2026–27 Tax Update: What Australians Working Overseas Need to Know
Introduction
Following the passage of the Federal Budget legislation, Australia’s Capital Gains Tax (CGT) regime is set to undergo one of its most significant reforms in nearly two decades.
In addition to introducing a new CGT calculation methodology from 1 July 2027, the reforms also include new tax residency requirements. Australians who become Foreign Residents or Temporary Residents during the relevant ownership period—whether due to overseas employment, secondments or long-term relocation—may no longer qualify for certain CGT concessions when disposing of Australian investment assets.
If you own an Australian investment property, are planning to work overseas, or have cross-border investments, now is an appropriate time to review your tax position and future investment plans.
1. Key Legislative Changes
From 1 July 2027, eligible CGT assets will progressively transition to the new CGT regime.
In addition to changes to the capital gains calculation methodology, the legislation introduces a new eligibility requirement based on an individual’s Australian tax residency status.
Under the proposed rules, taxpayers who have been classified as a Foreign Resident or Temporary Resident during the prescribed period may no longer qualify for the new CGT concession.
In other words, future CGT outcomes will depend not only on how long an asset has been held, but also on the taxpayer’s residency status throughout the ownership period.
2. Current Rules vs Proposed Rules
Under the current system, individuals who have owned a CGT asset for more than 12 months are generally entitled to a 50% CGT discount, provided the relevant eligibility requirements are met.
Current Rules
If a taxpayer becomes an Australian Foreign Resident for part of the ownership period, the CGT discount is generally apportioned based on the period during which they remained an Australian tax resident.
Example
- Investment property owned for 30 years
- 3 years spent as an Australian Foreign Resident
- The taxpayer may still be eligible to receive a CGT discount for approximately 27 years of Australian tax residency.
Proposed Rules
Under the proposed legislation, taxpayers who have been a Foreign Resident or Temporary Resident during the relevant period may no longer be eligible for the new CGT concession.
This means that even a relatively short period of overseas employment resulting in a change in Australian tax residency could affect the tax outcome when the property is eventually sold.
When planning future property disposals, taxpayers should therefore consider not only the property’s expected capital growth, but also the potential tax implications of any change in residency status.
3. Who May Be Affected?
The proposed reforms are most relevant to:
- Australians accepting overseas work assignments (expatriates)
- Individuals relocating overseas for extended employment (for example, to the UK, US, Singapore or Hong Kong)
- Owners of Australian investment properties
- Taxpayers planning to sell Australian investment properties in the future
- Individuals consider changing their tax residency status as part of a broader tax planning strategy
Individuals working overseas for a relatively short period while remaining Australian tax residents are generally expected to be less affected.
4. Should You Sell Before 1 July 2027?
Many property investors are asking whether they should sell their investment property before the new rules commence.
The answer will depend on each taxpayer’s individual circumstances.
Whether the current or the new CGT regime produces a more favourable outcome will depend on a range of factors, including:
- Expected future capital growth
- Inflation (CPI)
- Length of ownership
- Marginal tax rate at the time of disposal
- Long-term investment objectives
Selling before the new rules take effect will not necessarily produce the best tax outcome. A comprehensive tax assessment should be undertaken before making any significant investment decisions.
5. Recommendations
If you own Australian investment property, intend to work overseas, or have cross-border investments, it is worth reviewing:
- Whether your Australian tax residency status may change
- The tax implications of overseas employment
- The potential CGT consequences of future property disposals
- Whether your asset holding structure and overall tax planning strategy should be reviewed
As every taxpayer’s circumstances are different, professional advice should be obtained before making any major investment decisions.
How BOA & Co. Can Help
Australia’s tax landscape continues to evolve. Regularly reviewing your tax position can help ensure ongoing compliance while identifying opportunities to improve tax efficiency.
If you would like to understand how these proposed reforms may affect your business, employment arrangements, property investments or retirement planning, our experienced tax advisers are here to help.
Contact BOA & Co.
📞 1300 952 286