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2026

The Tax Institute welcomes removal of retrospective foreign resident CGT changes

SYDNEY, 7 July 2026: The Tax Institute has welcomed the Government's decision to remove the proposed retrospective application of the foreign resident capital gains tax (CGT) reforms, following the introduction of the legislation into Parliament on 2 July.

The removal of retrospectivity addresses one of the most significant concerns raised by The Tax Institute in its joint submission with the Institute of Public Accountants during consultation on the exposure draft legislation. The Joint Bodies had expressed concern that the draft legislation would retrospectively expand the foreign resident CGT regime back to 12 December 2006, potentially exposing foreign investors to tax liabilities on historical transactions that were not taxable based on the law as it was understood at the time.

"Retrospective tax laws undermine certainty and confidence in Australia's tax system. The removal of retrospectivity is a welcome and important improvement that reflects concerns raised by stakeholders during the consultation process”, says Ms Julie Abdalla, Head of Tax & Legal.

The Bill introduced into Parliament also contains several other important improvements compared to the exposure draft released in April.

Other welcome improvements

The Bill also incorporates a number of improvements that respond to issues raised by stakeholders during consultation. In particular, we welcome the inclusion of energy storage assets within the renewable energy concession, addressing concerns raised in our joint submission regarding standalone battery energy storage systems and combined generation-and-storage projects. We also welcome the reduction of the renewable energy asset threshold from 9:1 to 3:1, which broadens access to the concession and provides a more practical test for eligible projects.

"These changes demonstrate the value of consultation in the policy-making process and show that stakeholder feedback can lead to better policy outcomes, greater certainty and more practical legislation. The refinements to the renewable energy concession will better support investment in Australia's energy transition," says Ms Abdalla.

Continued monitoring needed

While welcoming these improvements, The Tax Institute notes that the legislation still represents a significant expansion of Australia's foreign resident CGT regime, including through the broadened definition of real property and changes to the principal asset test.

"Given the breadth and complexity of these reforms, we encourage the Government to undertake a post-implementation review to assess whether the measures are operating as intended and whether they are having any unintended impacts on foreign investment into Australia," says Ms Abdalla.

The Tax Institute looks forward to continuing to engage constructively with Government as the reforms progress and to supporting the development of practical guidance that provides certainty for taxpayers and investors.

ENDS

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