Non-resident capital gains tax implications

Broadly speaking, a non-resident investor will be subject to capital gains tax only on the ultimate disposal of interests in a PPP arrangement to the extent that the non-resident maintains a 10 per cent or more interest in an entity, and 50 per cent or more of the underlying market value of the entity is attributable to 'taxable Australian real property' ("TARP").  TARP is defined to mean real property situated in Australia or mining, quarrying or prospecting rights etc. situated in Australia. As the market valuation of TARP can change throughout the duration of a PPP arrangement, the potential capital gains tax implications to non-resident investors should not only be considered at the outset of the PPP arrangement, but should also be monitored throughout the arrangement to ensure any non-resident CGT liability is fully considered.