AU Nonresident Cgt

Section 1 — Quick Reference

Section 1 Quick Reference table (ITAA 1997 Div 855; TAA 1953 Sch 1 Subdiv 14-D; ATO, Tax rates: foreign resident)

Field	Value
Country	Australia
Applies to	Non-residents of Australia disposing of Australian assets
CGT rate (non-resident individual)	The foreign resident rate scale applies to the net gain: 30c to $135,000, then 37c to $190,000, then 45c. No Medicare levy. Test any retained CGT discount under section 115-115 (see the discount row below). Confirm the scale for the income year at ATO, Tax rates: foreign resident
Key test	Taxable Australian Property (TAP) test
Withholding	15% of the sale price for contracts signed from 1 January 2025, with no value threshold. 12.5% and a $750,000 threshold applied to contracts from 1 July 2017 to 31 December 2024
Primary legislation	ITAA 1997 Div 855; TAA 1953 Sch 1 Subdiv 14-D
Tax authority	ATO (ato.gov.au)
Verified by	Pending — Australian CPA/CA sign-off required

Section 2 — The Core Rule

• Core rule for non-resident CGT — Non-residents are only subject to Australian CGT on Taxable Australian Property (TAP). Non-TAP assets sold by non-residents: no Australian CGT. (ITAA 1997 Div 855)

Section 3 — The TAP Test: What Qualifies as TAP

TAP test asset types table

Asset type	TAP?
Australian real property (land, buildings)	Always TAP
Mining, quarrying, prospecting rights in Australia	Always TAP
Shares in a company where >50% of market value derives from Australian real property interests	TAP (indirect interest)
Units in a trust where >50% of MV derives from Australian real property interests	TAP (indirect interest)
Options/rights to acquire any of the above	TAP
Assets used in Australian permanent establishment of a non-resident	TAP
Shares in an Australian company where assets are predominantly operating business, IP, goodwill, cash	NOT TAP
Portfolio shares (<10% interest in a listed company)	Generally NOT TAP regardless of asset composition

• Critical question for company shares — Critical question for company shares — Look through to the company's balance sheet. If >50% of the market value of the company's assets consists of Australian real property interests → TAP. If the company is an operating business with IP, goodwill, equipment, receivables → likely NOT TAP.
• Indirect interests: both tests — A share or unit is an indirect Australian real property interest only if the non-portfolio interest test and the principal asset test are both met. The non-portfolio test counts the holder and associates, generally requires 10% or more, and can be met through a 12-month holding within the preceding 24 months. The principal asset test compares market values, not book values or the entity's business description. (ITAA 1997 (Cth) s 855-25; s 855-30)

Section 4 — CGT Rate for Non-Residents

CGT rate for non-residents table

Item	Non-resident treatment
CGT rate (individual, 2025-26 and 2026-27)	Progressive foreign-resident rates: 30% to $135,000; $40,500 plus 37% over $135,000 to $190,000; $60,850 plus 45% over $190,000. Apply to total taxable income, including the net capital gain. No Medicare levy. ATO foreign-resident rates
General CGT discount	Do not automatically set the discount to zero. For otherwise eligible gains, apply the acquisition-date, residency-period and 8 May 2012 market-value rules in ITAA 1997 section 115-115. Eligible Australian-resident periods and pre-8 May 2012 gains can preserve a partial discount.
SBCGT concessions	Available if all basic conditions met (including active asset test)
Main residence exemption	Generally unavailable if a foreign resident at disposal. The life-events exception requires a continuous foreign-residence period of 6 years or less and a qualifying terminal illness, death or relationship breakdown, together with the other exemption conditions. Citizenship or permanent residence alone does not qualify. ITAA 1997 section 118-110
Cost base calculation	Same as residents

• Gains, losses and the order of steps — Calculate each gain from capital proceeds and the adjusted cost base, and each loss from the reduced cost base, then apply capital losses and concessions in the statutory order. An asset that is not TAP produces a disregarded loss as well as a disregarded gain. (ITAA 1997 Div 855)
• Changes from 1 July 2027 — The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 changes CGT arrangements for events from 1 July 2027. This guide's discount and rate treatment covers events before that date; apply the enacted transitional rules to later transactions. See au-capital-gains.md. (Treasury Laws Amendment (Tax Reform No. 1) Act 2026)

Section 5 — Foreign Resident Capital Gains Withholding (FRCGW)

• FRCGW obligation — FRCGW obligation — For contracts signed from 1 January 2025, the purchaser must withhold 15% of the sale price on Australian real property, with no value threshold. Contracts from 1 July 2017 to 31 December 2024 attracted 12.5% where the value was $750,000 or more. ATO, Foreign residents capital gains withholding variations. (ATO, Foreign residents capital gains withholding variations)
• FRCGW nature — FRCGW nature — This is a payment on account (not a final tax). Actual tax liability is computed in the non-resident's Australian tax return.

FRCGW threshold table

FRCGW threshold	None, for contracts signed from 1 January 2025
Withholding rate	15% of the sale price
Who withholds	The buyer (purchaser)
Remittance deadline	Day of settlement

Example (synthetic): a foreign resident individual sells taxable Australian property for AUD $10M under a contract signed after 1 January 2025. The purchaser withholds 15%, being AUD $1.5M, unless a clearance certificate or variation applies. Suppose the net capital gain after any available discount is AUD $8M, with no other taxable income or offsets. Australian tax on the foreign resident scale is $60,850 plus 45c for each dollar above $190,000, giving $60,850 + 0.45 x $7,810,000 = AUD $3,575,350. Crediting the $1.5M withheld leaves AUD $2,075,350 payable through the Australian tax return. Do not apply a flat 30% to a gain of this size.

Section 6 — Clearance Certificate

• Clearance certificate for resident sellers — Clearance certificate for resident sellers — If the seller is an Australian resident (not a foreign resident), the seller can apply for a clearance certificate from the ATO to confirm residency, relieving the buyer of the withholding obligation.
• Variation for non-resident sellers — Variation for non-resident sellers — If the seller IS a non-resident but believes no tax is payable (e.g. asset is not TAP, or gain is nil due to losses), the seller can apply for a variation to reduce the withholding amount.
• Vendor declarations and excluded transactions — Other TAP interests and options use the vendor declaration rules rather than a clearance certificate, and qualifying transactions on an approved stock exchange are excluded from withholding. Obtain the right document before settlement and arrange payment of the withheld amount to the ATO. (ATO, Foreign resident capital gains withholding overview)

Applications: via ATO online portal (myGov / Tax Agent portal). Processing time: 14-28 days typically.

Section 7 — Filing Obligations for Non-Residents

• Filing requirement — Filing requirement — A non-resident who sells TAP must lodge an Australian non-resident individual tax return for the year of disposal (even if no tax is payable after losses/concessions). Due date: 31 October following the end of the financial year (or later with a tax agent).
• TFN requirement — TFN requirement — Australian Tax File Number (TFN) is required. Non-residents can apply via ATO.
• Reconcile the withholding credit — The withheld amount is a credit in the vendor's assessment, not the final tax. Reconcile it in the Australian return, retain the purchaser's payment evidence and confirm the lodgement deadline for the entity.

Section 8 — Interaction with Tax Treaties

• DTA coverage and Article 13 — DTA coverage and Article 13 — Australia has double tax agreements (DTAs) with 45+ countries. Article 13 of most DTAs follows the OECD Model — gains on shares may be taxed by the country of residence of the seller UNLESS the shares derive principally from Australian real property (aligns with the TAP domestic test).
• Treaty outcome mirrors domestic TAP rules — Treaty outcome mirrors domestic TAP rules — Under most treaties, the outcome mirrors the domestic TAP rules: if TAP → Australia taxes; if not TAP → Australia does not tax (residence country taxes).

Always check the saving clause and specific treaty wording.

Section 9 — Sources

• ITAA 1997 Division 855 (non-resident CGT)
• Tax Administration Act 1953, Schedule 1, Subdivision 14-D (FRCGW)
• ATO: ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/foreign-residents-and-capital-gains-tax
• ATO: Foreign resident capital gains withholding (ato.gov.au/FRCGW)

Working paper only. The TAP classification requires analysis of the company's asset composition by market value — not book value. Engage a qualified Australian tax adviser for transaction-specific advice.

Contributed by Ryan Duguid.

Contributed by Ryan Duguid.

Contributed by Ryan Duguid.