Key Highlights

  • Foreign companies and institutional investors that sell Australian wind farms, solar projects and battery storage assets can now claim a 50% capital gains tax discount, under laws that took effect on 1 October 2026.
  • The renewable energy discount sits inside a broader overhaul of the foreign resident CGT regime, contained in the Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Other Measures) Bill 2026.
  • The bill passed both Houses on 10 September, received Royal Assent on 15 September and the measures commenced on 1 October 2026.
  • The concession is narrower than the headline figure suggests. the discount is "available only to foreign residents that are not individuals", meaning companies and foreign institutional investors.

Foreign companies and institutional investors that sell Australian wind farms, solar projects and battery storage assets can now claim a 50% capital gains tax discount, under laws that took effect on 1 October 2026. Parliament extended the concession to 30 June 2040 during the bill's passage. The timing stands out: from 1 July 2027, Australian resident individuals lose the 50% discount on future gains, which is replaced by cost-base indexation and a 30% minimum tax.

What the New Law Does

The renewable energy discount sits inside a broader overhaul of the foreign resident CGT regime, contained in the Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Other Measures) Bill 2026. The same bill carried the tax practitioner reforms prompted by the PwC tax leaks scandal.

The bill passed both Houses on 10 September, received Royal Assent on 15 September and the measures commenced on 1 October 2026. It is now enacted law.

Treasurer Jim Chalmers said in August that "the reforms to foreign resident CGT will ensure foreign residents pay a fair share of tax in Australia", while his release also promised "generous concessions for investments in renewable energy".

Who Gets the Discount, and on What

The concession is narrower than the headline figure suggests. the discount is "available only to foreign residents that are not individuals", meaning companies and foreign institutional investors. Foreign trusts can qualify where the gain flows to non-individual beneficiaries.

That means a foreign individual who owns an interest in a solar farm does not receive the concession, and neither does an Australian resident company selling the same type of asset.

For a direct sale, the asset must be taxable Australian real property whose primary purpose is generating electricity in Australia from an eligible renewable source, or operating as an energy storage system for that electricity. general transmission infrastructure, such as poles and wires, does not qualify.

For an indirect sale, such as shares in a company that owns a wind farm, the interest must first pass the principal asset test. The entity's Australian renewable energy assets must then make up at least 75% of the value of all its taxable Australian real property. The exposure draft had set that bar at 90%.

A New Concession, Not an Old One Retained

This is a new tax break rather than one foreign investors already had. Companies, whether Australian or foreign, have generally not been eligible for the 50% CGT discount, which has applied to individuals, trusts and complying super funds.

The measure as a "transitional" discount that "has not been made a permanent feature of the regime". The bill originally set an end date of 30 June 2030. Mr Chalmers said the government was "providing a concessional period for these investments to 2040" to "more closely align with the investment horizons typical of renewable energy projects".

The government's stated aim is "to encourage further investment in Australia's energy security and energy transition".

How It Compares with the Domestic Overhaul

Under the Tax Reform No. 1 Act 2026, from 1 July 2027 the 50% CGT discount for resident individuals is replaced by cost-base indexation plus a 30% minimum tax on gains accruing from that date. Gains accrued to 30 June 2027 keep the 50% discount through a deemed market-value disposal. The new system is not a "30% discount".