Leaving Australia to live or work abroad, is an exciting time, but there are so many things to consider. Finding a school for your kids, choosing where to live, overseas health insurance, the list is endless. Finding an expat accountant is probably not even on your list, but it should be!
Understand your Australian tax residency status
It is vital that you understand the tax implications of moving overseas. If your tax residency changes, you need to know what impact this will have on your Australian taxes. At Expat Taxes, we’re expats ourselves, so we understand the implications that living abroad has on you as well as on your Australian taxes.
International tax is complicated – working with an expat accountant is critical
Australian tax residency is complex and requires a good understanding of legislation, ATO rulings and Australian tax cases. Also, Australia has tax treaties with many countries which can override the Australia’s tax law. An expat accountant will help you navigate through your obligations and highlight opportunities.
Avoid penalties and charges
If you are living outside of Australia, you might have to lodge Australian tax returns. There is a requirement to lodge a return each year unless you advise the ATO that you have no requirement to lodge future tax returns. There are tests to determine whether there is a requirement to lodge a return.
It’s important that you meet the Australian tax return deadline regardless of where you are living!
Using a Tax Agent who specialises in expat taxes to lodge your return will ensure that your return is prepared correctly.
ATO penalties for the late lodgement of a tax return begin at $222 and increases by $222 for every 28 days that the return is late, until it reaches a maximum penalty of $1,100 for each return.
But that’s not the worst of it, the ATO also charges daily compounding interest on any outstanding tax payable. These interest costs can be very expensive. Just as a guide, at the time of writing this article, although the Reserve Bank of Australia cash rate is the lowest that it has ever been (at 0.10%), the ATO is currently charging an annual General Interest Charge rate of 7.04%, some 6.94% higher than the RBA rate! I think you’ll agree, that’s quite a hefty margin that the government are making on taxpayers!
If you have any questions or if you need some help, contact our team today! We’ll help you understand how being an expat will affect your Australian taxes. We can also assist you with preparing your annual tax returns.