Australian Expat Tax Advice - Introduction
Exfin provides access to expat tax advice and information for Australians considering an overseas assignment, those who have already tax non-resident, future migrants and visitors on work visas regarding the Australian tax system. Prompt access to professional tax advice is available through our Inquiry form at the bottom of this page.
While Australian tax residents are taxed on their "worldwide income" at a maximum current taxable rate of 45%, (plus a medicare levy of 2% and, where applicable, a medicare levy surcharge) when they become non-resident for tax purposes they become liable only for tax on Australian sourced income - an approach which differs from that of some other countries, such as the US.
The Importance of Establishing your Tax Residency status
It will normally be crucial for Australian expatriates to clearly determine their tax residency status before departing and returning to Australia and we provide some discussion of the various tests used to determine an individual's residency status.
Determining tax residency is very dependent on an individual's personal circumstances and can involve complex assessments, and consequently you are strongly advised to seek professional advice to clarify your position. Wherever possible, this should occur before you depart for overseas because your status can be impacted by your overseas employment terms, and this is particularly the case if you are going to be working in the Middle East, where most countries do not currently levy income tax.
Australian expats should be aware of proposed changes to how tax residency will be determined in the near future. These changes could profoundly impact the tax residency status of Australians who return home for relatively short periods of time (45 days or more in a tax year). The Australian Treasury released a Consultation paper on the proposed New Tax Residency rules which required feedback required by September 22, 2023. We have yet to hear the Government's formal response to that feedback and there was no mention of any changes in the recent Federal Budget. Consequently, the earliest any changes to the rules can now be implemented is July 1, 2025.
Other areas of common concern to expatriates are the application of capital gains tax (CGT) in relation to property and assets in Australia, both on departure and while overseas, and how rental income from property is treated whilst overseas. Relatively recent changes make it imperative that expats do not sell previous Australian main residences without first receiving tax advice.
Australian expatriates should have a tax briefing with a professional advisor before leaving Australia and at least several months prior to their return. To what degree tax advice is warranted is very dependent on individual circumstances and these are remarkably varied. We do provide some general background around the more common taxation issues within our page on Expat Tax FAQ's and Expat checklists.
Note that some relatively recent changes, particularly in the area of superannuation, where the Government has limited annual and non-concessional contributions, means that it is vital that you also plan your superannuation strategy, since it may involve making contributions while overseas and prior to your return to Australia.
Most Australian tax advisors have a very domestic focus and it is important that you appoint tax advisors who are focussed and experienced with respect to expat tax matters to ensure that you receive full and complete advice. If you will have a continuing requirement to submit a full Australian tax return, then we would suggest that you consider appointing a tax advisor to represent you. There a number of associated benefits, including an assurance that you will remain both tax compliant and effective for Australian purposes and an extended deadline within which to complete tax returns. Individuals without a prior appointed tax agent still have an obligation to submit individual tax returns by October 31.
If you would like to arrange professional advice please complete the Inquiry form below providing details and you will be contacted promptly.
