The 2025-26 Australian Federal Budget brings a raft of tax changes, but not all apply equally — especially if you’re an Australian expat, non-resident, or foreign investor. While local taxpayers are set to receive tax cuts and cost-of-living relief, those living overseas or holding foreign tax residency will largely be left out — and in some cases, face tighter rules.
Here’s a breakdown of the Budget’s key tax and compliance implications for non-residents and Aussies living abroad.
One of the Budget centrepieces is a staged personal income tax cut starting in July 2026. For resident taxpayers, the tax rate on income between $18,201 and $45,000 will drop from:
- 16% to 15% in 2026–27, and then
- 15% to 14% in 2027–28
But if you’re classified as a non-resident for tax purposes, you’re not eligible. You’re taxed at a flat 30% on the first dollar of Australian income up to $135,000, and higher rates beyond that. No tax-free threshold, no offsets, and no benefit from these headline changes.
Here’s a quick comparison.
| Income Bracket | Tax Resident (2027-28) | Tax Non-Resident |
|---|---|---|
$0–$18,200 | 0% | 30% |
$18,201–$45,000 | 14% | 30% |
$45,001–$135,000 | 30% | 30% |
$135,001–$190,000 | 37% | 37% |
$190,001+ | 45% | 45% |
Bottom Line: If you’re earning Aussie-sourced income from overseas, you won’t benefit from the tax rate cuts.
2. Ban on Foreign Buyers of Existing Property
From 1 April 2025, foreign nationals — including temporary residents — will be banned from buying existing Australian residential property for two years.
Key points:
- Applies only to established dwellings
- New builds and developments remain accessible (to encourage supply)
- The ATO will receive $5.7 million to enforce the ban
- A further $8.9 million has been allocated to target land banking by foreign investors
Exceptions may apply for:
- Developments that significantly boost housing supply
- Worker accommodation linked to foreign-owned companies
This is a politically charged measure aimed at cooling housing demand before the federal election — but it directly impacts property strategies for foreigners and offshore Aussies looking to invest back home.
3. Capital Gains Tax (CGT) Tightening on the Horizon
The Government plans to broaden and strengthen the CGT rules for foreign residents, although the start date has been deferred until after the election.
Proposed CGT changes include:
- Expanding the types of assets subject to CGT (especially land-rich entities)
- Switching the principal asset test to a 365-day testing period, closing timing loopholes
- Requiring notification to the ATO before large ($20m+) disposals of shares or membership interests
These measures will make it harder to avoid CGT on Australian assets and increase compliance obligations for non-resident investors, including expats who still own significant property or equity in Australian entities.
4. Tougher ATO Compliance Programs
The Budget also includes nearly $1 billion in new funding for ATO enforcement, with a focus on:
- Multinational tax avoidance
- Illicit tobacco and black market activity
- Shadow economy behaviours
- Wealthy individuals and medium-to-large businesses
While this targets aggressive avoidance more than typical expats, non-residents with complex arrangements or large income/assets in Australia should expect more scrutiny in the coming years.
5. No New Superannuation Changes — But Watch Division 296
There are no new super measures directly affecting expats or foreign residents in this Budget. However, the Division 296 tax on super balances above $3 million — which includes unrealised gains — is still in limbo.
- If passed, it will apply from 1 July 2025.
- If you live overseas and hold a large super balance, this could impact your tax position.
Labor supports the change. If the government wins re-election, expect it to proceed — unless delayed again.
What Should You Do?
If you’re:
- Holding property or shares in Australia
- Generating rental or investment income
- Planning to return to Australia or invest more from abroad
…then this Budget makes it more important than ever to review your tax residency status, CGT exposure, and investment structures.
Need Help Navigating These Tax Impacts?
Unsure how the 2025–26 Budget impacts your Australian tax obligations while living overseas?
Odin Tax helps Aussie expats and foreign residents stay compliant, minimise tax, and make smart financial decisions. Whether it’s CGT exposure, non-resident tax rates, property investment, or super — we know the rules inside out.
Get your free ATO tax health check and a personalised action plan today. Stress-free tax management starts here!
Key Takeaways
- Personal Income Tax Cuts: Not eligible if non-resident. ⬆️
- CGT Changes: Broader asset base, tougher compliance ahead. ⬆️
- Foreign Buyer Ban: No access to existing homes for 2 years. ⬆️
- Superannuation: No change, but watch Div 296 tax. ⬆️
- ATO Enforcement: Stronger focus on tax compliance for wealthier taxpayers. ⬆️
FAQs about 2025-26 Australian Budget: Key Tax Implications for Aussie Expats and Non-Residents
Do the 2025–26 tax cuts apply to Aussie expats?
No, expats are not eligible for the tax cuts announced in the 2025–26 Budget as they are taxed at the non-resident rates.
How does the foreign buyer property ban affect expats?
Expats are banned from purchasing existing residential properties in Australia for two years starting 1 April 2025, though new builds are exempt.
Will CGT rules change for Aussie expats?
Yes, the Budget proposes tougher CGT rules for foreign residents, expanding taxable assets and requiring ATO notification for large disposals.
How does the 2025–26 Budget impact expat superannuation?
No major super changes were announced for expats, but the proposed Division 296 tax on super balances above $3 million remains a concern for high-value accounts.
What other tax changes should expats be aware of?
The Budget boosts ATO compliance funding, increasing scrutiny on expats and non-residents with Australian income or assets, particularly for large transactions.
