Leaving Australia for 3 years?

Was offered a different opportunity to work overseas (China) for a few years, good pay. But couldn't make decisions on the cons and pros.

My thoughts are below. Please correct me on the wrong thoughts and possibly suggest better ideas. Please also note that all statements and questions are hypothetical only.

Cash Income：

1. If we leave Australia for 3 years, we cease to be Australian resident for tax purposes. We still need to do tax return at the end of each FY just for the rental properties we have, and pay tax on non-resident rate which is higher. Since we are not making income in Australia (other than rental income) and our portfolio is roughly neutral, the impact on Australian income tax may not be significant.

2. Since we are non-resident of Australia for tax purposes, our foreign income will not need to be claimed with ATO and does not need to be included in our annual tax returns. As long as we pay income tax at the oversea country we stayed, we are clear with ATO.

3. While we are overseas, we can exchange our oversea savings into AUD and transfer back to our Australian bank accounts to help pay off the loans on our portfolio, we don't have to pay tax to ATO with these money.

4. After 3 years and we come back to Australia, we can still exchange the remainder of our oversea savings into AUD and transfer them back, without paying tax to ATO.

Shares：

During the 3 years of oversea life, I will be offered some RSU (restricted stock units) from the company I work for and each year I will get some of the RSU realised. Let's say the value of the RSU is very good and doubles in 10 years.

1. If I sell the RSU while I am overseas, I will just get more foreign cash income and this should be the same as above.

2. If I hold onto the RSU until after I return to Australia, I have to face CGT events on the profit. But what is the cost base? Is it the original price when I was given the RSU, or the price on the day I return to Australia and become a resident for tax purposes again?

3. If I intend to hold the RSU long term, say for 10 years, and I don't want to face CGT. Would it be possible that by the time I want to sell the RSU, I move overseas again for over 1 year, become non-resident for tax purposes, sell the RSU, and send the money back? Is this a good way to doing things or it's rather dodge?

Many thanks for any comments!

 

It will depend on the circumstances

See Harding v Commissioner of Taxation [2018] FCA 837
Mr Harding was overseas a lot longer than you but he was deemed to be a tax resident of Australia.

 

Cash income:

1. Yes. Make sure you have a decent accountant to take care of your tax return that knows your situation well. Even if you think it's neutral, you may end up paying some tax in Australia. Especially now you can't claim travel and accommodation towards rental costs. You'll might be put on a PAYG scheme as well. Definitely talk to your accountant before you leave.

2. You don't need to declare you're overseas income to the ATO if you are a non resident for tax purposes. But, your bank will need to know if you become a non resident for tax reasons as they will then charge you 10percent non residency withholding tax on any interest you earn over 10 dollars (IIRC).

3. Yes. But the world is far more interconnected. Be careful about what the Chinese government wants to know about your bank account and portfolio in Australia. I don't know the specifics of what Australia and China share or what the Chinese government wants to know, but Japan has become extremely invasive over the past 5 years and has introduced a few outrageous laws that have actually sent expats over to China.

4. Yes... as far as I'm aware. Be careful when you send money back to Australia while you are in China. Make sure you've got all your Aussie bank info before you go to China. Think you'll need the swift code or whatever it is now. Plus I'd set up a Citibank (local, not Australia) or similar account for your China salary (I assume you're getting paid in yuan and not Aussie dollars?). I don't know about other banks, but Citi has an exceptional online banking system for transferring funds overseas. It updates by the minute unlike a lot of other banks which may only set the rate once an hour or even once a day. Don't send more than 10,000 dollars at a time unless you're happy for the transfer to be flagged. It costs between 25-40 dollars for a one time transfer.

Hope this helps.

 

How does the double taxation agreement with china work here?

 

Just a couple of things, not sure if it applies

Does the company cover medical for you/family during this period. If not compare costs fir this

Education children?? Compare costs?

Your income paid.... what currency??

 

But harding won on appeal ?

 

Just because you are going for 3 years doesnt mean you are automatically non resident.

Change of domicile or permanent place of abode overseas ?

 

Thanks heaps @The Gambler , this is very valuable. I will definitely look into setting up a citibank account and last time I checked they have a global transfer scheme. HSBC has a similar thing as well.

 

I did a test on ATO website through answering multiple questions. ATO then told me I will not be a resident for tax purposes if I leave for the 3 years... Would that be "offical" enough? Or it's still questionable?

 

Apply for a private ruling so you get certainty. Can do it yourself.