When a non-resident sells Australian property, the ATO requires every dollar figure in the capital gains tax calculation to be expressed in Australian dollars (AUD). If you purchased the property while living in Singapore, Hong Kong, or Dubai and funded the purchase with foreign currency, that cost base must be converted to AUD using the exchange rate at the date of acquisition, not the date of sale. This single rule can materially increase or decrease your taxable gain, independently of how the property performed.
- All CGT cost base figures must be converted to AUD using the exchange rate on the date each cost was incurred, not the sale date.
- A weakened AUD at the time of purchase inflates your AUD cost base, reducing your taxable gain. A strengthened AUD does the opposite.
- From 1 January 2025, the Foreign Resident CGT Withholding rate increased from 12.5% to 15% of the contract price.
- The main residence exemption has been removed for non-residents in most circumstances.
How Does the ATO Convert Foreign Currency to AUD for the Cost Base?
The cost base is the foundation of every CGT calculation, and exchange rate conversion is where many non-resident returns contain errors. The ATO’s rule is straightforward: convert each element of your cost base to AUD using the exchange rate on the date that cost was actually incurred.
The cost base has five elements under Australian tax law, and each one gets its own conversion date:
| Cost Base Element | Example | Rate Applied At |
|---|---|---|
| Purchase price | Foreign currency paid at settlement | Date of settlement (acquisition) |
| Acquisition costs | Stamp duty, legal fees, buyer’s agent | Date each cost was paid |
| Capital improvement costs | Renovation, extension | Date each cost was paid |
| Ownership costs | Council rates, insurance (where not deductible) | Date each cost was paid |
| Disposal costs | Agent commission, legal fees at sale | Date of sale settlement |
The ATO accepts exchange rates from the Reserve Bank of Australia (RBA) or a suitably qualified financial institution. Using a rate from a money transfer app without documentation is a common gap that ODIN Tax regularly identifies when reviewing returns prepared elsewhere.
Why Does the Purchase Date Exchange Rate Matter So Much?
Building on the conversion rules above, the harder question is understanding why the purchase-date rate can swing a CGT liability by tens of thousands of dollars with no change in property performance. Consider a practical example:
An Australian expat in Singapore purchased an investment property in 2018, funding the purchase with SGD. The AUD/SGD exchange rate at that time meant the AUD cost base was calculated as AUD 600,000. By the time the property sells in 2026, movements in the AUD/SGD rate mean that the same SGD amount, if converted at the 2026 rate, would equal AUD 720,000. The ATO does not use the 2026 rate for the cost base. It uses the 2018 rate. The taxable capital gain is therefore measured from AUD 600,000, not AUD 720,000.
This is not a technicality. It is a structural feature of Australian CGT that creates currency risk independent of property market risk. Some expats find themselves with a larger AUD gain than they expected because the AUD weakened during their ownership period, and their cost base in AUD terms looks lower than the economic reality of what they paid.
What CGT Rate Applies to Non-Residents Selling Australian Property?
Stepping back from the exchange rate mechanics, a separate concern is the CGT rate itself. Non-residents are taxed on Australian-sourced capital gains at the non-resident marginal tax rates, which differ from the resident rates. Critically, non-residents who acquired property after they ceased to be Australian tax residents cannot access the 50% CGT discount that resident individuals enjoy. From 1 July 2027, new legislation replaces the 50% CGT discount with cost-base indexation; residents can still use the discount for gains accrued before that date, and foreign residents generally cannot access it.
For property acquired before becoming non-resident, a partial discount may apply depending on the proportion of the ownership period spent as a resident. This is a nuanced calculation that requires accurate residency determination dates.
Additionally, the main residence exemption has been effectively removed for non-residents in most circumstances [bt.com.au]. A former family home that you rented out after moving abroad is unlikely to qualify for full exemption at the time of sale.
What Is Foreign Resident CGT Withholding and How Does It Work?
A related but distinct obligation is the Foreign Resident Capital Gains Withholding (FRCGW) mechanism. When a non-resident sells Australian real property above the relevant threshold, the buyer is legally required to withhold a portion of the purchase price and remit it directly to the ATO.
Key figures for contracts entered into on or after 1 January 2025:
- Withholding rate: 15% of the contract price (increased from 12.5%)
- The withholding applies to the gross sale price, not the net capital gain
- If your actual tax liability is lower than the amount withheld, you can claim a refund via your Australian tax return
ODIN Tax frequently sees situations where clients have had 15% withheld on a property sale, but their actual CGT liability is substantially lower after applying the correct cost base, conversion rates, and any partial discount. Filing an accurate return is the only way to recover that difference.
Frequently Asked Questions
Which exchange rate does the ATO accept for cost base conversion?
The ATO accepts rates published by the Reserve Bank of Australia or a recognised financial institution. Rates should correspond to the date each cost was incurred, not an average or the sale date.
Can non-residents claim the 50% CGT discount on Australian property?
Generally no, if the property was acquired after you became a non-resident. A partial discount may apply for ownership periods partially spent as an Australian tax resident.
Does the main residence exemption apply to non-residents?
In most circumstances, the main residence exemption has been removed for individuals who are non-residents at the time of sale [bt.com.au].
What happens if too much is withheld under FRCGW?
You lodge an Australian tax return for the relevant income year and the excess is refunded by the ATO. You may also apply for a withholding variation before settlement if you can demonstrate the standard rate would result in over-withholding.
What records should a non-resident keep for a foreign currency property purchase?
Keep bank statements showing the foreign currency amounts transferred, exchange rate confirmations from your bank or financial institution on the date of each payment, and all settlement documents. Reconstruction of rates after the fact is possible but significantly more difficult.
Does currency gain on the property itself get taxed separately?
No. The ATO’s approach of converting cost base figures at historical rates means any currency effect is already embedded in the capital gain calculation. There is no separate currency gain tax on top of the CGT calculation for property.
Do temporary residents follow the same CGT rules as non-residents?
Temporary residents generally have different CGT rules; non-Australian assets are often exempt. However, Australian real property remains a taxable Australian property regardless of residency status.
About ODIN Tax
ODIN Tax is Australia’s specialist tax agent practice for Australian expats and non-residents, operating as part of ODIN alongside ODIN Mortgage. As a Registered Australian Tax Agent headquartered in Hong Kong, ODIN Tax has served 2,300+ clients across 40+ countries, with deep expertise in non-resident CGT calculations, Foreign Resident CGT Withholding, tax residency determinations, and overdue lodgment management.
What makes ODIN Tax distinct is the coordination of tax, mortgage, and conveyancing expertise within a single team. CGT strategy is considered at the point of acquisition, not only when a sale contract is signed. For expats selling Australian property in 2026, getting this right from the start can mean the difference between an accurate tax position and unexpected tax complications at lodgment time.
Selling Australian property as a non-resident, or want to understand your CGT position before you list?
Speak with the team at ODIN Tax and get clarity from specialists who work on these calculations every day.
