The Federal Government has dropped the retrospective element of proposed foreign resident capital gains tax (CGT) reforms after concerns raised by CPA Australia.
The new Bill, introduced to Federal Parliament, removes a controversial proposal that would have changed the tax treatment of transactions dating back almost 20 years to 12 December 2006. Instead, the changes will now apply only to future transactions.
CPA Australia Tax Lead Jenny Wong welcomed the decision, saying it provides greater certainty for taxpayers, advisers and investors.
“This is a significant and welcome outcome,” Ms Wong said.
“The original proposal would have retrospectively changed the tax treatment of transactions going back almost two decades. CPA Australia argued this was unfair and could undermine investor confidence, and the Government has listened.”
The legislation also includes safeguards preventing the Australian Taxation Office from reopening most past foreign resident CGT assessments outside the normal amendment period. Exceptions apply only in cases involving fraud, evasion or matters already under review before 10 April 2026.
Ms Wong said it was important these protections are written into the law rather than relying on administrative discretion.
CPA Australia believes the outcome demonstrates the value of meaningful consultation between government and industry. However, Ms Wong said future consultation periods should be longer to allow stakeholders enough time to review major tax reforms before legislation is drafted.
The Bill also broadens the definition of Australian real property for foreign resident CGT purposes, covering land, rights over land, certain licences, water entitlements and some mining and quarrying interests.
While CPA Australia welcomed guidance confirming that incidental service arrangements and mortgage-backed securities are not intended to be included, it says further clarification within the legislation itself would provide greater certainty for taxpayers.
The organisation believes the changes strike a better balance between protecting Australia’s tax system and maintaining confidence in Australia as a stable place to invest.
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