Bill removes near two-decade lookback from foreign resident tax reforms
The federal government has dropped retrospective provisions from its planned changes to Australia's foreign resident capital gains tax (CGT) regime, after sustained pressure from industry groups.
Legislation tabled in federal parliament removes a proposal that would have applied an expanded CGT base to transactions dating back to 12 December 2006. Under the earlier exposure draft, the changes could have reopened deals struck almost 20 years ago, drawing criticism from industry bodies – including the Property Council of Australia and CPA Australia.
The bill instead applies the reforms only to CGT events occurring on or after commencement. It also inserts statutory safeguards stopping the tax commissioner from amending prior-year assessments for foreign resident CGT matters outside standard amendment periods, aside from the usual fraud or evasion exception and cases already under review, appeal or objection before 10 April 2026.
“This policy pivot is a win for commonsense,” said Mike Zorbas (pictured right), chief executive of the Property Council. “Australia relies on long-term investment to build homes, infrastructure and the assets that support economic growth.”
“Applying new tax rules to transactions completed two decades ago would have spooked the international investors we need to help build tomorrow’s Australia.”
The bill still broadens Australia's foreign resident CGT regime through a wider definition of "real property," which the Property Council said would effectively capture many infrastructure and energy assets. The organisation said it had raised concerns during consultation about the original proposal's retrospective reach and would keep working with government on the remaining reforms.
CPA Australia also welcomed the shift to a prospective approach, saying it followed concerns the accounting body raised in an April submission to Treasury over the draft's scope.
“This is a significant and welcome outcome,” said Jenny Wong (pictured right), tax lead at CPA Australia. “The exposure draft would have retrospectively rewritten the tax treatment of transactions going back almost two decades. CPA Australia said that was disproportionate and damaging to investor confidence, and the government has responded.”
Wong said the legislated safeguards mattered because taxpayers should not have to depend on administrative practice for protection against historical exposure.
“The protections are written into the law itself,” she said. “Taxpayers won't have to rely on administrative discretion – the bill expressly prevents historical assessments being reopened outside the normal amendment periods. That's the legislative certainty we asked for.”
“Global capital is highly mobile and Australia competes with other markets every day for investment,” Zorbas added. “Tax policy certainty matters because investment decisions made today shape the homes, jobs and infrastructure of future generations.”
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