Australia’s ATO has implemented new foreign resident capital gains tax rules, requiring vendors disposing of assets valued at AUD 50 million or more to meet enhanced notification requirements, including submitting a declaration at least 28 days before settlement.
The Australian Taxation Office (ATO) announced, on 2 October 2026, that it has implemented new capital gains tax (CGT) rules for foreign residents. The CGT rules for foreign residents (Strengthening the foreign resident capital gains tax (CGT) regime) went into effect on 1 October 2026. The changes target transactions involving Australian assets and introduce stricter notification requirements for high-value disposals.
Threshold and scope
The new rules apply to foreign vendors disposing of assets valued at AUD 50 million or more. These transactions trigger mandatory reporting obligations unless the vendor qualifies for the Indirect Australian Real Property Interest (IARPI) exemption. Assets involving related transactions that collectively reach the AUD 50 million threshold also fall under these requirements.
When selling assets other than taxable Australian real property, a vendor may provide the purchaser with a declaration confirming that foreign resident capital gains withholding (FRCGW) does not apply.
For taxable Australian real property, Australian tax residents must obtain a clearance certificate from the Australian Taxation Office (ATO) to prevent FRCGW from being imposed.
Vendors can provide either a residency declaration or a declaration confirming that the asset is not an indirect Australian real property interest (IARPI).
Notification obligations
Foreign vendors must submit a non-IARPI vendor declaration form to the ATO at least 28 days before settlement. The vendor then needs to notify the purchaser in writing that this notification has been submitted. The ATO published guidance documents and an official notification form to support compliance with these requirements.
The form must be completed accurately and submitted via email to the ATO using the approved template and instructions.
Consequences for non-compliance
Failure to submit the notification form using the ATO’s approved process means the purchaser cannot rely on the non-IARPI declaration. This triggers foreign resident capital gains withholding obligations on the transaction. The ATO released the new guidance documents and notification form on 2 October 2026.
Earlier, on 23 September 2026, the ATO announced that changes to Australia’s foreign resident capital gains tax regime had received royal assent and would take effect on 1 October 2026.
