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  • To Be or Not To Be an Australian Tax Resident.

    6 June at 11:33 from atlas

    For many Australian Citizens working overseas this can be a straight forward question with a simple answer.

    But if:

    * you still own a home back in Australia and it is available for you to return to i.e. You are not renting it out to others, or
    * you still have other investments back in Australia - Property, Shares,
    Superannuation, Term Deposits etc., or
    * all your insurances - Life, Income Protection, Health etc,. or
    * your contract of employment is for less than 2 years, or
    * your contract of employment has a clause that covers the cost of returning you to home at the end of your assignment, or
    * Some or all your family are still lining in Australia.
    * and others

    Then the question of where you are a resident for tax purposes needs to be
    discussed, particularily the question of whether you have left Australia and established your domicile in another country. As this is important to be able to determine where you pay tax under both domestic laws and International Tax Treaties.

    Australian Residents for Tax are taxable in Australia on their world wide earnings. Changes to Australia's tax laws now mean that Salary earned off shore (except for a few very technical exemptions) and income from
    investments including Capital Gains are to be reported. If you have paid tax in the a foreign country then generally a foreign tax credit is given but proof is required of the payments and there may be limits placed on those as well.

    A Non Resident for Tax escapes this compliance requirement but will pay tax on any rental property income in Australia from the first dollar earned i.e. there is no tax free thresholds for a Non Resident.

    Australian Dividends and Interest may not need to be declared as long as the Share Registry and Bank are notified of your Non Resident status. In the case of the Banks they will withhold a 10% withholding tax which for Australia's purposes is a final tax.

    This is a very brief general overview and is not intended to be taken as formal advice. It is recommended that any Australian living offshore seek the guidance of a Tax Professional to assist in determining his or her own personal circumstances.