CPA Australia raises alarm over foreign resident CGT changes

CPA Australia has criticised the federal government’s draft reforms on foreign resident capital gains tax (CGT) rules.

In a statement, the accounting body said the move could erode confidence in the tax system by retrospectively reopening transactions.

The proposed law would retrospectively apply from 2006, meaning past transactions could be re‑examined and taxed differently from how they were originally understood under the legislation and guidance in place at the time.

CPA Australia’s tax lead, Jenny Wong, said the measures represent a “material policy shift” rather than a technical tidy‑up.

Wong said: “This is not mere clarification – it is a policy change. Retrospective tax changes of this scale fundamentally undermine certainty in the tax system.

“Applying new interpretations of the law back to 2006 sends a clear signal that the rules can change after the fact, and that makes Australia a less attractive place to invest.”

CPA Australia is concerned that taxpayers could be confronted with additional tax bills years after transactions have settled, potentially accompanied by penalties and a general interest charge.

Wong also cautioned that the current proposal mirrors earlier episodes of tax reform that, in CPA Australia’s view, led to drawn‑out disagreements and long periods of uncertainty.

The professional body has also taken issue with the short consultation period, describing it as insufficient given both the technical complexity and reach of the retrospective changes.

It argues that the time frame restricts proper evaluation of the impact on historical arrangements, long‑term investments and established corporate structures.

According to Wong, backdating the rules is likely to fuel disputes and increase compliance demands, raising costs for affected taxpayers as well as for the Australian Taxation Office.

CPA Australia noted the government’s plan to offer transitional concessions for some renewable energy projects, but Wong said this does not resolve the core policy objections.

“Tax integrity depends on trust, certainty and fairness – once those are damaged, they are hard to rebuild. This proposal puts all three at risk,” Wong added.

CPA Australia said it will continue to engage with the Treasury, while maintaining that any eventual changes must both safeguard revenue and preserve investor confidence.