Expatriates, including temporary expatriates, are set to become collateral damage from the government's nationalistic "Australian homes for Australians first" policy.

Sell your family home while living overseas, and you could lose the owner-occupier capital gains tax exemption.

The key to the change is whether someone is resident in Australia for tax purposes when signing a contract to sell. Own and occupy a home for 20 years in Australia, take a job overseas and decide to sell the house while you're not an Australian tax resident and, whack, CGT on every dollar by which the home has appreciated since the day it was purchased.

Price Waterhouse is warning the draft legislation could make it harder for employers to hire Australians to work overseas. BDO tax partner Mark Molesworth says it's neither fair or reasonable.