Most Australian expats know that selling their Australian home while living overseas triggers capital gains tax (CGT). What many do not realise is that “Taxable Australian Property” (TAP) is a legal category that extends well beyond bricks and mortar. Under Australian tax law, non-residents are subject to CGT on any asset that qualifies as TAP – and the definition captures shares in land-rich companies, business assets, and options or rights connected to Australian assets, not just direct real estate. Understanding what falls inside this boundary is not optional: the buyer is legally required to withhold 15% of the sale proceeds at settlement if the asset qualifies, and the rules are changing significantly in 2026 [6][8]. This is general information only and does not constitute personal tax advice.
TL;DR
- TAP is a legal category of assets on which non-residents pay Australian CGT regardless of where they live [1].
- It includes more than direct real estate: indirect interests in land-rich entities and Australian business assets also qualify [5][8].
- Non-residents lose the 50% CGT discount available to Australian residents, and face 15% Foreign Resident CGT Withholding at settlement [4].
- Draft legislation released in April 2026 proposes significant and retrospective changes to the TAP regime that will affect both direct and indirect investors [6].
- Getting the TAP classification wrong before a sale is costly and difficult to reverse.
What Exactly Is “Taxable Australian Property”?
TAP is the statutory category of assets that remain within Australia’s tax net even when the owner is a non-resident [1]. As a general rule, a capital gain made by a non-resident is disregarded for Australian tax purposes – unless the asset in question is TAP [7]. The definition matters because it determines whether you owe CGT at all, not just how much.
The ATO recognises five categories of TAP [5][8]:
- Taxable Australian Real Property (TARP): Direct interests in Australian land, including residential and commercial property, and mining, quarrying, or prospecting rights over Australian land.
- Indirect Australian Real Property Interests: Shares or units in entities where the majority of assets (by market value) are Australian real property – commonly called “land-rich” entities.
- Business assets used in an Australian permanent establishment: Assets a non-resident uses to carry on business through a fixed base in Australia.
- Options or rights to acquire any of the above: A contractual right to acquire a TAP asset is itself TAP.
- Assets that elected to remain TAP on departure: Where an individual chose to disregard the deemed disposal rule when they left Australia, those assets retain TAP status until ultimately sold [2].
Why Do So Many Expats Miss the Indirect Interest Rule?
Building on that TAP framework, the category that generates the most surprise is the indirect interest rule. This is where Australian property exposure through a company or trust structure triggers exactly the same CGT liability as owning land directly [8].
The threshold test: if an entity’s assets consist of more than 50% Australian real property by market value, a non-resident holding at least a 10% interest in that entity holds an indirect Australian real property interest – and that interest is TAP [8].
| Asset Type | Is It TAP? | Key Condition |
|---|---|---|
| Directly owned Australian home | Yes | Always TARP |
| Shares in a land-rich Australian company | Yes (if thresholds met) | 10%+ interest; >50% real property assets |
| Units in an Australian property trust | Yes (if thresholds met) | Same 10% / 50% tests |
| Shares in an ASX-listed company (non-land-rich) | No | Fails the >50% real property asset test |
| Australian business assets (permanent establishment) | Yes | Used to carry on Australian business |
What Happens to Non-Residents When They Sell a TAP Asset?
The tax consequences of selling TAP are sharper for non-residents than most people expect, on two fronts [4]:
- No 50% CGT discount: Australian tax residents who hold an asset for more than 12 months can reduce their capital gain by 50% before paying tax. Non-residents do not get this discount on TAP assets. The full nominal gain is assessed.
- 15% Foreign Resident CGT Withholding (FRCGW): The buyer of a TAP asset is legally required to withhold 15% of the gross sale price and remit it directly to the ATO, unless the seller obtains a clearance certificate or variation. This withholding applies regardless of whether a profit is actually made.
The withholding is not a final tax – it is credited against the seller’s eventual CGT liability – but it creates an immediate cash flow impact at settlement that catches unprepared sellers short.
What Are the 2026 Changes to the TAP Regime?
Stepping back from the established rules, a separate and urgent concern is the proposed legislative changes announced in April 2026. On 10 April 2026, the Australian Government released draft legislation proposing significant and retrospective changes to the TAP and Foreign Resident CGT regime [6].
Key elements of the draft legislation include [6][8]:
- Expanding the assets that qualify as TAP – broadening the definition to capture a wider range of indirect interests.
- Strengthening integrity rules around the point in time at which the land-rich test is applied.
- Retrospective application, meaning existing structures and past transactions could be reassessed under the new rules.
- Changes affecting both direct investors and those holding interests through entities [3].
These are draft proposals as of April 2026 and legislation has not yet been enacted. However, the retrospective nature of the proposed changes means this is not a “wait and see” situation for investors with existing structures.
What Assets Are Specifically Excluded From TAP?
A related but distinct question is what falls outside the TAP definition entirely – because not all Australian assets follow you into the non-resident tax net.
- Assets acquired before 20 September 1985 are excluded from the deemed acquisition rule and remain outside the CGT regime altogether [2].
- Shares in widely held ASX-listed companies that are not land-rich (i.e., Australian real property is not the majority of their asset base) are generally not TAP [5].
- Cash and foreign currency deposits held in Australian bank accounts are not TAP.
- Certain portfolio interests (below 10%) in entities may also fall outside the indirect interest rules depending on the entity’s asset composition.
Frequently Asked Questions
About ODIN Tax
ODIN Tax is Australia’s specialist tax agent practice for Australian expats and non-residents, part of the ODIN GROUP. ODIN Tax is a Registered Australian Tax Agent serving 10,000+ clients across 40+ countries with a 4.9/5 Google rating. ODIN Tax exclusively handles the tax scenarios that generalist accountants routinely get wrong: tax residency determination, non-resident CGT calculations, Foreign Resident CGT Withholding, and overdue lodgment strategy. Led by Tax Director Pau Lam, the team is headquartered in Hong Kong and operates within the same expat corridors as its clients. Tax strategy is coordinated across ODIN GROUP services from the outset, rather than treated as an afterthought at settlement.
Selling an Australian asset as a non-resident? Unsure whether your structure creates TAP exposure?
ODIN Tax helps Australian expats and non-residents understand their CGT position before a transaction, not after. With the 2026 TAP rule changes in draft, there has never been a better time to get clarity.
Disclaimer: This article contains general information only and does not constitute personal tax advice. Tax outcomes depend on your individual circumstances. Australian tax law, rates, and thresholds referenced are based on legislation and ATO guidance current as at the 2025-26 financial year and are subject to change, including proposed amendments as at April 2026. You should consult a Registered Australian Tax Agent before making any decisions based on this content. ODIN Tax is a Registered Australian Tax Agent.
References
- Difference Between TAP and Non-TAP Assets & Why Expats … (atlaswealth.com)
- A Guide to Capital Gains Tax for Australian Expats (titanwealthinternational.com)
- Australia’s non-resident CGT changes: a long awaited, but unwelcome, update for foreign investors | Herbert Smith Freehills Kramer – JDSupra (www.jdsupra.com)
- Foreign Income Reporting for Australian Expats: Resident vs Non-Resident Rules (www.expattaxes.com.au)
- What is Taxable Australian Property for Aussie Expats – Ally Wealth Management (allywealth.com.au)
- Significant and retrospective changes to Australia’s taxable Australian property laws: draft legislation released – Corrs Chambers Westgarth (www.corrs.com.au)
- Access Denied (www.taxathand.com)
- Government releases draft legislation to strengthen the foreign resident CGT regime (www.pwc.com.au)
