Fun fact: The average time most expats expect to stay overseas is two years, but the actual time spent averages seven years.
No matter how long you’ve stayed, it’s bound to be a little complicated when it’s time for you to move back home. Australian Tax Advisor Steve Douglas shares what you need to know about your Australian taxes.
The first thing you need to know is that you don’t need to worry about being taxed for bringing in money upon your return. While you must declare all earnings and foreign exchange gains in Australia yearly if the amount exceeds A$250,000, the original sum is not taxed. You should, however, be careful with offshore trusts and savings plans, as Australian anti-avoidance rules can tax annual value increases as income, even if they haven’t been cashed in. If you are thinking of cashing in or transferring any offshore pension plans, you should do so within six months of returning. If not, there may be some tax cost to you personally or within the fund you transfer your pension into. So, act quickly as soon as you know you are moving back to Australia.
Many Australians feel they need to sell off their assets or investments, but you don’t necessarily need to. Only future profits after your return will be taxable. Selling your assets can reduce your personal home debt, but if you choose to keep them, you should arrange a valuation before you return to Australia to confirm the starting value for Australian tax.
As for your investments, consider cashing in those that will help minimise your personal home loans, as personal home loans are not tax-deductible in Australia. It is better to divest any investment to lower debt and reduce your non tax-deductible cost. You can only claim the interest as a cost when your property is rented out. By divesting investments, you reduce your non-tax deductible cost as compared to leaving the investment where income or gains may be subject to tax. Most importantly, remember to plan ahead so as to be able to sell your investments at a favorable exchange rate.
Earnings before your date of arrival in Australia are not subject to tax – only those after a change of tax residence. If you are paid after moving to Australia, you’ll just need to prove that you were paid for work that corresponds with your employment period overseas and you won’t be taxed on that either. Take note that there are special rules for Employee Shares and benefi ts, and some issues on bonus payments should you stay with the same employer upon returning to Australia. It could be that you have to pay Australian tax and receive a credit for the overseas tax paid – it’s best to seek professional advice.
From The Finder (Issue 285), August 2017
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