The proposal submitted by the Australian Treasury for consultation from 10 to 24 April 2026 would change the taxation of non-residents' capital gains on certain indirect interests in Australian real property. Its explanatory material provides that the principal asset test could be satisfied at the testing time or at any time in the preceding 365 days.
The proposed amendment therefore changes the time dimension of the test. A snapshot of the entity's assets solely on the disposal date would no longer be enough to rule out this condition if it had been met during the specified preceding period.
When preparing a disposal, it would be useful to reconstruct changes in assets over the proposed period, particularly property acquisitions and disposals. This chronology would help identify the dates for which a valuation becomes relevant. A recent reduction in the property component might then be insufficient to avoid the proposed test. This preparatory work remains separate from the legal conclusion on taxation, which depends on the legislation applicable to the transaction.
This is, however, a proposal, not a rule whose entry into force is established by this consultation. An analysis of a disposal must still verify the enacted provisions, their effective dates and the other conditions applicable to the interests concerned. The result of the asset test alone does not determine the taxable capital gain.