Foreign asset managers, investment funds and institutional investors interested specifically in Australian real property asset transactions (including renewable energy and infrastructure projects), as well as other financial institutions with a focus on the Australian Financial Services arena in general, may want to prepare for substantial upcoming tax law changes.
The new Bill represents a significant expansion of Australia’s foreign resident capital gains tax (CGT) regime, with particular implications for infrastructure, renewable energy and mining investments.
The revision materially broadens the scope of assets treated as taxable Australian property (TAP), extending Australia’s CGT regime for foreign investors in real asset transactions.
The Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Other Measures) Bill 2026 was introduced into Parliament on 2 July 2026 and passed both Houses on 10 September 2026. As at 11 September 2026, it is awaiting Royal Assent. The substantive measures apply prospectively in accordance with their specific application provisions.
Expansion of “real property” – targeting real asset structures
Under current law, foreign investors are subject to CGT on disposals of Australian real property and certain indirect interests in land-rich entities. The Bill expands this concept beyond traditional legal definitions.
The expanded definition includes:
- rights or interests relating to land (including licences and contractual rights); and
- assets installed on land and expected to remain for the majority of their useful life.
This is particularly relevant for renewable energy assets, which have historically been structured on the basis that they are not “fixtures” and therefore fall outside the existing CGT net. The expanded definition would bring a broader range of these assets within scope.
Implications for renewable energy and infrastructure funds
The reforms are expected to have the greatest impact on foreign investors in renewable energy and infrastructure projects.
In effect, the changes introduce CGT exposure on exit where it may not previously have arisen, which:
- alters after-tax return assumptions for both new and existing investments; and
- limits structuring flexibility in isolating non-land value components from the CGT regime.
Existing investments are not generally grandfathered, meaning the reforms may affect future disposals of assets acquired before the new rules apply.
Transitional relief for qualifying renewable energy assets
The Bill includes specific transitional CGT relief for certain qualifying renewable energy investments disposed of before 30 June 2030.
The relief is subject to detailed eligibility requirements, including a high threshold relating to the proportion of relevant value attributable to qualifying real property. This may limit its practical application for operating projects where significant value is attributable to:
- power purchase agreements;
- other contractual rights; and
- intangible or other non-real-property assets.
Foreign investors should therefore test eligibility for the transitional relief against the statutory requirements rather than assume that renewable energy investments will automatically qualify.
Prospective application – but existing investments are not grandfathered
A significant change from the April 2026 exposure draft is the removal of the proposed retrospective expansion of the real-property definition. This substantially reduces the risk of historical transactions being brought within the expanded regime.
However, existing investments are not generally grandfathered (subject to the transitional relief above). Future disposals of existing holdings may therefore fall within the expanded regime once the relevant amendments apply.
The reforms also remain relevant to mining and resources investments, including through the treatment of relevant mining, quarrying and prospecting rights and associated interests.
Foreign investors should focus on exit readiness, including:
- whether an indirect interest satisfies the revised principal-asset test over the relevant 365-day testing period;
- whether asset valuations and the allocation of value between real-property and other assets can be supported; and
- whether the new pre-transaction notification requirements apply and how the transaction interacts with Australia’s foreign resident CGT withholding regime.
Practical and compliance considerations
In addition to expanding the tax base, the reforms introduce additional complexity, including:
- more extensive valuation requirements, including testing over the relevant 365-day period;
- new pre-transaction notification requirements for certain disposals; and
- increased transaction complexity, including interaction with purchaser withholding obligations.
These factors are likely to affect transaction execution, pricing, due diligence and exit planning for foreign investors and their counterparties.
Key takeaways
For foreign funds and financial institutions, the reforms represent a material broadening of Australia’s CGT regime as it applies to real asset investments.
Key implications include:
- expanded CGT exposure on exit for renewable energy, infrastructure and mining investments;
- no broad retrospective expansion of the real-property definition, but generally no grandfathering for existing investments; and
· increased importance of structuring, valuation, transaction planning and exit readiness.
