Tax Institute praises walk back of foreign resident CGT changes

Yasmine Raso

Senior Journalist

8 July 2026

The Tax Institute has signalled its agreeance with the Government’s decision to walk back the proposed changes to foreign resident capital gains tax (CGT) rules, which would have allowed CGT to be retrospectively applied to transactions as far back as December 2006.

The Bill introduced into Parliament last week follows a public consultation period on the draft legislation, with the Institute’s joint submission with the Institute of Public Accountants raising concerns about “exposing” foreign investors to new tax liabilities on historical transactions that weren’t subject to those liabilities at the time of the purchase.

The Institute said in a statement 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”.

“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”, Julie Abdalla, Head of Tax & Legal at the Tax Institute, said.

“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.

“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.”

The Institute noted it had also welcomed several other reform inclusions out of its joint submission, including energy storage assets within the renewable energy concession and the reduction of the renewable energy asset threshold from 9:1 to 3:1 to provide better access to the concession and a more practical test for eligible projects.