As UK and Australian tax agents we specialise in bridging the gap between the UK and Australian taxation systems.
With a team of experts experienced in both jurisdictions, we can apply our knowledge and practical experience to assist you with your tax planning and compliance obligations.
For individuals relocating to Australia, 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 the point in which you are deemed to be an Australian tax resident. Issues may arise where an individual is also considered to be tax resident in their departing country and therefore you should seek to obtain professional advice from an international tax specialist.
The point at which an individual is deemed to be a tax resident in Australia will depend on their social and living arrangements and intended length of stay.
Income Tax
An individual’s liability to income tax in Australia is dependent on their tax residency and Visa class.
Individuals who are tax resident in Australia are subject to Australian tax on their worldwide income and gains. However, this is not always the case when someone has arrived in Australia on a temporary Visa class.
Individuals earning income in Australia will be required to file an Individual Tax Return (ITR) and should apply for a TFN on arrival.
Capital Gains Tax
When an individual becomes a resident of Australia for tax purposes, they are deemed to have acquired their non-Taxable Australian property for its market value at the date of arrival.
Assets held for 12 months from purchase, or from date you became Australian tax resident if later, will receive a 50% CGT discount on disposal.
Foreign Exchange Gains
If assets, including cash, are kept overseas, then tax implications may arise based on fluctuation in foreign exchange rates. In certain cases, these gains are assessable as income and therefore are taxed at a higher rate.
The tax implications surrounding forex gains are a complex issue which is widely misunderstood.
Trusts
The tax issues surrounding trusts are complex and it is recommended that professional tax advice be obtained.
If a trustee of an offshore trust becomes Australian tax resident then, for Australian tax purposes, that trust is deemed to be Australian tax resident also. Because of this, any distribution made to a non-Australian tax resident beneficiary is taxed at 45% and payable by the Australian resident trustee. This can be problematic for trustees moving to Australia - sometimes requiring that individuals step down in their capacity as a trustee.
Australian resident beneficiaries are subject to tax on distributions received from an offshore trust. These distributions are assessable as income in Australia.
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.