how to calculate how much tax you pay when generate rental income in Australia and live overseas?

Hi,

my wife and I are planning to live overseas and get our income from our rented properties in Australia. Does anyone know how much taxes do you pay in Australia when you live in another country?
For instance you are getting $5000/month (after expenses) from your properties. How do you calculate how much tax have to be paid to ATO?
Is it any different from the income calculation you do when you live in Australia than when you live overseas?

thanks!
Jat!

 

Individual income tax rates ?

Tread carefully, there are other things to consider with this.

 

Profit x marginal tax rates. If you are non-residents for tax purposes there is no tax free threshold and rates start at 32%. Additional land tax in some states too.

 

Yes 32% is a good guide and the two factors that really affect it are 1. Loss of the tax free threshold and 2. Non-Resident tax rates. There can be a range of strategies to reduce this and personal advice would be suggested. Changes to CGT rules may impact the choice to keep as well as land tax. This is all very fluid at present. If you are citizens the land tax isnt a great problem but loss of the CGT 50% discount occurs and its a bit unfair that the value at the date you leave is NOT the basis.

Individual income tax rates

 

Being a citizen will not help you in some states. For example Queensland will consider citizens overseas as "absentees" and now imposes a massive land tax.

 

Whoa I just looked this up.
Absentees for land tax | Environment, land and water | Queensland Government

How do they calculate value of land as opposed to value of property?

 

Dartboard is the best and most reliable method.

 

Thanks for this. Im not from Queensland, and not looking to buy there, but ouch! Figures Im looking at from the website suggest approx 680K land value is $7K land tax. Seems like these days being a citizen count for SFA.
Next people on the tax harvesting list will be citizen residents, as is always the case as these things move down the chain i.e. as thresholds get lowered or capture more residents as values increase

 

Can anyone confirm WA? Last I checked nothing outside of the standard i.e. no special rate for absentees. However, as Paul mentioned this is getting very fluid.

 

There is no higher land tax in WA for non residents or for absentee owners.

If you live overseas but you regularly come back to Aus to visit family, do business and the like you might still be a resident for tax purposes.

Their might be opportunity for you to massage the outcome depending on your facts.

 

My Queensland land tax this year was over 100k. Not kidding. Due to them considering me a "foreigner" even though I am Ozzie. Unbelievably stupid policy from Labor which will disincentive investment. Crazy stuff.

 

Yet...

 

Hope you signed this petition

Are you an Aussie expat? Please sign petition, this is outrageous

 

Sizable portfolio for $100k land tax as an absentee. It could be worse and you not get the threshold.

 

Thats just the CGT proposal. The proposal being canvassed through Treasury (who have not yet determined the changes so a petition is useless!!) is basically to end the main residence exemption for any person when they depart Australia and cease to be a tax resident. This would mean the 6 year absence rule could not apply. Further the proposal seeks to treat any non Australian property as a foreign CGT asset and not permit the main residence exemption to ever apply in any form to foreign property.

There have been a few people attempt to talk the change up and they have suggested the loss of the main residence exemption may be retrospective. This would mean if you have your former home on the market and sell a week after departure it could be fully taxable. I doubt that approach would occur. It is 100% speculative and lacks any basis. A beat up.

Any such proposal also needs to address situations when a person has uncertain tax residency. For example they move to the UK for maybe 2 years - perhaps shorter, perhaps longer. How would their CGT position be affected ? They could seek to defer the CGT exemption loss if they were a tax resident for that period before applying to emigrate later.

 

Thank you all for all this information. I didn't know about the land tax in QLD when you live overseas. There is a different land tax when you live overseas for NSW or VIC also?

 

Each state has slightly different rules.

And trusts that own property can trigger other tax issues like CGT, duty, surcharges and income tax too when residency changes

 

Thanks for that. Yeah no chance in my case anyway with regards to changing tax status. Additionally, and as you see from my profile, there is also no way I would want to. You are right, and people need to take these things into consideration, as they are very individual based.

 

I missed this for WA: 'Other revenue measures include a new point of consumption wagering tax, that is not due to start until mid-2019. That is the same time a 4 per cent surcharge on foreign purchasers of WA property will start.'
Source: Company tax hikes and public sector cull in WA Budget

Question is what constitutes foreign? I checked a QLD site and it is a non citizen on there.

 

I did not know this either. The rates are totally insane too, not just a little more.
I'm very lucky that max mentioned this and I happened upon this thread to see it!
This has changed my tune from maybe Brisbane to no way in hell.
Very fkd up for anyone who already had property there before that rule came in (in particular for max). A 6mil porfolio there will cost you around 100k a year which is madness! 6mil is really not that much more than quite a few people on this board.

I checked for vic and nsw and seems if you are a citizen you are ok, although if you invest through a trust you are back up to serious costs again in vic.