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Australian Citizen - Non-resident for tax purpose

Discussion in 'Accounting & Tax' started by Luca, 10th Mar, 2016.

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  1. Luca

    Luca Well-Known Member

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    First of all thanks to the people who already helped me on making this topic clearer. Considering there are a lot of Australians living overseas and non-resident for tax purpose, I thought to open a new post to make this topic clearer to everyone.

    This is my understanding:
    • Don't have to declare any income that you make overseas
    • No Tax-free threshold for individuals
    • No 50% CGT discount for assets held more than 12mths
    • ATO can potentially challenge your residential status (this can cost money).
    • For tax loss there will not be anything to offset against so it carries forward until you have taxable income which you can then offset it against. This could be a cash flow positive property.
    • Land tax: I think it doesn`t change anything?!?!
    Other than this, I don`t see any major changes.

    Looking for a contribution from the experts.

    Please note I am not an accountant / tax advisor and everyone should seek own advice.
     
  2. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The KEY issue is that you have departed Australian "permanently"...This does not mean forever but 2 years may be a guide. However to do so you must arrive in the new country and have emigrated without intent to return in the foreseeable future. No conditional visa's or temp residency.

    Other issues for a non-resident may include

    - Serious concerns for any company, trust or SMSF and compliance
    - Some passengers may receive a tax interview at departure / return
    - Proposed change to HELP debts will require minimum repayments whilst absent (See point above for a guide to what may happen if you later return)
    - FIRB may prohibit some property acquisitions for some people
    - Loan issues
    - Estate and planning concerns
    - Losses may accumulate
    - Superannuation portability issues
    - Land tax in some jurisdictions is less generous
    - Australian source income (ie rents) may be taxable in the new country with less generous deductions (ie depreciation not available ?)
    - Loss of franking credits on AU shares (but no CGT)
    - Withholding may apply to unfranked divs, interest
    - CGT rules may trigger CGT or may defer a problem (Important to know which 2 choose)
     
    Last edited: 10th Mar, 2016
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  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Land tax can vary for non residents in some states such as QLD.

    I think VIC also increased stamp duty for non residents purchasing as well.
     
  4. Luca

    Luca Well-Known Member

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  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    - Loss of age pension and other entitlements
    - Tax free or concessional super pensions (age 58+) become taxable overseas
    - ADF / DVA pensions etc become taxable
     
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  6. Blacky

    Blacky Well-Known Member

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    I started a similar thread sometime ago.
    Foreign Residency and Tax

    Terry has a tax tip which also mentions land tax - I think number 96 if my memory is any good.
     
  7. Blacky

    Blacky Well-Known Member

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    Add in there that you lose medicare after being non-redident for 5+years.
     
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  8. Luca

    Luca Well-Known Member

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    Thanks @Blacky I missed that thread, well, actually read it and forgot about it :)
     
  9. truong

    truong Well-Known Member

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    Thank you all for the info.

    Question: if after being non-resident for a number of years (say 15 years) you’re back to live in Australia permanently, will everything go back to normal? In particular:

    - CGT discount
    - Franking credits
    - Age pension eligibility
    - Medicare
     
  10. Blacky

    Blacky Well-Known Member

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    Complicated question needing specific advice.
    As far as CGT is concerned I believe that any offshore assets you own - the effective start is the date you return to Australia.
    Not sure about onshore assets. Probably some kind of complicated pro-rated calculation.

    Blacky
     
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  11. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    CGT on property just continues on and the no of days eligible for 50% discount resumes. Other CGT assets are subject to a CGT event which applies the market value at date you commence AU residency. This applies to all assets - Even foreign.

    Age pension isn't as straight forward. Depends how long you were a resident and non-resident and there will be a wait period in many instances. Human Services website has more. Medicare can also be the same. But if you truly regain residency and are a citizen Medicare should commence on arrival after a new card is issued.
     
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