Hong Kong vs Australia After the 2026 Budget: The Honest Comparison
Editor’s note as at 1 June 2026. International tax rules change frequently. Please confirm the current tax rules and their application to your circumstances for any destination that you are seriously considering before making a relocation decision. We can assist with that analysis where required.
Let’s start with the numbers, because they’re the reason you’re reading this.
Hong Kong has no capital gains tax. No withholding tax on dividends or interest, and passive investment income generally sits outside the individual tax net unless it forms part of a Hong Kong trade or business. No inheritance tax. No GST, no VAT. A territorial system that doesn’t touch your offshore income at all. And a salaries tax that tops out at an effective 16%, which is the part where the Australian reading this spits out their flat white.
Because from 1 July 2027, an Australian high earner selling a long-held asset is looking at 47% on the indexed gain. Hong Kong’s answer to that same transaction is zero. Not “lower”. Not “concessionally taxed”. Zero.
So if this were a contest decided on tax alone, Hong Kong would be standing on the podium with the gold around its neck before the other countries had finished lacing up.
It isn’t decided on tax alone, though, and an honest article has to say so up front. Hong Kong comes with two genuine complications. The first is political: the place has changed since 2020, and for some Australians that’s the end of the conversation, not a footnote. The second is duller but costs real money: Australia and Hong Kong have never signed a double tax agreement, and that absence does things to your Australian income that most people don’t see coming.
This article covers all of it. The tax position (excellent). The immigration pathways (more open than you’d think). The no-treaty problem (a real and avoidable trap). And the political question (which is yours alone to answer).
The headline tax position
Hong Kong does not tax capital gains. For genuine capital assets, that’s the foundation. No CGT on shares, none on property gains, none on the sale of a business. The caveats are that trading profits can still be taxed (more on that in a second) and that transaction taxes like stamp duty can still apply to Hong Kong property and shares. But on a genuine investment gain, the headline holds: if you’re a Hong Kong resident and you sell something that’s gone up in value, the gain is simply not taxed.
The one thing to watch is the line between investing and trading, which trips people up in every no-CGT country. Buy and hold like an investor and you’re fine. Churn assets at high frequency like you’re running a business, and the Inland Revenue Department can decide you actually are running a business and tax the profits accordingly. For anyone holding genuine long-term investments, this isn’t a concern.
The whole system runs on a territorial principle, which is the key to understanding Hong Kong. Only income that arises in or comes from Hong Kong gets taxed. Money you make offshore is generally outside the Hong Kong tax net. There’s no withholding tax on dividends or interest, no inheritance tax (abolished in 2006), and no GST or VAT on top. Passive investment income is generally not taxed unless it forms part of a Hong Kong trade or business.
The one tax a working Australian will actually pay is salaries tax, on Hong Kong employment income. Here Hong Kong does something quietly clever: it charges you the lower of two calculations. Either progressive rates from 2% to 17% after your allowances, or a flat standard rate on your income before allowances, whichever leaves you paying less. From the 2024-25 year, that standard rate is two-tiered: 15% on the first HKD 5 million of net income, and 16% on anything above. The February 2026 Hong Kong Budget left it exactly where it was.
Put plainly: a well-paid Australian in Hong Kong pays salaries tax of roughly 15%, nudging towards 16% only on income above HKD 5 million (about AUD 980,000). The Australian equivalent hits 47% once you’re over AUD 190,000. That’s the gap on your salary alone, before we’ve even mentioned what happens to your investments.
Businesses get a two-tier profits tax too: 8.25% on the first HKD 2 million of profits and 16.5% above that for companies (7.5% and 15% for unincorporated businesses). And again, only Hong Kong-source profits are in the net.
One technical footnote so nobody emails me. Hong Kong brought in a Foreign-Sourced Income Exemption (FSIE) regime in 2023 that can tax certain foreign passive income received in Hong Kong by companies that are part of a multinational group, unless they have real substance there. It’s an anti-avoidance rule aimed at corporate structures, the same breed of rule Singapore and others have introduced to keep the international community happy. It is not aimed at you, the individual Australian holding a share portfolio, and it doesn’t change the no-tax-on-personal-capital-gains position one bit.
The no-treaty problem: the cost nobody mentions
Here’s the bit that gets skipped in the glossy relocation brochures, and it’s the bit that actually costs money.
Australia and Hong Kong do not have a double tax agreement (DTA). Never have. What Australia has with Hong Kong is a Tax Information Exchange Agreement, which is exactly what it sounds like: the two tax offices agree to swap information about you. It does nothing to reduce withholding tax or sort out who gets to tax what. And before you ask, the Australia-China double tax agreement does not quietly cover Hong Kong either. The ATO treats Hong Kong as its own separate jurisdiction, and it’s simply not on Australia’s list of treaty partners.
Worth a warning here. Without mentioning names, there are websites that will tell you, with total confidence, that an “Australia-Hong Kong DTA” exists with a tidy 15% dividend rate and a 10% interest rate. They are wrong. They’ve invented a treaty that doesn’t exist. The Australian Treasury, the ATO, and Hong Kong’s own Inland Revenue Department all confirm there’s no comprehensive double tax agreement between the two. Don’t plan your life around a treaty somebody made up on a tax-comparison site.
Three things follow from the missing treaty, and they matter.
First, the dividend hit. Unfranked Australian dividends paid to Hong Kong residents incur a 30% withholding tax by Australia, not the 15% a normal treaty would hand you. The saving grace: fully franked dividends are still exempt from Australian dividend withholding under our own domestic law, because the company has already paid the tax. So a fully franked portfolio sails through largely untouched. But unfranked dividends, and the unfranked slice of partly franked ones, get clipped at 30% with no treaty to soften it.
Second, no tie-breaker if you get residency wrong. Move to a treaty country like most of the world and accidentally end up tax resident in two places at once during your transition year, and the treaty has rules to decide which country wins. Move to Hong Kong and there’s no referee. If the ATO reckons you’re still Australian, you’re still Australian, taxed here on your worldwide income, with no treaty to wave in defence. Which means getting your departure clean and unambiguous matters more for Hong Kong, not less.
Third, no dispute mechanism. If the two tax offices ever disagree about your situation, there’s no treaty process to resolve it. You’re on your own with each country’s domestic rules.
In fairness, Hong Kong’s territorial system takes some of the sting out. Hong Kong won’t tax your Australian income anyway, because from where it sits that income is offshore, so the classic getting-taxed-twice nightmare that treaties exist to prevent is less of a live problem than the missing treaty might suggest. But the 30% on unfranked dividends is a genuine, ongoing cost, and the lack of a residency tie-breaker is a genuine trap. Both belong in your calculations. Most people don’t find out about either until it’s too late to plan around them.
Immigration: more open than you’d think
You can’t just turn up in Hong Kong and start working the way you can move between Australian states. You need a pathway in. The good news is that Hong Kong actively wants people like you, and its talent schemes are more accessible (and a lot more flexible) than the equivalents in a few of the obvious rival cities.
Three routes matter for Australians.
The Top Talent Pass Scheme (TTPS). This is Hong Kong’s flagship “please come, we’ll sort the details later” scheme, launched at the end of 2022. The remarkable feature: you don’t need a job offer to get in. Category A is for people who earned HKD 2.5 million or more (roughly AUD 490,000) in the year before applying, and it grants a 36-month stay. Categories B and C are for graduates of eligible top-ranked universities (B if you’ve got work experience behind you, C for recent graduates and subject to a quota), each granting 24 months. Once you’re in, you decide whether to take a job, start a business, or just have a look around. Your spouse and children under 18 come too, and the spouse can work with no restrictions. At renewal you simply show you’re genuinely employed or running a business in Hong Kong.
For a high-earning Australian, Category A is the obvious door, and HKD 2.5 million is a noticeably gentler bar than the premium-visa income thresholds some rival cities set. Graduated from a globally top-ranked university? Category B can get you in even if you’re not on the big income yet.
The Quality Migrant Admission Scheme (QMAS). A points-based scheme for skilled people, again with no job offer required. You’re scored on age, qualifications, experience, language, and family background, and if you clear the bar you’re in. At renewal you show you’ve put down roots and contributed (a job, a business, study, community involvement all count). QMAS is the route for skilled professionals who’d score well on paper but don’t hit the TTPS income number.
The Capital Investment Entrant Scheme (CIES). The money route, relaunched on 1 March 2024 after the original version was mothballed back in 2015. You need net assets of at least HKD 30 million (about AUD 5.9 million) held for the six months before you apply, and you commit to investing at least HKD 30 million in approved assets. The bulk goes into permissible financial assets and real estate (at least HKD 27 million), plus HKD 3 million into a designated CIES Investment Portfolio that the government channels into innovation and strategic industries. Real estate is capped for counting purposes: since 17 September 2025 the overall real estate cap is HKD 15 million, of which residential property can make up no more than HKD 10 million. The qualifying price threshold for a single residential property was lowered from HKD 50 million to HKD 30 million for purchases completed on or after 17 September 2025. The practical upshot is that CIES is primarily a financial-assets pathway: property can only ever count for a slice of the HKD 30 million, so the bulk has to go into equities, bonds, funds, and the like. Since 1 March 2025, assets you hold jointly with family count proportionally. It’s closed to mainland Chinese nationals unless they hold permanent residency somewhere else.
CIES eventually leads to permanent residency after the standard seven years of ordinary residence that Hong Kong applies to pretty much everyone.
The short version: if you earn at a senior level, TTPS Category A is genuinely within reach and doesn’t even need a job lined up. If you’re skilled but earning below that, QMAS is your points-based path. If you’ve got serious capital, CIES buys you in at HKD 30 million. Stack that against the salary and investment hurdles some rival financial centres impose, and Hong Kong is competitive, and in the TTPS case, unusually relaxed about letting you in first and figuring out the rest later.
Tax residency and the clean break
Hong Kong taxes by source, not by some residency day-count. Salaries tax lands on Hong Kong-source employment income, full stop, regardless of how you’d label your residency in the abstract. There’s no general tax-residency day-count for individuals of the kind many residence-based systems use, although day-counts can still matter in limited situations (certain salaries-tax exemptions and income apportionment). What mostly matters is where your income comes from and where your job sits.
The harder question, and the one that actually costs Australians money, is the Australian end: when do you stop being an Australian tax resident?
That’s governed by the residency tests in section 6 of the Income Tax Assessment Act 1936 and the ATO’s guidance, and it turns on the whole picture: the nature of your move, whether you intend to come back, where your family and home are, what you’ve kept in Australia, and how you actually live. A clean break helps enormously. A half-hearted departure, with the family home kept “just in case” and the spouse and kids staying behind while you fly back every few weekends, can leave you firmly Australian for tax purposes no matter how many Hong Kong stamps are in your passport.
And this is where the missing treaty bites a second time. In a treaty country, a messy dual-residency year can be untangled with the tie-breaker rules. With Hong Kong, there’s no tie-breaker to rescue you. If the ATO decides you never properly left, you’re taxed here on your worldwide income and there’s no treaty to override the call. So with Hong Kong specifically, a clean, deliberate, well-documented departure isn’t a nice-to-have. It’s the whole ball game, and it’s worth professional eyes before you go.
Leaving Australia: the exit tax you need to plan around
The Australian side of any move is where the real planning lives, and it centres on one event with a boring name and a big price tag.
When you stop being an Australian tax resident, CGT Event I1 (section 104-160 of the Income Tax Assessment Act 1997) treats you as having sold all your CGT assets at market value on the day you leave, with some carve-outs for taxable Australian property. In plain English: the taxman pretends you sold everything on your way out the door and taxes the gain, even though you’ve actually sold nothing.
You do get a choice. Under section 104-165 you can elect to disregard that deemed sale, which keeps the assets inside the Australian CGT net so that when you eventually do sell for real, Australia taxes the whole gain, including the part that built up while you were living overseas.
Getting the timing right here is the single most valuable thing on this page, so read this twice. The exit tax is calculated on the gain that has built up as at the day you leave. So if most of an asset’s growth is still ahead of it, leaving early is powerful: you trigger the exit tax on a small gain, pay a modest bill, and then all the future growth happens while you’re a Hong Kong resident, where it isn’t taxed at all. Australia only ever got its hands on the small slice that existed when you left.
Flip it around. If the gain has already largely happened before you go, that same exit tax lands on a big number and the bill hurts. That’s the situation where deferring under section 104-165 might be the smarter play, keeping the asset in the Australian net and paying later, though that keeps Australia attached to the asset indefinitely, so it needs proper modelling rather than a guess. The instinct most people have (“I’ll just defer the tax, deferring is always good”) is exactly the instinct that costs them.
A couple of other moving parts. There are special rules for the cost base of assets that become taxable Australian property (section 855-45), and the foreign resident capital gains withholding regime, which jumped to 15% from 1 January 2025 with the old AUD 750,000 threshold scrapped, bites on Australian property you hold after leaving. Non-residents also lose the 50% CGT discount on Australian property (and from 1 July 2027 that discount is being replaced for everyone anyway), so any Australian property you hang onto needs its own analysis.
One reassurance, because the question comes up constantly: leaving Australia for tax purposes does not mean handing back your passport. You stay an Australian citizen. What changes is your tax residency, which is a completely separate thing from citizenship.
Thinking seriously about the move?
The interaction between the Australian departure rules and the Hong Kong tax position is where most of the planning value lives, and the missing treaty makes getting your residency cessation right more important than usual. Done well, the move can slash your total tax bill. Done badly, you cop an oversized departure-year tax bill, 30% withholding on unfranked Australian dividends, or a dual-residency mess with no treaty to bail you out. We run dedicated Outbound Expat Tax Consultations to work through your specific situation, including CGT Event I1 timing, the section 104-165 choice, the no-treaty implications, and the Hong Kong side. Our consultations are conducted personally by Shane Macfarlane or Terryn Davidow, both partners of the firm. Generic advice isn’t good advice. Tell us your circumstances and we’ll analyse your facts and provide specialist advice for your situation.
What this looks like for different Australians
The same move plays out very differently depending on who you are.
The founder approaching exit. You’re sitting on a private company that’s gone up a lot and you’re eyeing the door. Sell while you’re still Australian after 1 July 2027 and 47% of the indexed gain goes to Canberra. Sell as a Hong Kong resident and the gain isn’t taxed, provided it’s a genuine capital sale and not you running a trading operation. The timing logic is everything: if the big growth is still ahead of the company, leaving early means your exit tax is calculated on today’s smaller gain, and all that future upside accrues tax-free in Hong Kong. If the growth has already happened, the exit tax is brutal and deferral needs modelling. On the way in, a founder pulling HKD 2.5 million a year (salary, business profits, or both) walks straight into TTPS Category A without needing anyone to offer them a job, which is about as painless as founder immigration gets.
The high-income earner with a share portfolio. Sell shares while Australian after 1 July 2027 and it’s 47% on the indexed gain. In Hong Kong, the gain isn’t taxed, and your Hong Kong salary tops out around 15-16%. The one catch: if your portfolio pays unfranked Australian dividends, those get docked 30% on the way out of Australia with no treaty relief. A fully franked portfolio barely notices. So if your wealth is in growth assets rather than unfranked income payers, Hong Kong’s mix of no CGT and low salary tax is about as good as it gets. TTPS Category A is your route in.
The high-net-worth retiree. Your gains cross the top threshold, so it’s 47% on the indexed gain if you sell while Australian. Hong Kong charges nothing on the disposal and nothing on your offshore income. But the missing treaty matters most to you, because a retiree living off an Australian income stream cops the 30% withholding on any unfranked dividends and distributions (franked ones are fine). On immigration, you’ve probably got no Hong Kong salary to lean on, so unless your investment or business income tops HKD 2.5 million a year for TTPS, the CIES (HKD 30 million invested) is the realistic path in if you’ve got the assets.
The family with school-age kids. Hong Kong has a deep bench of international schools, but the good ones are competitive to get into and dear to attend, often HKD 200,000 to HKD 300,000 per child per year, sometimes with a debenture or capital levy on top just to secure the spot. Housing is among the priciest on the planet, and you get dramatically less space than the same money buys in any Australian city. The trains are superb. The TTPS lets your spouse work without restriction, which helps two-career households. The tax position is brilliant, but the schooling scramble, the cost of living, and (for plenty of families) the political backdrop all need weighing together.
The political question
No honest article about moving to Hong Kong can dodge this, so here it is straight.
Hong Kong’s political and civil-liberties environment has changed a great deal since 2020, following the National Security Law and the legislative and institutional changes that came with it. The detail is widely reported and well beyond a tax article, but the practical point for you is simple: the Hong Kong of today is not the Hong Kong of 2015, and where its civil and political life is heading is an open question rather than a settled one.
For some Australians, that settles it. They won’t consider Hong Kong whatever the tax saving, and that’s a perfectly sensible position.
For others, particularly those going for a defined commercial stint, or comfortable with the operating environment, or simply weighting the financial and career upside more heavily, the trade-off is acceptable. That’s also a perfectly sensible position.
What we’d warn against is letting the tax numbers make the decision for you. The tax position is genuinely outstanding. The political environment is genuinely different from what you’re used to. Both things are true at the same time, and how you weigh one against the other is personal. We can tell you exactly what the tax saving is. We can’t tell you how much the rest is worth to you, and you shouldn’t let a spreadsheet pretend to answer that for you.
The honest list of drawbacks
Beyond the politics, here’s what else you’re signing up for.
The missing treaty is a real, recurring cost, especially if your Australian income includes unfranked dividends or anything else that a treaty would have shielded. And it strips away the safety net for a botched dual-residency year.
The cost of living is steep. Hong Kong property is some of the dearest per square metre anywhere on earth, and you’ll get markedly less room than the same budget buys back home. International schooling is expensive and oversubscribed.
It’s dense and it’s intense. If you’re used to a backyard and a bush walk on the weekend, the sheer compression of Hong Kong takes adjusting to, though the genuinely excellent country parks and hiking trails within the territory soften that more than outsiders expect.
The Mandatory Provident Fund (MPF) means compulsory retirement contributions for many employees, expats often included, though exemptions can apply (for example, short-term employment of 13 months or less, or where you remain covered by an overseas retirement scheme). Where it applies, the sums are modest next to Australian super.
And the air, much improved over the past decade, still has its bad days, especially in winter.
None of these is a dealbreaker on its own. They’re the price of admission for a genuinely exceptional tax position. The only question that matters is how they net out for your particular life.
The bottom line
On tax alone, Hong Kong is one of the most powerful options an Australian has after the 2026 Budget. No capital gains tax, no tax on offshore income, salary tax effectively capped at 15-16%, and a flagship visa scheme that genuinely wants high earners and lets a lot of them in without so much as a job offer.
The complications are specific and they’re real. No treaty with Australia means 30% on unfranked dividends and no tie-breaker if your residency gets messy, which makes a clean exit essential. And the political environment is a variable only you can price.
When you relocate overseas, it’s the things you don’t know that you don’t know that make all the difference financially between a roaring success and simply a change of scenery, same outcome, different country. Done properly, Hong Kong can deliver one of the best tax outcomes of anywhere in this series. But the missing-treaty trap and the clean-break question have to be handled right, and the political dimension deserves honest thought before the tax numbers sweep you off your feet.
Frequently asked questions
Is there a tax treaty between Australia and Hong Kong?
No. Australia and Hong Kong do not have a comprehensive double tax agreement. Australia has only a Tax Information Exchange Agreement with Hong Kong, which covers information sharing, not the allocation of taxing rights or reduced withholding rates. The Australia-China DTA does not extend to Hong Kong. Be wary of websites claiming a “15% dividend” Australia-Hong Kong treaty rate, because no such treaty exists.
Does Hong Kong have capital gains tax?
No. Hong Kong does not have a general capital gains tax. Genuine investment gains on shares, property, and businesses are not taxed. The two caveats are that profits from genuine trading activity can be taxed as income, and that transaction taxes such as stamp duty can still apply to Hong Kong property and shares.
How much income tax do you pay in Hong Kong?
Hong Kong salaries tax on Hong Kong-source employment income is the lower of two calculations: progressive rates from 2% to 17% after allowances, or a standard rate on income before allowances. From the 2024-25 year, the standard rate is two-tiered at 15% on the first HKD 5 million of net income and 16% above. In practice a high earner pays an effective rate of roughly 15-16%. Hong Kong taxes only Hong Kong-source income, so offshore income is generally outside the net.
How can an Australian move to Hong Kong?
There are three main pathways. The Top Talent Pass Scheme (TTPS) lets people earning HKD 2.5 million or more in the prior year move without a job offer. The Quality Migrant Admission Scheme (QMAS) is a points-based route for skilled migrants, also with no job offer required. The Capital Investment Entrant Scheme (CIES) is the investment route, requiring HKD 30 million in net assets and a HKD 30 million investment commitment.
Do I still pay Australian tax if I move to Hong Kong?
It depends on whether you genuinely cease Australian tax residency. If you make a clean break under the residency tests, you stop being taxed in Australia on your worldwide income, though Australian-source income (and Australian property) can still be taxed here. If your departure is messy and the ATO considers you still Australian resident, you remain taxable here on worldwide income, and because there’s no tax treaty with Hong Kong, there’s no tie-breaker to fall back on. Leaving also triggers CGT Event I1, a deemed disposal of your CGT assets on departure, which needs careful planning.
Are my Australian dividends taxed if I live in Hong Kong?
Fully franked Australian dividends are generally not subject to Australian dividend withholding, because the company tax has already been paid, so a fully franked portfolio is largely unaffected. Unfranked dividends (and the unfranked portion of partly franked dividends) are subject to Australian withholding at the default domestic rate of 30%, with no treaty reduction available because there’s no Australia-Hong Kong DTA.
Get the Hong Kong move planned properly
We’ve spent over 20 years advising Australian expats and Australians considering relocation. The Hong Kong move involves several specific planning levers most advisers never surface: the timing of CGT Event I1, the section 104-165 choice, the consequences of having no Australia-Hong Kong treaty (including 30% unfranked dividend withholding and the lack of a residency tie-breaker), immigration pathway selection (TTPS vs QMAS vs CIES), and the clean cessation of Australian tax residency. Done well, the move can save substantial tax. Done without proper planning, it can cost more than it should. Our Outbound Expat Tax Consultations are conducted personally by Shane Macfarlane or Terryn Davidow, both partners of the firm. Generic advice isn’t good advice. Tell us your circumstances and we’ll analyse your facts and provide specialist advice for your situation.
