Foreign investors face 20-year tax clawback, risking Australia's capital inflows

Foreign investors who have avoided capital gains tax on Australian property sales since 2006 could now face a 20-year tax clawback under a proposed policy from Treasurer Jim Chalmers. The Australian Taxation Office would gain new powers to collect unpaid taxes from overseas investors who sold property in Australia and did not pay tax at the time. This policy would override state laws that previously offered tax exemptions to foreign investors, including in cases where the ATO lost court rulings, such as with Malaysian conglomerate YTL Power and North American mining firm Newmont. The move could reduce the profitability of foreign investments in Australian property-related projects. As a result, some developments may not proceed, or local partners may be forced to borrow more, increasing Australia’s foreign debt. The policy could ultimately lead to a significant decline in foreign capital inflows, which currently total around US$5 trillion and are critical to Australia’s economy.