Obtaining expat tax advice and information is crucial to Australians who are contemplating an overseas assignment, those who have already become non-residents for tax purposes, future migrants, and visitors on work visas who require guidance on the Australian tax system. Our network professionals can provide expeditious access to professional tax advice.
Introduction to Expat Tax Planning
Australian tax residents are subject to taxation on their "worldwide income" at a maximum tax rate of 45%, along with a Medicare levy of 2% and, if applicable, a Medicare levy surcharge. However, if they become non-residents for tax purposes, they are only required to pay tax on income sourced from Australia. This approach differs from that of other countries, particularly the US.
It is crucial to establish your tax residency status, in order to plan for your tax risks ahead.
It is imperative for Australian expatriates to accurately ascertain their tax residency status prior to departing and returning to Australia. We offer a comprehensive analysis of the different criteria employed to establish an individual's residency status.
The process of determining tax residency is highly contingent upon an individual's unique personal circumstances and may entail intricate evaluations. Therefore, it is highly recommended that you seek the guidance of a professional to obtain clarity on your situation. It is advisable to arrange this prior to your departure for overseas, as your overseas employment terms may affect your status. This is especially relevant if you plan to work in the Middle East, where the majority of countries do not currently impose income tax.
It is advisable for Australian expatriates to take note of the proposed modifications to the criteria for determining tax residency in the upcoming period. The aforementioned modifications have the potential to significantly influence the tax residency classification of Australian citizens who temporarily come back to their home country for a duration of 45 days or more within a tax year. It is imperative that the present administration reevaluates these changes promptly, given their recent statements indicating a willingness to exhibit greater adaptability than the preceding LNP Government.
It has been stated that the aforementioned measure will take effect from the initial income year following the Royal Assent of the enabling legislation. Based on our current understanding, it is highly likely that the implementation of the new residency regulations will be postponed until July 1, 2024, at the earliest.
Capital Gains Tax Concerns
Expatriates commonly express concerns regarding the application of capital gains tax (CGT) on property and assets in Australia, both during their overseas stay and upon their departure. Additionally, they seek clarity on the treatment of rental income from property while residing overseas. It is crucial for expatriates to seek tax advice before selling their former Australian primary residences due to significant changes that have been implemented recently.
It is recommended that Australian expatriates seek the guidance of a professional tax advisor prior to their departure from Australia and at least several months prior to their planned return. The necessity of tax advice is highly contingent upon individual circumstances, which can vary significantly. Our website offers comprehensive information on Expat Tax FAQ's and Expat checklists, which cover the most prevalent taxation issues.
Hidden Superannuation Tax Implications
It is important to note that recent changes, particularly in the area of superannuation, have limited annual and non-concessional contributions by the government. Therefore, it is crucial to plan your superannuation strategy, which may involve making contributions while overseas and prior to your return to Australia.
It is crucial to engage tax advisors who possess expertise in expat tax matters to ensure comprehensive guidance. Many Australian tax advisors tend to concentrate on domestic tax issues, hence the need for a specialist international tax focus.
If you wish to receive professional advice from an international tax adviser, please contact us.