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Expat Tax Advice for Individuals Leaving Australia

Sydney, Australia -June 26, 2022: View from Cahill expressway to the Circular Quay on crowd of people walking and enjoying beautiful sunny afternoon in Sydney Australia

For Australians planning on relocating overseas, there are important tax considerations that should be considered in advance of the move to avoid unintended tax consequences for you.

Tax Residency Status

The first consideration is to determine if there is a change in your tax residency status once you have relocated overseas.

Individuals who are tax resident in Australia are subject to Australian tax on their worldwide income and gains. However, once an individual ceases to be Australian tax resident they are no longer subject to Australian tax on their overseas income.

Whether or not an Australian expat remains tax resident in Australia will depend on their social and living arrangements and intended length of stay overseas.

Income Tax

When an individual relocates overseas, they may remain liable in Australia to tax on their Australian sourced income. They may also be subject to tax in the country in which they have relocated to on the same income, however, relief from double taxation may be available under the tax treaty between Australia and the country of relocation.

Tax rates for non-residents differ to tax rates for residents of Australia.

Capital Gains Tax

When you cease to be Australian tax resident, for Australian CGT purposes, an individual will be deemed to dispose of all non-Taxable Australian Property assets. However, individuals are able to make an election to disregard the deemed disposal until the ultimate sale of the asset, or until such time as the individual becomes an Australian resident again.

Whether an individual choses to pay the tax or defer it until a later date will depend on the individuals tax affairs and their future intentions.

As an Australian tax resident, disposals of assets held for at least 12 months are eligible for a 50% discount. When an individual ceases to be Australian tax resident, they are no longer eligible to claim the discount on the disposal of any Australian property.

Main Residence

An important consideration for many expats is what to do with their Australian main residence while overseas. There is no simple answer to this and may well depend on tax considerations.

From a tax perspective, selling your main residence before you leave means that you might not pay any capital gains tax on the property. However, if you sell your property after becoming a non-resident, then you will be liable for CGT on the full profit made on the sale of your home. Individuals who sell their main residence and who were foreign residents at the time of disposal will not be entitled to the main residence exemption - this includes Australian citizens or permanent residents living overseas who were non-residents.

An appealing option for many expats is to rent out their main residence. The rental income would remain subject to Australian tax and would need to be disclosed in the individuals Australian tax return. Importantly all costs in relation to owning a property are claimable and can offset any tax. This includes interest and depreciation allowances, which in many cases can ensure that no tax liability will be created on the rental income. If you own a rental property in Australia, and it is making a profit, the profit will be taxed at non-resident rates once you become a non- resident.


The tax issues surrounding trusts are complex when dealing with non-residents and it is recommended that professional tax advice be obtained.

In general terms, the residency of a trust follows the individual residency of the trustee(s) and therefore this can be problematic when expatriates move overseas - sometimes requiring, that personal or corporate representatives need to be appointed in lieu of the current trustees to retain the trust's Australian tax residency.

For a beneficiary of an Australian trust can give rise to significant tax issues. For example, simply being the beneficiary of an Australian trust as a US tax resident can generate significant compliance costs and issues.

Depending on the country of relocation, the tax treatment of your trust may change under the domestic rules of that country. For example, Family Trusts in Australia are considered Discretionary Trusts in the UK and are subject to tax at 45% on distribution. As such, these favourable tax vehicles could lose its tax benefits.

Individuals who are the trustees or beneficiaries of an Australian trust, are recommended to seek specific tax advice prior to leaving Australia and becoming non-resident for Australian tax purposes - to ensure that any adverse tax consequences are addressed, or minimised.

Individuals should start planning well in advance of an overseas move to ensure there are no unintended tax consequences and there is sufficient time for tax planning.

Where individuals have already relocated, there will still be merit in seeking tax advice to ensure you remain fully compliant with any tax obligations and tax advantage of any tax planning opportunities available to you.

We can help provide advice in relation to this advice.

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