Leaving Australia does not take your Australian property out of the Australian tax system. That has been true for a long time. What changed on 1 October 2026 is how much counts as "property" for that purpose, how far back the tax office can look when you hold it through a company, and how the rule reads against Australia's tax treaties.
The changes come from Schedule 2 of the Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Other Measures) Act 2026, Act No. 86 of 2026. It received Royal Assent on 15 September 2026, and its commencement table starts Schedule 2 on 1 October 2026. The amendments to Division 855 apply to CGT events that happen on or after that date. In the government's joint media release of 10 September 2026, the Treasury ministers said the changes "bring the Capital Gains Tax (CGT) treatment of foreign residents more into line with the treatment of Australians" and into "closer alignment with the OECD Model Rules".
Most of the commentary has been about infrastructure funds and large investors. The rules apply to individuals too: Australians who have moved abroad and kept assets at home, and foreigners who invest in Australia from outside.
The starting point: what a foreign resident pays CGT on
The basic rule is in section 855-10 of the Income Tax Assessment Act 1997. A foreign resident disregards a capital gain or loss unless the asset is taxable Australian property. Section 855-15 lists the categories. For an individual, the ones that matter are:
- taxable Australian real property, meaning Australian land and what is attached to it;
- an indirect Australian real property interest, meaning a stake in a company or trust whose value comes mainly from Australian real property;
- assets used in a business through a permanent establishment in Australia;
- assets you chose to keep in the Australian net when you left (more on that below).
Shares in listed Australian companies, Australian bank deposits and most other financial assets held by a foreign resident are outside this list, unless they cross the thresholds for an indirect real property interest. The 1 October changes do not alter that structure. They widen what falls into the first two categories.
Change one: a statutory definition of real property
Until 1 October, the dictionary of the 1997 Act in section 995-1 had no entry for "real property". Item 20 of Schedule 2 now inserts one. Real property includes:
- any interest in or right over land, regardless of how State or Territory law treats it;
- a personal right to call for or be granted an interest in or right over land;
- a licence or contractual right exercisable over or in relation to land;
- a thing fixed or installed on land, whether or not it is a fixture under State law or general law;
- a lease of such a thing, and a licence or contractual right over it.
Section 855-20 was rewritten to match. Taxable Australian real property is now real property that is situated in Australia, relates to land in Australia, or relates to a thing fixed or installed on land in Australia. Two further items were added: water entitlements for an Australian water resource, and options or rights to acquire any of these assets.
For a private individual, the practical reach looks like this. An apartment or house was always caught. What is now explicitly caught includes rights that sit around land rather than in it: contractual rights to occupy, licences, off-the-plan purchase rights, leases of installed equipment, and water entitlements held by a farming family member who has moved overseas. A foreign resident who holds any of these should assume they are now taxable Australian real property.
Change two: a 365-day look-back for company and trust stakes
The second change targets holdings through entities. Under section 855-25, a stake in a company or trust is an indirect Australian real property interest if two tests are met:
- the non-portfolio interest test: the holder and its associates have 10% or more of the entity, either at the time of the CGT event or throughout a 12-month period in the previous 24 months (the 10% figure is in section 960-195);
- the principal asset test in section 855-30: the market value of the entity's taxable Australian real property exceeds the market value of its other assets.
Before 1 October, the principal asset test was applied at the time of the CGT event. Item 16 of Schedule 2 changes that. The test is now passed if the entity was land-rich at that time or at any time during the 365 days before it. The minister can also set a different testing time by legislative instrument.
This closes a familiar sequence: an entity that was mainly land sells or dilutes its land shortly before its owners sell their shares, so that on the day of sale it no longer looks land-rich. For an individual with 10% or more of a private company or unit trust that owned Australian property in the last year, the stake can now be taxable even if the property has gone by the date of sale.
Change three: treaties read through the same lens
Tax treaties usually let the country where land is located tax gains on that land, and some of Australia's treaties give the expressions "real property", "immovable property" or "land" the meaning they have under Australian law. Item 21 of Schedule 2 replaces subsection 3(5) of the International Tax Agreements Act 1953. To the extent a treaty does that, those expressions now mean taxable Australian real property within the 1997 Act.
The effect is that the broader domestic definition carries into the treaty. A foreign resident who expected a treaty to narrow what Australia could tax should not rely on that without checking the treaty's own wording against the new rule.
What did not change
Some rules that matter most to individuals were already in place before October and stay as they were. The Brief's guide to the Australian tax return for foreign residents covers them in detail; in short:
- The CGT discount. Under sections 115-105 and 115-115, the 50% discount is reduced for any part of the ownership period after 8 May 2012 during which the owner was a foreign resident or a temporary resident. It is nil if the owner was a foreign resident throughout.
- The main residence exemption. Under section 118-110(3), it does not apply if, when the sale happens, the owner is an excluded foreign resident (a foreign resident for a continuous period of more than six years) or a foreign resident who does not satisfy the life events test. That test covers a terminal medical condition of the owner, a spouse or a minor child, the death of a spouse or minor child, and certain property settlements between spouses, each within a period of foreign residence of six years or less.
- Withholding at settlement. Under section 14-200 of Schedule 1 to the Taxation Administration Act 1953, a buyer who acquires taxable Australian real property or an indirect Australian real property interest from a foreign resident pays the tax office 15% of the first element of the cost base. Section 14-215 lists the excluded transactions; property value is not one of them, so there is no exemption for low-value sales. Australian resident sellers avoid the withholding with a clearance certificate under section 14-220. Schedule 2 tightens the rules on seller declarations for transactions of $50 million or more, which will rarely concern a private individual.
No retrospective reach, with exceptions
A wider definition invites the question whether past sales can be reopened. The enacted text answers it in item 40 of Schedule 2. If the tax office made an assessment for a foreign resident before 1 October 2026 that included a capital gain on Australian real property or an indirect interest, it cannot amend that assessment on the point unless the normal amendment period is still open, or there was fraud or evasion, or the amendment follows an objection made before 10 April 2026. Item 39 confirms that the Division 855 changes apply to CGT events from 1 October 2026 onward.
Why this matters when you leave
The changes connect directly to Australia's departure rule. Under section 104-160, CGT event I1 happens when an individual stops being an Australian resident. The departing resident works out a gain or loss on each CGT asset owned at that moment, at market value, except taxable Australian real property and Australian business assets of a permanent establishment. Those are left out of the departure calculation because they stay taxable after departure anyway.
Section 104-165 lets an individual choose to disregard the departure gain on all the other assets. If they do, those assets are treated as taxable Australian property until they are sold or the person becomes resident again. The Brief explained the mechanics in The Tax on Leaving and argued the principle in Exit Taxes Are Taxes on Time.
Put together, a person leaving Australia now faces a wider permanent net. Everything that is "real property" under the new definition, everything closely tied to Australian land, and any stake of 10% or more in an entity that was land-rich at any point in the past year stays within Australian CGT for as long as they hold it, wherever they live.
A practical checklist for Australians abroad
If you have left Australia, or plan to, and still hold assets there:
- List every Australian asset that touches land, not only houses and apartments: leases, licences, off-the-plan contracts, water entitlements, installed equipment, rights to acquire property.
- Check every private company or trust stake of 10% or more. If the entity held Australian property at any time in the past 365 days, treat the stake as potentially taxable on sale.
- Reprice the discount. For any asset bought after 8 May 2012, work out how much of the ownership period was foreign residence; that part gets no discount.
- Do not count on the main residence exemption after more than six years abroad, or at any time as a foreign resident without a life event.
- Plan for 15% withholding at settlement and lodge an Australian return to reconcile it.
- Read the treaty with your new country of residence in light of the new section 3(5); then check how that country taxes the same gain, since it may tax it too and give a credit.
Our Australia country guide covers the other side of the picture, including the treatment of temporary residents who move in. For people who compare destinations on recurring property costs rather than gains, The Brief's countries with no property tax is the companion piece.
The direction of travel
The ministers framed the change as alignment with the OECD model, and the structure follows it: land is taxed where it lies, including when it is held indirectly. For internationally mobile people, the lesson reaches beyond Australia. Moving your tax residence changes how your income and most of your investments are taxed. It changes very little about land you leave behind, and since 1 October 2026 Australia's definition of land is broader than it was.
Work with Sebastian
If you have left Australia, or are planning to, and still hold property, a family company or other assets tied to Australian land, Sebastian works with internationally mobile clients on making residence, assets and filings line up across both countries. Book a consultation.
