Leaving Australia to Work Overseas: Tax Issues
Editorial note, updated June 2026
We’ve substantially rewritten this checklist. The biggest change: the original said you could rent out your home and stay CGT-free under the six-year rule, but since 2020 foreign residents generally lose the main residence exemption entirely when they sell, which is now one of the most expensive traps for departing expats. We’ve corrected that, added the “deemed disposal” exit tax on your investments, untangled the Medicare levy from the surcharge with current thresholds, and updated the student loan rules. Read on.
Leaving Australia? The Pre-Departure Tax Checklist (Before You Board That Plane)
There’s a glorious moment in every expat’s journey when the job is locked in, the visa’s approved, and the only things left on the list are “buy adaptor plugs” and “say goodbye to everyone twice”. It’s exciting. It’s also exactly when the boring-but-important tax admin gets forgotten, and some of it is genuinely expensive to get wrong.
So here’s a no-nonsense checklist of the money and tax housekeeping worth sorting before you fly. None of it is hard. All of it is cheaper to handle now than to untangle from a different time zone later.
Your Australian home: the rule that completely changed
This is the big one, and it’s where old advice (including, frankly, the original version of this article) will lead you straight off a cliff.
For years, the rule was lovely: move overseas, rent out your home, and you could keep treating it as your main residence for capital gains tax purposes for up to six years under the absence rule, selling within that window CGT-free. Plenty of expats still plan around this. For non-residents, it no longer works that way.
Since changes that took effect in 2020, if you sell your former Australian home while you are a foreign resident for tax purposes, you generally lose the main residence exemption entirely. Not partially. Not just for the rented years. The whole capital gain, going right back to the day you bought the place, can become taxable. There’s only a narrow “life events” exception (things like terminal illness, the death of a spouse or child, or divorce) available to people who’ve been non-resident for six years or less.
The flip side, and the planning gold: the exemption is tested by your residency status on the day you sign the sale contract. Sell while you’re genuinely an Australian resident again and the exemption (including that six-year absence rule) can be back in play. For an expat with a former home, the difference between signing a sale contract the month before coming home versus the month after can be a six-figure tax swing. This is, hands down, one of the most expensive things to get wrong, so get advice before you either leave or sell.
The exit tax nobody mentions: deemed disposal
Here’s another one the original checklist skipped entirely, and it surprises almost everyone.
The day you stop being an Australian tax resident, the ATO treats you as having sold certain assets (broadly, your shares and other investments that aren’t Australian real property) at their market value, even though you haven’t sold a thing. This “deemed disposal” can trigger a capital gains tax bill on departure. You can instead elect to defer it, keeping those assets in the Australian tax net until you actually sell them. Each choice has long-term consequences, and most people don’t even realise they’re making it. Sort this out in the year you leave, not three years later when you’re doing your return and discover the problem.
Medicare: stop the levy, weigh up your health cover
Two separate things often get muddled here, so let’s pull them apart.
The Medicare levy is 2% of taxable income that most Australian residents pay. If you genuinely become a non-resident, you’re generally not entitled to Medicare and so generally not liable for the levy for that period. To claim the exemption on your return, you’ll usually need a Medicare Entitlement Statement from Services Australia confirming you weren’t entitled to Medicare, and you apply for a fresh one each year you claim. Worth knowing: if you have a spouse who was entitled to Medicare in the same period, your own exemption can be affected.
The Medicare levy surcharge is a different beast: an extra 1% to 1.5% charged to Australian residents who earn above the threshold (for 2025-26, $101,000 for singles and $202,000 for families) and don’t hold adequate private hospital cover. If you’re a non-resident not entitled to Medicare, the surcharge generally doesn’t apply either.
So on private health cover: many expats suspend or cancel it on the way out. Before you do, ring your insurer and ask about suspending rather than cancelling (which can preserve waiting periods you’ve already served, handy for when you come home), and check the cost of suspension against what you’d otherwise face. Just don’t assume your residency or levy position; have it confirmed, because part-year residency makes the maths fiddly.
Student loans: they’re coming with you
If you have a HELP debt (or a VET Student Loan or Australian Apprenticeship Support Loan), moving overseas does not press pause. Since 2017, Australians overseas have had to report their worldwide income to the ATO each year and make repayments once their income clears the threshold, even as a non-resident.
Two things to do before and after you go: if you intend to be overseas for 183 days or more in any 12-month period, update your details and lodge an overseas travel notification through myGov within 7 days of leaving; then report your worldwide income (or a non-lodgment advice) by 31 October each year. The current rules are friendlier than they used to be (the 2025-26 repayment threshold is $67,000, repayments are calculated on a marginal basis, and balances got a one-off 20% cut in mid-2025), but the reporting obligation is non-negotiable. We’ve covered all of this in detail in our guide on repaying HELP debts as an expat.
A practical tip while we’re here: sort out your myGov sign-in before you cancel your Australian SIM, or you’ll spend a frustrating evening overseas waiting for a security code to reach a phone number that no longer exists.
Superannuation: tidy it up, then leave it alone
Leaving Australia, even permanently, doesn’t let you crack open your super early. It stays preserved under Australian rules until you reach preservation age or meet another condition of release, no matter where you live.
What’s worth doing before you go is a tidy-up. If you’ve got super scattered across several funds from various jobs, consolidating into one (after checking you’re not torching valuable insurance inside the funds you’d close) means you’re not bleeding multiple sets of fees while you’re away. Make sure your contact details on the fund are ones you’ll still be able to access overseas, and check whether the insurance inside your super still makes sense once you’ve left.
One caveat worth flagging: if you’re moving to the United States, super gets genuinely complicated, because the US tax system doesn’t recognise it the way Australia does. If that’s you, get specific advice before you go, because it’s a known trap.
The bottom line
Before you fly: get advice on your home and the main residence exemption (the rule changed and it’s brutal for non-residents), understand the deemed disposal that hits your investments on departure, sort your Medicare levy and health cover position, lodge your HELP travel notification and keep reporting worldwide income, and tidy up your super without trying to access it. Most of it takes one good conversation. All of it is easier before the plane than after.
Tread your own path. Just tick off the tax list before you pack the sunscreen.
About to head overseas? Let’s get your departure sorted properly.
The single most expensive expat tax mistakes happen at the start, in the decisions made (or missed) in the months around departure: the home, the investments, the residency call itself. Get them right before you leave and you’ll save yourself money, penalties and a great deal of stress later.
Our specialist expatriate tax team offers a dedicated departure planning consultation that walks through exactly this checklist for your situation, and we work remotely with clients heading all over the world.
Book a departure planning consultation with our expat tax specialists today, ideally a few months before you fly. Your future self, will thank you and may even buy you a drink.
General information only. This article doesn’t consider your personal circumstances and isn’t tax or financial advice. Speak to our specialist expatriate tax team today, or with another registered tax agent, before acting.
References
- Australian Taxation Office, “Main residence exemption for foreign residents” (loss of the exemption for foreign residents and the life events test): ato.gov.au
- Australian Taxation Office, “Changing residency” (CGT event I1 and the deemed disposal of assets when you stop being an Australian resident): ato.gov.au
- Australian Taxation Office, “Medicare levy exemption” (foreign resident exemption and the Medicare Entitlement Statement): ato.gov.au
- Australian Taxation Office, “Medicare levy surcharge income, thresholds and rates” (2025-26 thresholds of $101,000 for singles and $202,000 for families): ato.gov.au
- Australian Taxation Office, “Overseas obligations when repaying loans” (overseas travel notification, worldwide income reporting and the 31 October deadline): ato.gov.au
- Australian Taxation Office, “Accessing your super” (preservation age and conditions of release): ato.gov.au
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