreements (DTAs) follow OECD model Article 13 (Capital Gains):

• Real property situated in Australia — Australia has primary taxing rights. The foreign-resident country provides a foreign tax credit for the Australian tax paid (capped at the foreign-country liability on the same gain). For property sales, the treaty rarely reduces Australian tax — it shifts who carries the residual cost.
• Shares in Australian companies — varies. Some DTAs (US, UK, Singapore) give the residence country primary taxing rights on share gains, exempting Australia. Others (China, India) preserve Australian taxing rights on shares in “land-rich” Australian companies.
• No DTA exists — Australia taxes under domestic law without relief. Hong Kong is the prominent example; the China-Australia DTA does not extend to Hong Kong residents.

This article isn’t a treaty interpretation guide. Get a written treaty position from a tax agent with international expertise before any cross-border disposal.

Worked example 1 — Australian expat selling Sydney apartment

Jenny, dual Australian/UK citizen, working in London since 2020, sold her Surry Hills investment unit on 1 July 2030.

Detail	Value
Property type	Investment (never her main residence)
Acquisition date	1 July 2015
Acquisition cost	$620,000
Disposal date	1 July 2030
Sale price	$1,150,000
Nominal gain	$530,000
Tax residency at sale	UK tax resident (Australian foreign resident)
Holding period	15 yrs total (4,383 days pre-1 Jul 2027 + 1,096 days post)
Legacy share	4,383 / 5,479 ≈ 80.0%
Reform share	1,096 / 5,479 ≈ 20.0%

Legacy portion: $530k × 80% = $424,000 gross.

• 8 May 2012 rule: Jenny was a foreign resident for the entire period since 2020. The pre-2020 portion (2015–2020, ~33% of legacy days) attracts the 50% discount; the 2020–2027 portion does not.
• Roughly: $424k × 33% × 50% discount = $70k taxable on the pre-2020 sub-portion. The post-2020 sub-portion ($424k × 67% = $284k) is fully taxable. Total legacy taxable ≈ $354k.

Reform portion: $530k × 20% = $106k gross. With 3 years of CPI uplift on cost base (factor 1.077), indexation lifts the allocated cost base by ~$15k, real reform gain ≈ $91k. The 30% minimum is inert for Jenny (foreign resident, base rate 30%).

Total Australian assessable gain: ≈ $354k + $91k = $445,000.

Australian tax at non-resident brackets (treating the gain as the only AU income):

• $0–$135k @ 30% = $40,500
• $135k–$190k @ 37% = $20,350
• $190k–$445k @ 45% = $114,750
• Total: ~$175,600

Compare with old rules: all $530k taxable under old rules (no 50% discount because she was a foreign resident throughout the gain-accrual period, save for pre-2020 sub-portion ~33%). Old-rules taxable ≈ $530k × 67% + $530k × 33% × 50% = $355k + $87k = $442k. Tax at non-resident brackets ≈ $175k. Reform adds roughly $0 to her bill — the discount she would have lost anyway under the 8 May 2012 rule is now also lost on the post-2027 portion, but indexation gives back ~$15k of relief.

FRCGW at settlement: 15% × $1,150,000 = $172,500 withheld by the buyer. Since Jenny’s actual liability is ~$175,600, she’ll owe ~$3,100 more on assessment. (If indexation had been more generous, she’d be in refund position.)

UK foreign tax credit: Jenny lodges in the UK as a UK tax resident. HMRC charges UK CGT on the same gain at 28% (residential rate post-Autumn Budget 2024 adjustments). She claims foreign tax credit for the AU tax paid, capped at the UK liability on the same gain. Net foreign-country residual depends on the treaty position — the AU-UK DTA gives Australia primary taxing rights on Australian real property, so HMRC offsets the AU tax.

Worked example 2 — Foreign-resident investor buying post-reform

Wei, Hong Kong resident, buys a Brisbane apartment as an investment on 1 January 2028 for $720,000. Sells 1 January 2034 for $1,150,000.

Detail	Value
Bucket	C — wholly new rules
Acquisition date	1 January 2028
Acquisition cost	$720,000
Disposal date	1 January 2034
Sale price	$1,150,000
Nominal gain	$430,000
Holding period	6 years post-reform (no pre-2027 portion)
CPI factor (6 yrs @ 2.5%)	1.160

Indexed cost base: $720,000 × 1.160 = $835,200. Real reform gain: $1,150,000 − $835,200 = $314,800.

Tax position:

• No 50% discount available (foreign resident).
• No 30% minimum binding (non-resident base rate is already 30%).
• No DTA (Hong Kong not covered by China-Australia treaty for Hong Kong residents).
• All $314,800 taxed at non-resident brackets:
  • $0–$135k @ 30% = $40,500
  • $135k–$190k @ 37% = $20,350
  • $190k–$314,800 @ 45% = $56,160
  • Total: ~$117,010

FRCGW at settlement: 15% × $1,150,000 = $172,500 withheld. Wei is in a refund position by ~$55,000 (i.e. variation application worthwhile pre-settlement).

Compare with old rules estimate: under the pre-reform 50% discount regime — denied to foreign residents anyway under 8 May 2012 — the full $430,000 nominal gain would have been taxed at non-resident brackets. Total: $40,500 + $20,350 + ($430k − $190k) × 45% = $168,850. The reform’s indexation gives Wei ~$51,800 of relief versus the old rules. This is the post-2027 acquisition story: foreign-resident investors who never qualified for the 50% discount in the first place gain real relief from indexation.

Worked example 3 — Returning Australian selling overseas-acquired property

Mark moved to Singapore in 2020, becoming a Singapore tax resident (Australian foreign resident). He bought a Sydney investment unit in 2024 for $750,000 while still a foreign resident. He returns to Australia in 2028, re-establishing Australian tax residency. He sells the unit on 1 January 2031 for $1,050,000.

Detail	Value
Bucket	B — split treatment
Acquisition date	1 January 2024
Acquisition cost	$750,000
Disposal date	1 January 2031
Sale price	$1,050,000
Nominal gain	$300,000
Tax residency at sale	Australian resident (returned 2028)
Holding period	1,277 days pre-1 Jul 2027 + 1,280 days post = 2,557 days
Legacy share	1,277 / 2,557 ≈ 49.9%
Reform share	1,280 / 2,557 ≈ 50.1%

Legacy portion: $300k × 50% = $150k gross.

• For the 2024–2027 sub-period Mark was a foreign resident — 8 May 2012 rule denies the 50% discount on the entire legacy portion.
• Legacy taxable: $150,000 (no discount).

Reform portion: $300k × 50% = $150k gross. CPI factor for 3.5 years at 2.5% ≈ 1.090. Indexation uplift on the allocated cost base ≈ $34,000. Real reform gain ≈ $116,000.

Total Australian assessable gain: $150,000 + $116,000 = $266,000.

Tax at resident brackets (assume Mark has $130,000 salary in 2030-31; gain added on top): the gain pushes him into 37% and 45% portions.

• Marginal slice on the gain: roughly $5k @ 30% + $55k @ 37% + $206k @ 45% = $1,500 + $20,350 + $92,700 = ~$114,550 Australian tax.

Compare with old rules estimate: the entire $300k nominal gain × 0% discount on the 2024–2027 sub-period (foreign resident under 8 May 2012) + 50% discount on the 2028–2031 sub-period (resident again). Roughly $150k × 100% + $150k × 50% = $225k taxable. At marginal rates on top of $130k salary ≈ $99,750. Reform adds ~$14,800 — a meaningful hit on a property where indexation provided some relief on the reform portion, but the lost 50% discount on the resident sub-period weighs more.

The lesson: returning Australians who bought property as foreign residents face an unusual interaction — they lose the 8 May 2012 discount denial and face the reform on the post-2027 portion. Time the sale carefully against expected residency status.

Worked example 4 — Pre-1985 asset held by foreign resident

Margaret, UK citizen and resident, inherited her Australian uncle’s Adelaide rural land in 2010. The land was purchased by her uncle in 1979 for $50,000, so it is a pre-CGT asset. Margaret sells the land on 1 January 2030 for $1,200,000.

Detail	Value
Original acquisition	1979 (pre-20 September 1985)
Acquisition cost	$50,000
Margaret’s acquisition (inheritance, rollover)	2010
Disposal date	1 January 2030
Sale price	$1,200,000

Pre-1 July 2027 portion: under the old rules, a pre-CGT asset would have been entirely exempt from CGT. Under Budget 2026, pre-1985 assets become subject to CGT — but only on the post-1 July 2027 portion of the gain. The pre-1 July 2027 portion remains exempt.

1 July 2027 valuation as new cost base: Margaret needs an ATO-supported valuation of the land at 1 July 2027. Assume formal appraisal returns $900,000.

Reform portion gain: $1,200,000 − $900,000 = $300,000 gross.

Indexation: CPI factor for 2.5 years at 2.5% ≈ 1.063. Cost-base uplift on $900,000 ≈ $56,700. Real reform gain ≈ $243,300.

Tax position:

• Foreign resident at sale (UK resident).
• 50% discount denied (8 May 2012 rule + reform split — on the reform side the discount is gone for everyone anyway).
• No 30% minimum binding (non-resident).
• All $243,300 taxed at non-resident brackets:
  • $0–$135k @ 30% = $40,500
  • $135k–$190k @ 37% = $20,350
  • $190k–$243,300 @ 45% = $23,985
  • Total: ~$84,835

Compare with old rules: the full $1.2M sale would have been entirely exempt under the pre-2027 pre-CGT rule. Reform takes a previously zero-tax asset to ~$84,835 of tax. This is the biggest absolute change of any scenario in this article.

FRCGW at settlement: 15% × $1,200,000 = $180,000 withheld. Margaret is in a refund position by ~$95,000 → variation application before settlement is essential.

UK foreign tax credit: Margaret pays UK CGT on the same gain (treaty gives Australia primary taxing rights on Australian real property, so the AU tax credits against the UK liability — net residual depends on UK rates).

The pre-1985 inherited asset story is a meaningful loss for cross-generational Australian families with property held by overseas-domiciled descendants. The exposure was free for ~45 years; from 1 July 2027 it isn’t.

The 12.5% withholding — wait, 15% (since 1 Jan 2025)

A common misconception is that FRCGW is still 12.5%. It’s 15% since 1 January 2025, and the $750,000 threshold was abolished at the same time. So:

• Sale price $400k → 15% × $400k = $60,000 withheld.
• Sale price $1.2M → 15% × $1.2M = $180,000 withheld.
• Sale price $5M → 15% × $5M = $750,000 withheld.

Withholding is on the gross sale price, not the gain. It is fully refundable against actual tax liability, but the cashflow gap between settlement and lodgement (typically 6–12 months) can be brutal for foreign-resident vendors with no Australian banking footprint to bridge.

Variation applications are the answer if expected actual tax is materially below 15% of the sale price. Apply 6–8 weeks before settlement; ATO processing on cross-border applications is slower than for domestic clearance certificates. Worked-example 4 is a clear variation candidate: $84,835 actual tax vs $180,000 default withholding.

For Australian expats who are still Australian tax residents (Group 1 above), apply for a clearance certificate — free, fast (1–14 business days), valid 12 months. This avoids withholding entirely.

Tax treaty interactions

The Budget 2026 reform doesn’t override treaties — treaties override domestic law where they conflict, and the reform is domestic law. But for Australian real property, no major treaty overrides Australia’s domestic taxing right anyway. So the reform applies to foreign-resident property sales regardless of treaty.

Where treaties matter:

• Shares in Australian-listed companies — the AU-US, AU-UK and AU-Singapore treaties typically give the residence country primary taxing rights on share gains (subject to “land-rich” exceptions for property-heavy companies). A US resident selling BHP shares might escape Australian CGT entirely under the treaty. The reform doesn’t change this carve-out — it applies only where Australia retains taxing rights.
• Land-rich Australian companies — when an Australian company holds property worth more than 50% of its assets, most treaties preserve Australian taxing rights on share-sale gains as if they were direct property gains. The reform applies as for direct property.
• Indirect Australian property interests — foreign-resident shareholders selling shares in foreign companies that own Australian property face TARP (Taxable Australian Real Property) rules. Reform applies.

For non-property assets (shares, units, crypto, IP), the treaty position needs an actual reading on the relevant DTA. Don’t extrapolate from the property answer.

Foreign tax credit mechanics: if Australia taxes a gain and the country of residence also taxes the same gain, the country of residence typically gives a tax credit for the Australian tax paid, capped at the country of residence’s tax on the same gain. So the Australian tax is rarely “wasted” — it just changes who collects. But:

• The cap matters: if Australia taxes more aggressively than the residence country (e.g. AU 45% non-resident bracket vs Singapore 22% top marginal), the excess Australian tax is not refundable by the residence country. It’s a final cost.
• Timing matters: the AU tax is paid on lodgement of the AU return (usually months after settlement); the residence-country credit is claimed in the residence-country return. Cashflow gap can be a year.

Australian expats returning home — CGT residency-change events

When you stop being an Australian tax resident, you face a CGT Event I1 deemed disposal of your non-Australian assets (unless you elect to defer). When you become an Australian tax resident again, you face a CGT Event I2 deemed acquisition of your non-Australian assets at market value on that date.

These events are not changed by the reform. They continue to apply as before. The reform only affects how the gain is taxed after you have residency status — the timing and existence of the deemed events sit at the residency change.

Practical takeaway for returning expats:

• Track the market value of your non-Australian portfolio at the date you re-establish AU residency. This is your new Australian cost base going forward.
• Any gain accrued on those assets WHILE you were a foreign resident is outside the Australian CGT net (subject to TARP carve-outs for Australian real property).
• Any gain accrued AFTER your return is subject to AU CGT — and from 1 July 2027 onward, to the reform.

For Australian assets held throughout (e.g. Sydney apartment), no deemed event triggers on residency change. The reform applies to those assets on actual disposal.

Temporary residents — different rules apply

If you are in Australia on a temporary visa and meet the Subdivision 768-915 temporary resident tests, you have a different CGT regime: most non-TARP foreign-source gains are exempt from Australian CGT, and the foreign-resident main residence denial doesn’t apply in the same way. The Budget 2026 reform applies to your taxable Australian gains the same way as for any other taxpayer, but the temporary-resident carve-out for foreign-source gains continues.

If you might be a temporary resident (typical: working-holiday-maker, 482/485 visa holders, NZ citizens on SCV), get a specific position from a tax agent before assuming the foreign-resident treatment in this article applies to you.

Planning levers

Three high-impact levers for expats and foreign residents facing the reform:

1. Crystallise pre-1 July 2027 gains if you’d sell anyway

If you have a foreign-resident-period gain on a long-held Australian asset and you were planning to sell within 12–24 months anyway, the 30 June 2027 deadline matters. Sales settled by that date avoid the split treatment entirely (you’d still face foreign-resident 8 May 2012 discount denial, but no reform overlay).

For long-held assets where the legacy share is going to be 70%+ anyway, the reform impact on the small reform portion is modest — moving the sale isn’t worth disrupting your plans. Run the actual numbers in the CGT calculator.

2. Time your tax residency change

If you’re between countries — leaving Australia or returning to Australia — the date you change tax residency affects what discount and exemption regime applies to your existing Australian assets. The 8 May 2012 rule means foreign-resident periods drop the 50% discount on legacy gains; the reform from 1 July 2027 then layers split treatment on top.

For someone returning to Australia in 2027 who plans to sell an investment property in 2029, the timing of the residency change (March 2027 vs January 2028) materially affects the discount apportionment on the legacy portion. This is a complex calc — get a tax agent to model both timings before booking a flight.

3. Manage FRCGW cashflow with a variation

For property sales where your expected actual tax liability is clearly below 15% of the sale price (worked example 4 is a clear case), apply for a withholding variation 6–8 weeks before settlement. Save up to hundreds of thousands of dollars of cashflow gap between settlement and lodgement.

For Australian-resident expats (Group 1), the clearance certificate is even simpler — free, online, 1–14 business days, valid 12 months. No reason to skip it.

Related tools

• Capital Gains Tax Calculator — the hero tool. Models legacy/reform split, indexation, 30% minimum, and resident vs non-resident bracket selection.
• Investment Property Calculator — annual rental cashflow plus CGT-on-exit modelling.
• Non-Resident Tax Calculator — non-resident bracket structure (no tax-free threshold, 30% from $1).
• Hold vs sell scenario — model the trade-off of selling now vs holding into the reform window.

Sources

• Treasury Budget Paper No. 2, Tax Reform — Boosting Home Ownership measure (12 May 2026), p21 — confirms reform applies to all CGT assets held by individuals, trusts and partnerships, including pre-1985 assets.
• Income Tax Assessment Act 1997, Subdivision 855-A — foreign resident CGT regime (Taxable Australian Real Property and indirect interests).
• Income Tax Assessment Act 1997, Subdivision 115-C — 50% CGT discount apportionment for foreign-resident periods (8 May 2012 rule).
• ATO: Foreign resident capital gains withholding overview.
• ATO: Main residence exemption for foreign residents.
• 50% CGT Discount Reform: Cost Base Indexation + 30% Minimum Tax from 1 July 2027 — master reform article.
• Selling Your Home as an Expat: The Main Residence Exemption Trap — pre-reform companion on the 2019 rule.
• Foreign Resident CGT Withholding: 15% Rate From 1 January 2025 — FRCGW mechanics.