Digital Nomad
Foreign Resident CGT Regime: What Digital Nomads and International Investors Need to Know
New draft legislation will tighten capital gains tax for foreign residents – don’t be caught unaware if you’re investing or disposing of Australian real estate or natural-resource assets.
By NomadicTax Research Team • 5-8 min read • May 5, 2026
## What’s Proposed in the Foreign Resident CGT Reform
On **10 April 2026**, the Australian Treasury released **draft legislation** to strengthen the **foreign resident capital gains tax (CGT)** regime. The changes aim to extend CGT to foreign residents disposing of assets with close economic connection to Australian land and natural resources. Proposals include:
- Defining "**real property**" in statutory terms.
- Expanding the scope of **Taxable Australian Real Property (TARP)**.
- Changing the **principal asset test**.
- New vendor notification obligations for large transactions.
- **Retrospective amendments** dating back to **2006** concerning interactions with state laws and improvements on land and fixed assets.
- A notable addition: a **50% CGT discount for foreign residents investing in renewables**, valid for a **4-year transitional period**, to support the energy transition. ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/may-2026.html?utm_source=openai))
These amendments are still in the draft stage; the comment period ended **24 April 2026**. They are not yet law. ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/may-2026.html?utm_source=openai))
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## Why Digital Nomads / International Investors Should Care
| Situation | Possible Impact Under Reform |
|---|---|
| Disposing overseas real estate or shares of a land-backed property trust | Might be considered taxable TARP; foreign resident CGT kicks in. |
| Buying renewable energy assets in Australia | Could benefit from **50% CGT discount** for foreign investors under transition rules. |
| Having property with “improvements” or fixed structures | Such features may make the property more closely connected to Australia for CGT purposes. |
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## What You Can Do Now to Prepare
- **Review your investment structures**: trusts, companies, or holding vehicles may need rethinking depending on nationality and residency.
- **Keep records of asset improvements**, purchases, and alterations made historically—especially those fixed or structural. These may affect retrospective aspects.
- **Stay current with state and territory severance laws** and how they interact with federal CGT regime.
- **Seek advice if disposing of Australian land or natural-resource-tied assets**—foreign sales could become taxable where previously they were not.
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## What’s Not Yet Clear & Next Steps
- How wide the definitions of land, “fixed improvements”, and principal assets will be.
- How vendor notification obligations will be enforced and penalties if they fail.
- How tax treaties might mitigate or complicate these changes.
- Whether the 50% discount for renewables investors will apply only to qualifying assets or more broadly.
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## Case Example
Suppose you’re a digital nomad with foreign residency, owning an Australian coastal property with solar panels (fixed improvements) and undeveloped land. Under the new rules:
- These improvements may cause the whole property to fall under broadened TARP.
- Disposing of the property could trigger full CGT obligations, including retrospective elements.
- If part of energy-transition (solar infrastructure), you may access the proposed CGT discount.
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These reforms, when enacted, will give foreign investors less opportunity to avoid CGT for land-related disposals. Keep a close eye on formal passage of the law, and assess existing and future investment decisions accordingly.