Understanding the new Australian Tax Non-Resident CGT and Tax Resident/Non-Resident 15% Asset Withholding Tax implications from proposed expansions to the Real Property, TARP and IARPI definitions (likely from 1/7/26)

Treasury’s recent 10 April 2026 Draft Legislation release is proposing to significantly expand the Australian taxation concepts of Taxable Australian Real Property (TARP), Indirect Australian Real Property (IARPI) and insert a new s 995-1 ITAA 1997 tax definition of “Real Property”, with likely effect from 1 July 2026 (subject to Royal Assent date to the final law).

The Draft Legislation’s title refers to “the foreign resident capital gains tax regime” and there will clearly be numerous non-resident Australian Capital Gains Tax (CGT) implications arising from the Draft Legislation (including a proposal to significantly backdate some elements of the above definition) as well increasing Non-resident Vendor cash flow and compliance implications from Australia’s associated Subdiv 14-D Sch 1 Taxation Administration (TAA)1953 15% withholding tax from selling/transferring a significantly expanded range of TARP/IARPI assets.  Of equal, or perhaps greater, importance are the significant implications for many Australian Tax Residents purchasing a wide range of additional assets which will become subject to Australia’s  associated Subdiv 14-D Sch 1 TAA 1953 Australia’s  associated Subdiv 14-D Sch 1 TAA 1953 15% asset purchaser withholding tax obligations as a result of the above definition changes.  Examples of newly affected purchases are likely to include items of equipment which have been installed on or affixed to Australian land, a wide range of legal rights over land, water and installed equipment etc. which will require ATO Clearance Certificates (including for transactions solely between related or unrelated tax residents) and/or Membership Interest Vendor Declarations.  Numerous practical issues which will shortly face Resident and Non-Resident taxpayers, and their professional advisers alike will need to be quickly understood (including for both tax and potential Anti-Money Laundering (AML/CTF) compliance purposes) if the proposed law is enacted as currently drafted.

Click here to read our detailed summary of the important practical issues affecting both Resident and Non-Resident taxpayers from the expected start date of 1 July 2026 (this PDF summary includes links to our explanatory online videos).