Tax changes for expats

[Will27]

53 minutes ago, GTgrizzly said:

Fur king hell, just when I'm about 4 months of moving to LOS they drop this on us

Good onya ATO thanks for nothin

That's not new.

 

The legislation regarding non-residents has been in for years.

[lvr181]

On 2/6/2018 at 1:31 AM, Bikeman93 said:

https://www.ato.gov.au/Rates/Individual-income-tax-rates/

 

A foreign (non) resident is an Australian who spends half the year overseas. Then a flat tax of 32% applies on all Australian earned income.

Do the math as it applies to you. Pay the tax or travel back to Oz one day before 6 month rule comes into effect. Cost of travel etc against cost of tax payable. 

[Stevemercer]

It is a very regressive tax rule.

 

If you earn $20,000 from investments (renting, Superannuation etc) in Australia, but are a non-resident for tax purposes, you pay $6,600 in tax.

 

If you live in Australia you pay virtually no tax (after applying the tax free threshold of $18,800).

 

On the other hand, if you are getting over $100,000, you might be better off living overseas because you don't have to pay any higher rates of tax (e.g. fixed at 33%).

 

So the rules are advantageous if your earnings are high (e.g. a politician), but are highly disadvantageous if your income is low or average.

[Retdent]

As previous posters have mentioned, as a non-resident for tax purposes you lose the tax free concessions; ie you start paying tax at $1. The tax rates are not fixed but are stepped depending on the earnings or income. They can therefore be 32.5, 37 or 45 cents in the dollar as your income hits various thresholds. Medicare levy is not charged (but look out for problems some years down the track if you ever want to access health care back in Au.).

 

I agree, the OP should seek tax advise from a competent accountant.

 

There are many things to be seriously considered before jumping ship for a retirement overseas.

[4MyEgo]

On 11/02/2018 at 7:50 PM, isaantony said:

I wrote an article about this very topic plus other financial considerations Australians should be aware of when deciding to move to Thialand here http://tonyinthailand.com/australians-moving-overseas-beware/ I would be interested to here of your thoughts.

Hi Tony a very interesting blog, but can I say one thing as an Aussie xpat, its not all that depressing if you stumbled onto the research I have, i.e. you can avoid paying tax if you invest your money in the ASX, I don't know if you or the other readers here know this, you can sell your property that is providing you with an income less 32c in the dollar to the tax man, less maintenance costs, water, council rates, insurances, vacancy factors, agents fees, agents re-letting fees, advertising costs etc etc, then you have capital gains tax, but not before you get a retrospective fair market valuation as at the date you left the country, hopefully the valuer will give you a higher figure to minimise your future liability.
I mean seriously who wants to hang onto a property, by the time you add the above its a 50/50 split, however if you invested into a low risk portfolio in the ASX through a good broker you could be earning 5%-6% net yearly, and very easily, all tax free, i.e. you by fully franked shares (tax paid at the time the dividend is paid), problem solved and any capital gains tax is yours because there is non to be paid, sound to good to be true, well its true and legal, I have been doing it and there is no problem, and sure, shares rise and fall, but if your not selling when they are down, your good, I sell when I want to take profit, and I also get involved in my portfolio, and in 6 months I was managing 7.5% net, that's 15% per annum tax free with a low risk portfolio, so worth looking into as a foreign resident.

[Lacessit]

This is a beatup. One can only be non-resident if one declares it to the ATO. As long as one has an Australian address, they are an Australian resident irrespective of how long they stay overseas. Medicare cuts out after 5 years, but any return to Australia prior to that reinstates the 5 year period.

[4MyEgo]

On 06/02/2018 at 2:31 AM, Bikeman93 said:

https://www.ato.gov.au/Rates/Individual-income-tax-rates/

 

A foreign (non) resident is an Australian who spends half the year overseas. Then a flat tax of 32% applies on all Australian earned income.

This is correct, but excludes shares that are fully franked, i.e. tax is already taken out when the dividend is paid, and all capital gains on the shares are not taxed.

 

Forget property in Australia and earning an income from within Australia, unless its fully franked shares.

 

It is really simple to invest, but get a good broker, and a low risk portfolio, learn because it will be new to you, owning property in Australia is not for non residents, the tax plus outgoings will end up being 50% to you from your 100% investment, then you have capital gains tax to consider when you sell.

 

I sold and invested in the stock market, not knowing anything but property for 25 years, best thing I ever did, earning around 15% per annum, but I am also hands on, buying and selling as well as receiving dividends, but if you want 5%-6% net per annum, its easily achievable, and yeas shares go up and down, the thing is, you never sell when they are down, you top up with reserves and take the profit when they are up.

 

There is no point moaning and groaning about what is, it is what it is, and the only way around it is the way I am telling you, and if you start doing your due diligence, you too will be a tax free non resident of Australia and loving it.

[4MyEgo]

5 minutes ago, Lacessit said:

This is a beatup. One can only be non-resident if one declares it to the ATO. As long as one has an Australian address, they are an Australian resident irrespective of how long they stay overseas. Medicare cuts out after 5 years, but any return to Australia prior to that reinstates the 5 year period.

Lol, not that simple mate, a few hoopla hoops to jump threw when the ATO does that audit and says please explain, yeh sure you have an Australian address, but you have been living in Thailand for more than 183 days, oops, to easy the way your saying it, your abode under legislation can be a park, i.e. a place where you normally reside, and if your out of Australia for more than 183 days and in one spot, your toast, trust me on this, I have read every single point in legislation and cases that went to court.

 

You can prove your residency as Australian, but it is more complicated than what you say and is based on individual cases, so not so cut and dry, a lot of xpats just put their heads in the sand, but when the time comes, its going to hurt, i.e. if it ever comes.

[4MyEgo]

On 10/02/2018 at 2:45 AM, BEVUP said:

All income is taxable in Auss including interest/dividends ect

Your statement can be misconstrued, if we are talking about non residents, fully franked dividends are NOT taxed, bank interest is charged at a lessor rate of 10% on the interest earned, it is called the 10% withholding tax.

 

If you are referring to an Australian resident, the same applies for fully franked dividends, however for an Australian or non resident who purchasers shares that are not taxed, then they have to declare it and pay tax on the dividend, if Australia, they pay according to the Australian taxation scale, if a non resident 32.5c in the dollar.

 

Also, there is no capital gains tax payable on shares for a foreign resident, but an Australia resident has to pay capital gains tax on shares sold.

[Will27]

49 minutes ago, Lacessit said:

This is a beatup. One can only be non-resident if one declares it to the ATO. As long as one has an Australian address, they are an Australian resident irrespective of how long they stay overseas. Medicare cuts out after 5 years, but any return to Australia prior to that reinstates the 5 year period.

Just because you declare yourself as a non-resident doesn't mean you are one.

[Will27]

1 hour ago, lvr181 said:

Do the math as it applies to you. Pay the tax or travel back to Oz one day before 6 month rule comes into effect. Cost of travel etc against cost of tax payable. 

That doesn't really help if you live in Thailand.

[4MyEgo]

8 hours ago, Will27 said:

Just because you declare yourself as a non-resident doesn't mean you are one.

Could you elaborate on the above comment as its a little confusing

[simoh1490]

1 minute ago, 4MyEgo said:

Could you elaborate on the above comment as its a little confusing

https://www.ato.gov.au/Individuals/International-tax-for-individuals/Work-out-your-tax-residency/Residency-tests/

[lvr181]

8 hours ago, Will27 said:

10 hours ago, lvr181 said:

Do the math as it applies to you. Pay the tax or travel back to Oz one day before 6 month rule comes into effect. Cost of travel etc against cost of tax payable. 

That doesn't really help if you live in Thailand.

After 'returning' to Oz (to negate the tax effect) have a day or two of holiday ( or meaningful discussions with your financial planner and accountant) and then return to Thailand.

[4MyEgo]

1 minute ago, simoh1490 said:

https://www.ato.gov.au/Individuals/International-tax-for-individuals/Work-out-your-tax-residency/Residency-tests/

Fully aware of that, but he made the comment "just because you declare yourself a non resident, doesn't mean you are one.

 

Usually someone who changes their residency status would be advised to do so by their accountant as in my case, or already know about the residency test, therefore I cannot see his point, hence the reason I asked him to elaborate, but thanks all the same.

[4MyEgo]

1 minute ago, lvr181 said:

After 'returning' to Oz (to negate the tax effect) have a day or two of holiday ( or meaningful discussions with your financial planner and accountant) and then return to Thailand.

The rules are pretty clear, i.e. if you are out of the country for more than 183 days in any "financial year" you are a non resident, unless you can prove otherwise, this is done on an individual basis, nothing is cut and dry, the ATO are not stupid, just money hungry dogs sniffing out all potential non residents, so as long as you have all the individual basis points covered as per the legislation, you should be fine, but like I said, its not that cut and dry and most will fall by the wayside if ever audited, the most interesting part of the legislation that I found was that your "abode" could be a park, i.e. your normal place of residence when outside of Australia.

 

The tool on the website is just a guide and if everyone thinks that a machine that gives you a guide on your status, is leaving themselves open, mind you fat chance the ATO will come down on anyone, unless audited, but its still a possibility, and with technology and government agencies linked up, I am sure they have a list of people who are out of the country for more than 6 months and if doing their returns, are having a look, i.e. if they have the man power because there are about 1 million Xpats overseas as far as I am aware. 

[Will27]

16 minutes ago, 4MyEgo said:

Fully aware of that, but he made the comment "just because you declare yourself a non resident, doesn't mean you are one.

 

Usually someone who changes their residency status would be advised to do so by their accountant as in my case, or already know about the residency test, therefore I cannot see his point, hence the reason I asked him to elaborate, but thanks all the same.

Using the guidelines set out by the ATO , I suspect most people who live in Thailand, would be classed as non-residents.

 

Many I assume would claim to be residents because of the obvious tax benefits.

What I was trying to say was, that if Fred Blogs is living in Thailand 360 days per year, he in most cases

a non-resident. 

 

As our tax system is self assessment based, as you alluded to in another post, if audited by the ATO, they would

have a hard time trying to prove residency.

 

So basically, you claim can claim whatever you like under self assessment.

Weather or not that is correct is a different matter.

[Will27]

25 minutes ago, lvr181 said:

After 'returning' to Oz (to negate the tax effect) have a day or two of holiday ( or meaningful discussions with your financial planner and accountant) and then return to Thailand.

I think you're misinterpreting the guidelines for residency.

Going back for a few days every 6 months doesn't make you a resident.

 

It's pretty much spending more than 6 months out of Australia per year.

[4MyEgo]

4 minutes ago, Will27 said:

Using the guidelines set out by the ATO , I suspect most people who live in Thailand, would be classed as non-residents.

 

Many I assume would claim to be residents because of the obvious tax benefits.

What I was trying to say was, that if Fred Blogs is living in Thailand 360 days per year, he in most cases

a non-resident. 

 

As our tax system is self assessment based, as you alluded to in another post, if audited by the ATO, they would

have a hard time trying to prove residency.

 

So basically, you claim can claim whatever you like under self assessment.

Weather or not that is correct is a different matter.

Spot on and well summed up, thx

[lvr181]

4 minutes ago, Will27 said:

I think you're misinterpreting the guidelines for residency.

Going back for a few days every 6 months doesn't make you a resident.

 

It's pretty much spending more than 6 months out of Australia per year.

My comment was made on the basis of buying some time (without incurring a presumed tax penalty) to obtain professional advice about making some financial changes to minimise future tax liabilities.

[Lacessit]

12 hours ago, 4MyEgo said:

Lol, not that simple mate, a few hoopla hoops to jump threw when the ATO does that audit and says please explain, yeh sure you have an Australian address, but you have been living in Thailand for more than 183 days, oops, to easy the way your saying it, your abode under legislation can be a park, i.e. a place where you normally reside, and if your out of Australia for more than 183 days and in one spot, your toast, trust me on this, I have read every single point in legislation and cases that went to court.

 

You can prove your residency as Australian, but it is more complicated than what you say and is based on individual cases, so not so cut and dry, a lot of xpats just put their heads in the sand, but when the time comes, its going to hurt, i.e. if it ever comes.

You may be right. However, I think the ATO has a lot bigger fish to fry than a few expats living overseas. After all, we live overseas because it's cheaper than Australia, n'est ce pas?

In any case, I have to return to Australia every 6 months for a medical check which would cost me megabucks in Thailand, and costs zero in Australia. Plus stock up on 6 month's worth of prescriptions using the PBS. I have an Australian address, so unless our politicians squeeze even more by cutting the period to 3 months, I'm not affected.

[Will27]

33 minutes ago, Lacessit said:

You may be right. However, I think the ATO has a lot bigger fish to fry than a few expats living overseas. After all, we live overseas because it's cheaper than Australia, n'est ce pas?

In any case, I have to return to Australia every 6 months for a medical check which would cost me megabucks in Thailand, and costs zero in Australia. Plus stock up on 6 month's worth of prescriptions using the PBS. I have an Australian address, so unless our politicians squeeze even more by cutting the period to 3 months, I'm not affected.

I agree the ATO have bigger fish to fry, but returning to Oz every 6 months still doesn't make you a resident.

 

The big danger is getting done by a random audit.

[MadMuhammad]

16 hours ago, 4MyEgo said:

Lol, not that simple mate, a few hoopla hoops to jump threw when the ATO does that audit and says please explain, yeh sure you have an Australian address, but you have been living in Thailand for more than 183 days, oops, to easy the way your saying it, your abode under legislation can be a park, i.e. a place where you normally reside, and if your out of Australia for more than 183 days and in one spot, your toast, trust me on this, I have read every single point in legislation and cases that went to court.

 

You can prove your residency as Australian, but it is more complicated than what you say and is based on individual cases, so not so cut and dry, a lot of xpats just put their heads in the sand, but when the time comes, its going to hurt, i.e. if it ever comes.

Looking over the descriptions by the ATO of non-resident has helped my decision somewhat as I was cringing at the thought of my franking credits being eaten by the government.

I have been considering coming in on an education visa instead of the Elite Visa just recently, mainly for the initial large cost factor of relocating, freight, bike and car etc. I dont want to outlay even more cash initially

It looks as though with an ED Visa I could stretch out a few more years of tax breaks until I bite the bullet and go with the Elite.

I'll be maintaining a residence in Australia as such, my mother's house, where the utilities are in my name and the address will be listed on my Australian drivers license, electricians license, contractors license and security license.

I'm going to do some more research but what are your thoughts mate?

[4MyEgo]

6 hours ago, Lacessit said:

You may be right. However, I think the ATO has a lot bigger fish to fry than a few expats living overseas. After all, we live overseas because it's cheaper than Australia, n'est ce pas?

In any case, I have to return to Australia every 6 months for a medical check which would cost me megabucks in Thailand, and costs zero in Australia. Plus stock up on 6 month's worth of prescriptions using the PBS. I have an Australian address, so unless our politicians squeeze even more by cutting the period to 3 months, I'm not affected.

I reckon your right, its a numbers game, i.e. an audit and if your audited and cannot provide enough info to stack up that you are a resident, the penalties and interest will be high, trust me, suffice to say, if your prepared to gamble and try to get away with it, good luck to you, me on the other hand, cannot prove residency, but do return every 18 months for check up and stock up on my M&M's too, because they are so pricey here.

[4MyEgo]

2 hours ago, MadMuhammad said:

Looking over the descriptions by the ATO of non-resident has helped my decision somewhat as I was cringing at the thought of my franking credits being eaten by the government.

I have been considering coming in on an education visa instead of the Elite Visa just recently, mainly for the initial large cost factor of relocating, freight, bike and car etc. I dont want to outlay even more cash initially

It looks as though with an ED Visa I could stretch out a few more years of tax breaks until I bite the bullet and go with the Elite.

I'll be maintaining a residence in Australia as such, my mother's house, where the utilities are in my name and the address will be listed on my Australian drivers license, electricians license, contractors license and security license.

I'm going to do some more research but what are your thoughts mate?

I too have maintained an address back in Australia for my licence which goes to my PO Box, but you have to have a street address, I do the same for Medicare and Valuers registration, although I have nominated non resident as I cannot justify myself being here as a resident.

 

The fact of the matter for me is, at my retirement age, I don't want any hassles, the zero tax as a non resident works for me, and having come from a property background of 25 years, I saw the real estate market in Sydney eventually cooling off as it has, a year after I sold my place, although a place sold in the same villa complex of mine 6 months after, bigger and better for an extra $60k which was fine by me, i.e. it was the pic of the villas in the complex.

 

I can't advise you what to do with regard to tax breaks, sorry mate, the accountant is the one to assist there, and not sure about the education visa.

 

I did some work for some clients over here which was possible, but the income was deposited into my account back in Australia, so I suppose that is classified as income made in Australia, and am about to do my tax return for the financial year ending 2017 which I will pay 32.5c in the $, however of the 25k that I made, I will be deducting and depreciating a few items that I purchased here, like a desk, chair, laptop, printer, internet, mobile calls, etc etc, so I can reduce my tax bill, and hopefully bring it down to the 19c mark, so as to feel that I did actually get the $18,200 threshold...lol

 

Relocating costs are not that expensive if you use a Thai shipping company, they sometimes have specials and we did the hole move for $600, although we purchased furniture and electrical good from here, as for car and bike, also purchased here as the cost to bring over from Australia would be heavy I am sure and cars here hold their value, i.e. not like in Australia were you would be lucky get half back after 3 years.

 

Do yourself a favour and get professional advice with regard to the franking credits and either retaining your residency or becoming a non resident, research is always good, but not always up to date. If your in Sydney and need a good accountant who doesn't charge like a wounded bull PM me and I will drop you his details and you can make your own enquiries.  

[Bikeman93]

20 hours ago, 4MyEgo said:

Hi Tony a very interesting blog, but can I say one thing as an Aussie xpat, its not all that depressing if you stumbled onto the research I have, i.e. you can avoid paying tax if you invest your money in the ASX, I don't know if you or the other readers here know this, you can sell your property that is providing you with an income less 32c in the dollar to the tax man, less maintenance costs, water, council rates, insurances, vacancy factors, agents fees, agents re-letting fees, advertising costs etc etc, then you have capital gains tax, but not before you get a retrospective fair market valuation as at the date you left the country, hopefully the valuer will give you a higher figure to minimise your future liability.
I mean seriously who wants to hang onto a property, by the time you add the above its a 50/50 split, however if you invested into a low risk portfolio in the ASX through a good broker you could be earning 5%-6% net yearly, and very easily, all tax free, i.e. you by fully franked shares (tax paid at the time the dividend is paid), problem solved and any capital gains tax is yours because there is non to be paid, sound to good to be true, well its true and legal, I have been doing it and there is no problem, and sure, shares rise and fall, but if your not selling when they are down, your good, I sell when I want to take profit, and I also get involved in my portfolio, and in 6 months I was managing 7.5% net, that's 15% per annum tax free with a low risk portfolio, so worth looking into as a foreign resident.

They can take away the dividend franking for non-residents as quickly as they pulled this and justify for the same reasons.

[4MyEgo]

1 minute ago, Bikeman93 said:

They can take away the dividend franking for non-residents as quickly as they pulled this and justify for the same reasons.

As soon as do that, you will see a mass exodus from the ASX, with the stock market taking a hug dip, hence the reason they want non residents to invest in the Australian Stock Market, i.e. investing in Australian companies, that's my opinion of it anyways 555

[Bikeman93]

20 minutes ago, 4MyEgo said:

As soon as do that, you will see a mass exodus from the ASX, with the stock market taking a hug dip, hence the reason they want non residents to invest in the Australian Stock Market, i.e. investing in Australian companies, that's my opinion of it anyways 555

Just the thing for initiating a GFC to keep potential retirees working so they can destroy conditions and wages for younger workers. Over 80% of the ASX is superannuation.

That carrot they're dangling might just as well be a nose ring.

[4MyEgo]

4 minutes ago, Bikeman93 said:

Just the thing for initiating a GFC to keep potential retirees working so they can destroy conditions and wages for younger workers. Over 80% of the ASX is superannuation.

This won't happen in our life time, but agree there is an enormous amount of money in the stock market from superannuation, as well as real estate.

 

Retirees will only go back to work when they drop the old age pension or lift the old age pension age to 70 for those thinking of getting the pension, who don't have enough to stand on their own two feet due to the cost of living and no wage increase in the past decade.

[MadMuhammad]

1 hour ago, 4MyEgo said:

I too have maintained an address back in Australia for my licence which goes to my PO Box, but you have to have a street address, I do the same for Medicare and Valuers registration, although I have nominated non resident as I cannot justify myself being here as a resident.

 

The fact of the matter for me is, at my retirement age, I don't want any hassles, the zero tax as a non resident works for me, and having come from a property background of 25 years, I saw the real estate market in Sydney eventually cooling off as it has, a year after I sold my place, although a place sold in the same villa complex of mine 6 months after, bigger and better for an extra $60k which was fine by me, i.e. it was the pic of the villas in the complex.

 

I can't advise you what to do with regard to tax breaks, sorry mate, the accountant is the one to assist there, and not sure about the education visa.

 

I did some work for some clients over here which was possible, but the income was deposited into my account back in Australia, so I suppose that is classified as income made in Australia, and am about to do my tax return for the financial year ending 2017 which I will pay 32.5c in the $, however of the 25k that I made, I will be deducting and depreciating a few items that I purchased here, like a desk, chair, laptop, printer, internet, mobile calls, etc etc, so I can reduce my tax bill, and hopefully bring it down to the 19c mark, so as to feel that I did actually get the $18,200 threshold...lol

 

Relocating costs are not that expensive if you use a Thai shipping company, they sometimes have specials and we did the hole move for $600, although we purchased furniture and electrical good from here, as for car and bike, also purchased here as the cost to bring over from Australia would be heavy I am sure and cars here hold their value, i.e. not like in Australia were you would be lucky get half back after 3 years.

 

Do yourself a favour and get professional advice with regard to the franking credits and either retaining your residency or becoming a non resident, research is always good, but not always up to date. If your in Sydney and need a good accountant who doesn't charge like a wounded bull PM me and I will drop you his details and you can make your own enquiries.  

Extensive and helpful as always mate, thanks for the detailed reply.

I’ve just been spitballing the idea of ED visa and the taxbreak that may provide, definitely worth looking into. 

Thank you for the offered assistance regarding an accountant but I am in Melbourne and I do have an accountant that takes care of my tax for my portfolio, he’ll be my next port of call.

 

I may PM you regarding shipping and transport of some household goods sometime in the future though. I have quotes from a couple of companies but your costs are far below these. I will be bringing over my PC gaming setup and some clothing etc but as far as I’m aware I can have one duty free shipment into the country if I have a minimum year long visa.

 

thanks again