Entity Setup
Setting Up an Entity in Australia? Trusts, Companies & Foreign Ownership Rules to Know Now
New rules around foreign ownership of property, updated MIT withholding, and entities with foreign exposure mean structuring decisions made today could have tax impacts for years.
By NomadicTax Research Team • 5-8 min read • March 15, 2026
## Key entity-related policy shifts to consider
### Foreign resident CGT regime & foreign ownership bans
- From **1 July 2026**, caps in the **foreign resident Capital Gains Tax (CGT) withholding regime** are being increased to **A$400,000** annually. ([ashurst.com](https://www.ashurst.com/en/insights/australia-federal-budget-2025-2026-key-tax-measures/?utm_source=openai))
- Also under Budget‐2025-26, the government introduced a **two-year ban (starting 1 April 2025)** on foreign persons (including temporary residents and foreign-owned companies) buying **established dwellings**, with limited exceptions. While that ban is in effect already, enforcement and compliance by the ATO will be strengthened. ([ashurst.com](https://www.ashurst.com/en/insights/australia-federal-budget-2025-2026-key-tax-measures/?utm_source=openai))
### Managed Investment Trust (MIT) withholding tax & concessions
- The Government intends to amend laws to ensure foreign widely held pension funds and sovereign wealth funds have access to reduced MIT withholding rates on eligible income from “captive” MITs. Clarifications will apply to distributions made from 13 March 2025. ([ashurst.com](https://www.ashurst.com/en/insights/australia-federal-budget-2025-2026-key-tax-measures/?utm_source=openai))
### Business structure & oversight focus
- There is increased funding (approx **AU$999 million over four years**) allocated to the ATO for compliance—especially targeting multinationals, large private businesses and foreign investors. ([ashurst.com](https://www.ashurst.com/en/insights/australia-federal-budget-2025-2026-key-tax-measures/?utm_source=openai))
- The ATO’s enforcement powers and risk areas (e.g. land banking via foreign ownership, CGT withholding, MIT misuse) are under close legislative and regulatory attention. ([ashurst.com](https://www.ashurst.com/en/insights/australia-federal-budget-2025-2026-key-tax-measures/?utm_source=openai))
## Practical implications for structuring now
- If you're a foreign investor or business entity, carefully evaluate whether purchasing established property is permitted under the foreign ownership ban—if not, consider built-to-sell or newly constructed properties, or corporate investment via allowed entities.
- For trusts or companies using MITs, ensure that your structure qualifies as “widely held” or “captive” as proposed, and that you maintain documentation supporting eligibility. It may involve reviewing membership, beneficial ownership, fund rules. A mistaken categorization could lead to full withholding rather than reduced rates.
- Consider timing of distributions & disposals: for example, disposing of assets prior to 1 July 2026 or 2027 might avoid certain caps or withholding impacts.
- Ensure foreign resident CGT obligations are understood: purchasers of certain assets must withhold, and failure to withhold properly can result in liability.
## Example scenarios
- A foreign pension fund intending to invest via an MIT should assess whether it is “widely held” or “captive” under the proposed legislation, and whether distributions made after **13 March 2025** will be eligible for reduced withholding. Plan structure accordingly.
- A developer looking to sell newly built homes may navigate around foreign ownership bans, whereas someone buying established dwellings will likely be prohibited outright unless an exception applies.
**Bottom line**: Recent legislative announcements mean entity form, ownership, and residency structuring matter more than ever. Early design and review can yield tax savings and avoid withholding traps.