Australia Expat Tax: Residency Traps & CGT Changes

Australia taxes its residents on worldwide income, and its residency rules are among the hardest in the world to escape. Australians who go travelling often stay tax resident without realising it. In 2026, two sets of capital gains tax (CGT) changes also became law: one for foreign residents from 1 October 2026, and one for everyone from 1 July 2027.

This guide covers Australian personal tax for people moving to, living in or leaving Australia in the 2026-27 tax year, including the residency tests, the new CGT rules, the temporary resident regime and what happens when you leave.

The key question is simple. Are you still an Australian tax resident, and what happens to your assets when you leave?

What's changed: the foreign resident CGT rules were enacted on 15 September 2026 and apply from 1 October 2026, with no grandfathering for assets already held. The Budget changes that replace the 50% CGT discount with indexation and a 30% minimum tax from 1 July 2027 are also now law. And the 16% income tax rate fell to 15% from 1 July 2026.

📋 Australia tax at a glance for 2026-27

The residency tests and the nomad trap

You're an Australian tax resident if you meet any one of four tests:

• Resides test: you live in Australia in the ordinary sense, judged on your behaviour, family, assets and ties.

• Domicile test: your domicile is in Australia, unless you have a permanent place of abode outside Australia.

• 183-day test: you're in Australia for more than half the income year, unless your usual home is elsewhere.

• Commonwealth superannuation test: for certain government employees working overseas.

The domicile test is the trap for Australians who become digital nomads. If you leave Australia without setting up a permanent home somewhere else, you can stay an Australian tax resident on your worldwide income while you travel. The government proposed a simpler 183-day bright-line test in 2021, but it still hasn't been legislated.

👉 ATO: how changing residency affects CGT

Income tax rates for 2026-27

Rates exclude the 2% Medicare levy. Non-residents pay 30% from the first dollar and get no tax-free threshold.

Worked example

• You're an Australian resident employee earning A$150,000 (about US$100k) in 2026-27.

• Income tax is A$31,020 plus 37% of the amount above A$135,000, A$36,570 in total.

• The 2% Medicare levy adds A$3,000.

Your all-in bill is about A$39,570, or 26% of your salary. Your employer pays 12% superannuation on top.

The 2026 capital gains tax changes

Why does this matter now? Because two separate CGT reforms passed in 2026, and both affect expats.

Image 1 — two CGT changes, both now law

Foreign residents, from 1 October 2026. More assets now count as taxable Australian property. The definition of real property is broader, and the principal asset test, which decides whether shares in a land-rich company are taxable, is measured over 365 days rather than at a single point in time. There's no grandfathering for assets already held. Foreign residents also can't use the main residence exemption, and since 1 January 2025 buyers must withhold 15% from every property sale unless the seller provides a clearance certificate.

Everyone, from 1 July 2027. The 50% CGT discount for individuals, trusts and partnerships is replaced by cost base indexation and a 30% minimum tax on real capital gains. Gains that accrue before 1 July 2027 keep the 50% discount, and the asset's value on that date becomes its cost base for the new rules. Negative gearing on established homes bought after 7.30pm on 12 May 2026 is limited to rental income from 1 July 2027.

👉 ATO: strengthening the foreign resident CGT regime

👉 ATO: reforming negative gearing and capital gains tax

Leaving Australia: the departure CGT charge

When you stop being an Australian resident, you're treated as having sold your worldwide assets other than taxable Australian property (CGT event I2). You can choose to defer this, but those assets then stay inside the Australian CGT net until you sell them.

Superannuation stays in Australia. Temporary residents who leave for good can claim their super as a departing payment, which is taxed.

Temporary residents: Australia's special regime

If you hold a temporary visa and neither you nor your spouse is an Australian resident for social security purposes, you're a temporary resident for tax. Temporary residents are taxed on Australian income and on foreign employment income for work done while temporary resident, but not on most other foreign income. Gains on assets that aren't taxable Australian property are also exempt.

Crypto, investments and pensions

Crypto is treated as a CGT asset. Gains on crypto held for more than 12 months currently get the 50% discount, but gains accruing from 1 July 2027 move to indexation and the 30% minimum tax. Dividends from Australian companies carry franking credits for tax the company has already paid, and foreign pensions are generally taxable. There's no inheritance or wealth tax.

Social security and superannuation

Australia doesn't have an employee social security contribution. Instead, employers pay a superannuation guarantee of 12% of salary into your super fund, and individuals pay the 2% Medicare levy. Higher earners without private health insurance may also pay the Medicare levy surcharge.

Visas for remote workers

Australia doesn't have a digital nomad visa. Working holiday visas are open to people aged 18 to 30, or 35 for some nationalities, for up to 12 months at a time. Visitor visas allow only remote work that's incidental to the main purpose of your trip.

Double tax treaties

Does Australia have double tax treaties? Yes. Australia has 46 tax treaties in force, including with the UK, the US, New Zealand, Japan, China, India, Singapore, Germany, France, Canada, Ireland and Switzerland. Treaties with Croatia, Portugal, Slovenia and Ukraine have been signed but weren't in force as of March 2026.

👉 ATO: countries with a tax treaty with Australia

Who is Australia good for?

How does Australia compare for different kinds of mover? Ratings are relative to the 150+ countries TaxPilot covers, based on 2026-27 rules and the all-in cost.

☑️ Who is Australia good for? Tax ratings for expats in 2026-27

Filing and deadlines

The Australian tax year runs from 1 July to 30 June. Self-lodged returns are due by 31 October, or later if you use a registered tax agent. In the year you leave, you'll usually lodge a return covering your income up to departure and declare your change of residency.

Frequently asked questions

Can I stop being an Australian tax resident while travelling?

Not easily. Under the domicile test you stay resident unless you have a permanent place of abode outside Australia. Travelling without setting up a home elsewhere usually leaves you resident on your worldwide income.

What changed for foreign residents on 1 October 2026?

The foreign resident CGT rules widened. More assets count as taxable Australian property, and the principal asset test for land-rich companies is measured over 365 days. There's no grandfathering for assets already held.

Is the 50% CGT discount being abolished?

Yes, for gains accruing from 1 July 2027. It's replaced by cost base indexation and a 30% minimum tax on real capital gains. Gains accrued before that date keep the 50% discount.

Do I pay CGT when I leave Australia?

Usually yes. When you stop being resident, you're treated as having sold your assets other than taxable Australian property. You can choose to defer this, but those assets then stay inside Australian CGT.

How many double tax treaties does Australia have?

Australia has 46 tax treaties in force, including with the UK, the US, New Zealand, Japan and China. Treaties with Croatia, Portugal, Slovenia and Ukraine have been signed but aren't in force yet.