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Bikeman93

Tax changes for expats

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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.

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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. :coffee1:

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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. :coffee1:

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

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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

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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. :coffee1:

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.

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1 minute ago, simoh1490 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.

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