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  • Foreign residents and capital gains tax

    If you are a foreign resident or a temporary resident, you:

    • pay capital gains tax (CGT) only on your taxable Australian property
    • cannot claim some CGT discounts and exemptions.

    Foreign residents are subject to foreign resident capital gains withholding on the sale of Australian real estate worth more than $750,000.

    On this page

    Know your tax residency status

    There are 3 categories of tax residency:

    • Australian resident
    • foreign resident
    • temporary resident.

    It is important to check your tax residency status because we do not use the same rules as the Department of Home Affairs.

    For example, you:

    • can be an Australian resident for tax purposes without being an Australian citizen or permanent resident
    • may have a visa to enter Australia but are not an Australian resident for tax purposes.

    How your residency affects CGT

    • Which assets you are taxed on: Foreign and temporary residents are subject to CGT only on taxable Australian property, such as real estate in Australia and assets used to carry on a business in Australia.
    • CGT discount: The 50% CGT discount is generally not available to foreign and temporary residents for assets acquired after 8 May 2012.
    • Main residence exemption: Foreign residents are not entitled to the main residence exemption unless they satisfy the requirements of the life events test.
    • Changing residency: If you become an Australian resident, or stop being one, the assets on which you pay CGT in Australia will change.

    Assets you acquired before CGT started on 20 September 1985 are not subject to CGT.

    For Norfolk Island residents:

    • assets you acquired on Norfolk Island before 24 October 2015 are exempt from CGT
    • all other assets are subject to the normal CGT rules.

    Selling Australian real estate

    If you are a foreign resident selling Australian real estate worth more than $750,000, the buyer of your property must withhold 12.5% of the purchase price and send it to us.

    This is called foreign resident capital gains withholding. You can claim it back when you lodge your Australian tax return.

    Last modified: 04 Aug 2021QC 66058