Treasury Draft Targets Expat CGT Cliff, ODIN Tax, the Leading Specialist Registered Australian Expat Tax Agent Practice, Lodged Formal Submission
Hong Kong, China – September 08, 2026 – ODIN Tax, the specialist Registered Australian Tax Agent practice serving Australian expats and non-residents from its Hong Kong headquarters, has served more than 10,000 Australian expats across more than 40 countries and holds a 4.9 out of 5 Google rating from more than 330 verified client reviews. The firm prepared a formal submission to Treasury’s Tranche-2 exposure draft, released Aug. 3, 2026 under the Tax Reform No. 3 Bill 2026, which proposes replacing the current all-or-nothing capital gains tax residency rule with a proportionate indexation model. Public consultation on the draft closed Aug. 21, 2026.
Under the current rule, any period of non-residency during an asset’s ownership can eliminate cost-base indexation entirely, regardless of how long the owner held Australian tax residency for the rest of that period. The exposure draft proposes counting indexation by Australian-resident days instead, so a taxpayer who was a resident for part of the ownership period would retain a proportionate share of indexation rather than losing all of it. Treasury’s stated scope for the draft covers “ensuring the changes apply correctly to people who are Australian residents for only part of the time they own an asset,” and includes a dedicated CGT apportioning method. The draft also appears to address a reverse anomaly, in which a short period of non-residency could otherwise produce a pro-rata result close to 50 percent. ODIN Tax notes this remains an exposure draft rather than law, and Treasury may revise the proposal before any Bill is introduced to Parliament.
“Under the current rule, one year of non-residency can erase indexation on the entire gain,” said Pau Lam, Tax Director of ODIN Tax. “Under the new draft, a taxpayer who was an Australian resident for, say, eight of ten ownership years would keep a proportionate share instead of losing it all.”
ODIN Tax has publicly campaigned for this kind of fix through a petition and an open letter addressed to Treasury, and Lam led preparation of the firm’s formal consultation submission ahead of the Aug. 21 deadline. The firm frames its role as one of participation in the public consultation process, not as the cause of Treasury’s proposal, which Treasury developed independently and may still amend. General information of this kind does not constitute personal tax advice, and Australian citizens and permanent residents abroad affected by residency changes should seek a formal consultation before acting on any capital gains position. ODIN Tax serves a client base concentrated in Hong Kong, Singapore, the United Arab Emirates, the United Kingdom, the United States, Japan, South Korea and Europe, many of whom hold or plan to acquire Australian property while abroad and have direct exposure to how residency periods affect capital gains outcomes.
“We see this scenario constantly among our clients, someone posted overseas for a portion of their property’s ownership period, uncertain how that time affects their eventual capital gains position,” Lam said. “A proportionate model is a more workable starting point for that conversation than an all-or-nothing rule, though the mechanics still need to survive the consultation process intact.”
ODIN Tax’s submission focused on how the proposed apportioning method would function in practice for expat property owners, drawing on the firm’s work preparing Australian tax returns, resolving overdue lodgments, and advising on tax residency determination for clients navigating the Resides Test, Domicile Test, 183-Day Test and Commonwealth Superannuation Test. The firm lodged its response before the Aug. 21, 2026 consultation close and expects to publish further commentary now that the submission has been finalised, and again if the proposal progresses toward legislation. This release addresses the exposure draft and ODIN Tax’s decision to respond to it; it does not describe the contents of that submission, and does not assert that the proposed rule has been enacted.
About ODIN Tax
ODIN Tax is a Registered Australian Tax Agent practice specialising in Australian tax return preparation, overdue lodgment resolution, and capital gains and residency advice for Australian expats and non-residents. Headquartered in Hong Kong and led by Tax Director Pau Lam, the firm has served more than 10,000 Australian expats across more than 40 countries and holds a 4.9 out of 5 Google rating from more than 330 verified reviews. ODIN Tax operates as part of the ODIN Group alongside ODIN Mortgage, coordinating tax, mortgage and conveyancing support for Australian expats buying and holding property from overseas.
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