Whether you’re looking for a chance to travel, moving for work, or are simply seeking a lifestyle change, the prospect of moving abroad is exciting. While it’s hard not to get caught up in the excitement of moving overseas, seeking the advice of a financial expert before you go could save you thousands in double taxation or even fines!
How to avoid tax headaches when moving overseas
Whether it’s lodging an Australian tax return or declaring income gained from any property you own, we’ve put together a list of tips to avoid tax headaches when moving overseas:
Determine whether you are still an Australian tax resident
If you are migrating on a temporary basis to live and work overseas, the chances are you’re still considered an Australian tax resident. This means you’ll still have to lodge an Australian tax return and declare any income that you have earned whilst living abroad. Consult with an industry expert to avoid the possibility of facing fines on your return. Refer:
- Determining Your Australian Tax Residency
- Am I an Australian resident for tax purposes? 10 factors to consider
What if you’re buying an investment property in your new country?
Whilst (outside of your tax return), it’s not mandatory to inform the Australian Tax Office that you’re buying an investment property abroad, if you’ve remained an Australian tax resident, it’s important to declare it in your Australian tax return.
You’ll need do do this because as an Australian tax residents you will be subject to tax on your worldwide income (including the rent that you receive from your overseas investment property) and on any capital gains that you may make (worldwide). In other words, you’ll need to declare your rental income as well as any gains (or losses) that you may make when you ultimately sell the property.
It’s a complex areas so talk through this with an accountant to assess how much tax you may have to pay on earnings from any properties you own abroad.
What if you’re leaving Australia permanently?
If you’re leaving Australia permanently it’s important to let the Australian Tax Office know so that you can tie up any loose ends. Be aware that if you sell your home in Australia AFTER becoming a tax resident you’ll have to pay Capital Gains Tax on the whole gain, so timing is critical because if you sell prior to becoming a non-resident, the whole (or a partial) gain may be tax-free! Refer:
- Death of the Main Residence Exemption for Australian Expats
- Capital Gains Tax changes to affect thousands of Aussie expats
So again, timing is critical so be sure to talk to an accountant long before you decide to move overseas, and long before you decide to sell your property!
If you’re moving overseas and would like to consult with an expert, feel free to reach out to our expatriate tax team here at Expat Tax Services – we’ll provide you with clear, practical advice that assist you to minimise your taxes, minimise potential tax risks and maximise your chance of success when you move overseas.