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Foreign residents and taxable Australian property

Foreign residents disposing of taxable Australian property must lodge returns advising of any gain or loss.

Last updated 30 April 2023

Taxable Australian property

Foreign residents (except beneficiaries of resident non-fixed trusts) can disregard a capital gain or loss from a CGT event (such as a disposal), unless that CGT asset is taxable Australian property (TAP).

TAP comprises of:

  • taxable Australian real property (TARP)
  • indirect interests in Australian real property interests
  • assets used in carrying on a business through a permanent establishment in Australia
  • an option, or right, to acquire any of the above assets.

Foreign residents disposing of TAP are expected to lodge returns advising of any gain or loss.

Taxable Australian property that attracts our attention

Foreign residents attract our attention if they:

  • hold significant direct or indirect interests in TAP assets – for example, shares in mining companies and interests in commercial properties
  • dispose of TARP or indirect interests but do not meet their CGT obligations in relation to the disposal
  • characterise or value assets in a way to come within the CGT exclusion
  • enter into a series of transactions such as 'staggered sell-down' arrangements that attempt to come within the CGT exclusion
  • lodge returns that are not in accordance with new associate inclusive test in determining total participation interests
  • fail the principal asset test by inappropriately allocating significant market value to non-TARP assets
  • are unlikely to have sufficient funds or assets remaining in Australia to meet their tax obligation relating to a disposal of a TARP.

Guidance on taxable Australian property

For information on staggered sell-down arrangements and exploiting asset valuations to avoid capital gains tax, see:

  • TA 2008/19 Foreign residents attempting to avoid Australian capital gains tax by certain 'staggered sell down' arrangements
  • TA 2008/20 Foreign residents exploiting asset valuations to avoid capital gains tax.