Structuring for non-resident & offshore company in a tax haven

Hi guys,

I'm just looking at refinancing my 2 IP's and it got me thinking I should probably restructure better as my circumstances have changed significantly. Both IP's are held in my own name however since purchasing I have become a non-resident for tax purposes. I no longer get the 50% CGT deduction and as both are negative geared I'm not really benefiting from the deductions (yet). I also have no plans to return to Australia permanently in the future.

I asked my accountant about my offshore BVI company purchasing the properties, an Australian company that is owned by the BVI company, using a trust or another suitable structure but he kind of flipped out saying BVI was a tax haven and wanted no part of it. I want to use the BVI company for estate planning purposes as I have assets scattered around the world and it would currently be a nightmare for my executors to handle it all. I thought there was no issue using a tax haven company as long as everything is declared & taxes in Australia paid correctly? I have no interest in hiding anything and want to ensure I handle everything 100% legit while achieving my goal of simplifying my estate planning & legally minimizing taxes.

I'm on a decent income (US$200,000 net PA) and haven't known what to do or invest in since leaving Australia so also have a decent amount of cash (US$300,000) sitting idle in a bank account. I'd like to invest a good portion of this but unsure if it will be in Australia or not. Either way I'd like to structure so that I can invest further if I decided to.

What would be the best way to set this up? Or could you recommend a good international accountant / tax lawyer that could assist? Most I've spoken to react similarly to my accountant as above and refuse to think outside the box for my scenario. Cheers!

 

Foreign companies can purchase property in Australia.
The company will have to seek FIRB approval and consider the foreign acquistions and takeovers act whether it is legal owner or controls a trust or other local company.

I think the company will need to register in Australia and will need a local agent appointed. It will be difficult to find such a person as they can be personally liable.

Then you will have to consider the taxation aspects which will be complex. Not to mention other aspects such as succession etc.

 

Ah I forgot about FIRB. I'm guessing any application would be denied as they are rentals right? As an Australian citizen but non-resident, can an Australian company or trust I hold major interest in invest without FIRB approval? I know I can as an individual.

 

Not sure off the top of my head. I think you may fall under the definition of 'foreign person' being a non resident

 

If you want to use a company or corp trustee then at least one of the directors would need to be ordinarily resident in Australia to avoid an issues.

 

The Australian company owned in BVI may yet result in ATO / IRS curiosity. The worldwide attention on low tax haven avoidance is on the radar for all modern economies and they each share data now. The USA particularly see a trust very differently to Australia.

I would start with asking this question of your US tax adviser who may well flip for a good reason. The estate planning issues with trusts in the US is one concession they do give.

 

And the trust must also have its central management and control in Australia to avoid become a non-resident trust. That can be very complex to satisfy and would need AU legal advice.

 

Reminds me of a recent case where the company was controlled overseas by non resident directors but nasically it was run by the aust accountant. It was deemed to be taxable in australia as a resident.

 

Hey, did you end up finding an international tax specialist?

 

I would be more concerned about what an Australian tax adviser would say. Australian property being acquired by a tax avoidance scheme entity controlled by a foreign person. FIRB sale could be the outcome and a tax issue to boot.