Australian Expat Tax Advice - Introduction
The coronavirus pandemic has already had a very significant economic impact in Australia, with a recession looming in the second quarter of 2020. The Government has launched a number of fiscal measures, including tax changes and the JobKeeper initiative, which are focused on helping Australian businesses and employees survive what is going to be a very difficult period ahead. None of the measures so far will have any discernible impact on Australian expatriates, but additional measures will follow over the coming weeks and months. We will incorporate any relevant changes as they occur within the website but look to our commentary for regular updates.
Exfin provides access to tax advice and information for Australians considering an overseas assignment, those who have already broken tax residency, future migrants and visitors on work visas regarding the Australian tax system. Prompt access to professional tax advice is available through our Inquiry forms.
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, and particularly the US. This is why it will often be crucial for Australian expatriates to clearly determine their tax residency status before departing and returning to the country and why 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.
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 whilst overseas, and how rental income from property is treated whilst overseas.
In our view, Australian expatriates should have a tax briefing with a professional advisor before leaving Australia and at least several months prior to their return. There are a considerable number of tax complexities and we cannot hope to address them all within the website - although we do provide some general background around the more common taxation issues and a page of tax FAQ's. 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 whilst 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.