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Budget 2024: Change to foreign investment rules

Treasurer Jim Chalmers said the government is focused on changing the way the nation attracts and deploys investment.

"We will create a front door for investors to accelerate and coordinate transformational projects, establish a domestic National Interest Account that adds discipline to investments in the national interest, and strengthen and streamline approvals - across environmental, planning, cultural heritage and foreign investment," Chalmers said.

The government will strengthen the foreign resident capital gains tax (CGT) regime to ensure foreign residents pay their "fair share" of tax in Australia and to provide greater certainty about the operation of the rules.

The amendments will apply to CGT events commencing on or after 1 July 2025 to:

  • Clarify and broaden the types of assets that foreign residents are subject to CGT on
  • Amend the point-in-time principal asset test to a 365-day testing period
  • Require foreign residents disposing of shares and other membership interests exceeding $20 million in value to notify the ATO, prior to the transaction being executed
"These reforms will also improve certainty for foreign investors by aligning Australia's tax law for foreign resident capital gains more closely with the OECD standards and international best practice," the Budget said.

Conversely, investments in non-sensitive sectors will be streamlined and approved faster for investors with a good compliance record. Treasury will assess the investor, the target of their investment, and the structure of the transaction.

This comes after the Albanese government announced plans to reform and renew the foreign investment framework earlier this month.

Chalmers said the government was taking action to strengthen the regime where it needs to, streamline processes, and make it more transparent.

"This is all about boosting and bolstering our economic security and attracting the investment we need in our economy," Chalmers said.

"By providing more clarity around sensitive sectors and assets, our reforms will give businesses and investors greater certainty, while safeguarding our national security."

Chalmers said foreign investment has a key role to play in the Australian economy but only if it's in the national interest.

"We are ensuring our framework can evolve to respond to the changing global and economic environment we face," he said.

"National security threats are increasing due to intensifying geopolitical competition and risks to Australia's national interests from foreign investment have evolved at the same time as competition for global capital is becoming more intense."

Chalmers said Australia has a strong track record of attracting investment into the country but "we cannot be complacent".

"Our reforms will make Australia a more attractive place to invest, boost economic prosperity and productivity, while strengthening our ability to protect the national interest in an increasingly complex economic and geostrategic environment," he said.

Read more: CGTTreasurer Jim ChalmersFederal BudgetATOOECDTreasury