Australian living overseas. Is the grass greener?

[Borisdog]

My biggest tip - If you have a SMSF and become non-resident you are possibly in a world of trouble. (ie the ATO can confiscate half of the assets from your SMSF). No one ever tells you about that one!

I, fortunately, was warned about that one by my accountant. It ended up being the deciding factor in me rejecting an overseas role.

 

[burmans]

Yes, the current arrangements for those who are considered foreign tax residents is not counting any foreign income in any calculations. Does not even need to be reported. Income tax is calculated on the $5k in your example using the special foreign resident tax rates which have no tax free threshold, and jump straight to 32.5c in the dollar for first bracket.

That is a big IF though, ATO site states (https://www.ato.gov.au/Individuals/International-tax-for-individuals/Work-out-your-tax-residency/),
If you:

leave Australia temporarily and do not set up a permanent home in another country

you are generally:
an Australian resident for tax purposes

To be regarded as foreign tax resident the ATO expects that you have left Australia permanently. It's not as easy as some think to prove to the ATO that you have left permanently if you leave behind (and don't sell) your home, maintain bank accounts, super etc and/or visit family and friends back in Australia. This is one area I would seriously suggest you seek professional advice on.

 

[dajop]

That is a big IF though, ATO site states (https://www.ato.gov.au/Individuals/International-tax-for-individuals/Work-out-your-tax-residency/),
If you:

leave Australia temporarily and do not set up a permanent home in another country

you are generally:
an Australian resident for tax purposes

To be regarded as foreign tax resident the ATO expects that you have left Australia permanently. It's not as easy as some think to prove to the ATO that you have left permanently if you leave behind (and don't sell) your home, maintain bank accounts, super etc and/or visit family and friends back in Australia. This is one area I would seriously suggest you seek professional advice on.

Yes it is important to get professional advice (I did as part of relocation package) and probably even personally review relevant ATO rulings (I also did).

Even though I frequently visit and maintain some bank accounts /super in Australia - after eight years in Singapore - living in the same apartment, and having become Permanent Resident here - I am completely confident I could demonstrate permanent departure from Australia, in the spirit of ATO rulings. I have no idea when I will return, which is also one of the important tests. The rulings suggest that permanent does not necessarily mean forever, and a vague desire to return at some unspecificed time doesn't negate permenant departure. However, it seems to be more difficult to demonstrate permanent departure for those who leave for less than 2 years, or who move between temporary accommodation a lot during their time overseas.

 

[Deleted member 29185]

This is one area I would seriously suggest you seek professional advice on.

This has been mentioned previously and is possibly the most important information in this thread. We're often speaking of large amounts of money and professional advice is crucial IMHO.

Remember also, that the ATO can come after you many years down the track so if anyone wants to have their mind at ease, it would be foolish to think that all advice here of AFF is absolutely correct.

Friends of mine did what has been suggested and they were deemed foreign tax residents and their "permanency" only lasted about 5 years, but to do it, they had to cut all solid ties with AU including selling their house, closing bank accounts etc. and I'm guessing there were many more requirements.

 

[PineappleSkip]

This has been mentioned previously and is possibly the most important information in this thread. We're often speaking of large amounts of money and professional advice is crucial IMHO.

Remember also, that the ATO can come after you many years down the track so if anyone wants to have their mind at ease, it would be foolish to think that all advice here of AFF is absolutely correct.

+1. And new stings can pop up all the time, hence the need for good tax advice from someone who keeps up to date.

I thought of this thread when the Treasurer announced the removal of the capital gains tax exemption on main (australian) residence for non-residents as [art of Budget 2017. There is no detail, the budget website just has fluffy stuff these days but it reckons ...

[FONT=&quot]The main residence capital gains tax exemption for foreign and temporary tax residents that own Australian real estate will be removed.[/FONT]

That means if you become a non resident, then sell your home, you may now be hit for CGT on the sale. Can't tell anything for sure without the legislation (and successful passage through the Senate) but meanwhile Caveat Venditor. Some sort of apportionment would be a sensible thing but that appears to be missing detail at this stage.

Some commentary, including a reference to the measure starting 1 July 2019 for existing owners, buried in here
Budget 2017-18 - Tax Brief - Greenwoods

Cheers skip

 

[Beehelp]

Lately I had a discussion with a friend of mine. We first met in Germany during our au-pair years and are still friends. Both of us are in an international business, and spend much time living in germany, ausrtia, canada and ukraine. Both in Germany and Austria it seems like you have to pay for a sigle breath. Taxes for cats, dogs, fireplace in your backyard... In Canada the story is the same, perhaps more freedom. In Ukraine it's different, you don't have to pay that much, but you cannot earn

 

[PineappleSkip]

Thanks for your contribution Beehelp. Hope the forum will Bee helpful to you

On the tax side, dug up some research from a previous project. The worst tax/poverty combination I'd award to Central African Republic. Right at the bottom of the poorest countries of the world, together with a standard VAT rate of 19% :shock: . Possibly not a lot of green grass there.

Cheers skip

 

[Beehelp]

Unfortunately now I can add to your research on the tax side, that comparing salaries, expenses and taxes, Ukraine is moving to Africa with a jet speed after the war began

 

[Sdtravel]

So interestingly i was in HKG over the last few days where i continued to get the talk about how i should move there. Singapore and Hong Kong are the places to be. Better opportunities, low tax and better life ect.
Anyway. On the plane home i sat next to someone who moved over to HKG with their husband in Feb but hates it so much they want to move back to SYD.

She noted that there was so much discrimination, sexist behaviour and rude people she couldnt stand it. She said people think she is Pilipino so dont treat her with respect. She also noted that she has tried to get a job in her field as an IT Change & Release manager but HKG is very behind and they dont know what that is, they were 15 years behind she stated. Apparently everyone is very agile and things often just break in production.
When she went to apply for a HK ID they asked her if she had a current job and when she said she was still looking they said her profession was "Housewife".
She noted other things like when she went to an interview someone got in the lift and gave her a very obvious look up and down (despite other people also in the lift) with a look of you seem out of place or like you dont belong as she stated. Other examples she gave were the taxi driver shouting at her to get her own bags out of the boot.

While im probably not going to face many of the problems she talked about it was an interesting discussion. Anyone else have thoughts, or experiences of discrimination like this in Asia?
Do you think their behind in technology or they way they operate?

 

[Deleted member 29185]

She noted that there was so much discrimination, sexist behaviour and rude people she couldnt stand it.

Although we know there are discriminatory people in Au, I tend to think Australia gets a bit of a bum wrap with that tag. Generally, I think AU is a very multicultural community and we benefit greatly from that. I've been to many countries where discrimination is not just rife, but blatant, open and unappealing. In PNG, discrimination is the norm. There is currently electioneering going on and more than one candidate is campaigning on a "black PNG" ticket and one of the sitting Gov't ministers is facing a discriminatory tirade against him, because he's white (never mind that he is a nationalised PNG citizen)! Generally Euro heritage or indigenous Aussies and Kiwi's get on quite well however, but an Indian or Asian heritage is different ... they don't tend to be accepted quite as favourably in PNG.

 

[travelislife]

Asian countries are some of the most racist in the world! No doubt about that. Skin colour determines so much, as do different ethnic backgrounds. It definitely exists much more than a place like Australia. Social mobility financially is also much harder. Less jobs 100% on merit.

 

[marki]

I am currently living in Berlin as a self-employed contractor in the IT industry…. I mainly moved here for the lifestyle as I was over nanny state NSW . I do get paid a lot more here than in Australia, and also the cost of living is significantly lower, but the financial side was low in priority.

If someone is going to move overseas just for the money or financial status… they will probably be very unhappy and regret their decision long term

Love Berlin and living near Frederich Strasse when I can..... is the Austrian open yet or still undergoing renovations? I do some contractor work as well but more on the Medical side and dabble in real estate when I can. It's not been unpleasant. Although I work mostly in Oz and do the travel to EU every three months.

 

[marki]

For me the "tax benefits" or "pay" didn't even factor into the equation, it was about being on a more global stage and easy access to travel (which PER didn't have quite so readily at the time). I'm stationed in the UK and always planned to do the work and travel thing; however met Mrs Flashback and bought a house and as they say .... the rest is history.

Don't regret it one bit and this is definitely home for me now. As to where we retire, we have a few options in which country to do that in but that's not even close on the radar so that's one to think about some way down the line. I don't think it'll be Australia, though - much to the parents dismay!

Similar sentiments studied in Europe had a great global stage and easy access to travel.

 

[marki]

We're Americans who moved to Australia for better quality of life. We certainly won't move back to the US. It's much safer here, with a much greater access to nature, and higher pay. Plus, the political discourse in the US is so divisive - it infects everything. In Australia, you have a mix on the political spectrum but at least you are not dealing with idiots who claim everything is fake news. Plus the health care here is so much better, as is the educational system.

The downsides? Bullying is rife here - much worse than in the US (and New Zealand, where we also lived). There's a bit of mentality that you expect to either be a bully, or be bullied. I've seen people treated horrifically on the job - if they were in the US, they would sue for millions of dollars and win. So that type of behavior is much rarer in the US because you could be held accountable.

The other two main downsides: shopping and home prices. I do miss shopping in the US but I go back at least once a year for work, so I just bring empty suitcases and fill them up with bargains. Also, I do find the home prices in Australia absolutely unbelievable -- and if the bubble does burst, all the people with upside-down mortgages will be in trouble. In the US, if you walk away from a mortgage for financial reasons, it goes onto your credit report, but that's it. Australia takes a much harsher tack.

That said, we wouldn't move back to the US for anything, even though we miss family and friends. Australia is a far better place to live and raise kids -- just have to bully-proof them.

I guess your wanting free health care in Australia like most left orientated. Which is understandable, although in Australia we are loosing the fight for free speech. Climate change agenda is high on the menu. Macron wants the PM to ignore the Australian electorate and put plant foodn(Co2) in the ground.

 

[Forg]

^ Or those want a country to make it’s citizens the happiest, social services tend to have that effect.

 

[Melburnian1]

.... However, it seems to be more difficult to demonstrate permanent departure for those who leave for less than 2 years, or who move between temporary accommodation a lot during their time overseas.

dajop, a most interesting discussion: I know this isn't a tax advice forum, but an aviation one.

Hasn't the test for the latter situation ('temp accomm' as you stated above' been that you need to be out of Oz for 183 days a year - i.e. more than 'half' - to qualify as a genuine non-resident for tax purposes?

 

[Archipelago]

dajop, a most interesting discussion: I know this isn't a tax advice forum, but an aviation one.

Hasn't the test for the latter situation ('temp accomm' as you stated above' been that you need to be out of Oz for 183 days a year - i.e. more than 'half' - to qualify as a genuine non-resident for tax purposes?

I thought so too - the 183 days rule - as that is what was under in my first long spell as an expat, but still spending time in Oz

These days I would have no idea, as I haven't been back to Australia in 6 years even for a single visit, and am no longer a resident there for any kind of tax purposes

Is it still 183 days?

 

[PineappleSkip]

The 183 days test is still there, but it's not the only test of residency for tax purposes. There is also a 'domicile' test which can trip people up. There are some ATO calculators if you are really keen.
Residency - the resides test
Cheers skip

 

[dajop]

The 183 days test is still there, but it's not the only test of residency for tax purposes. There is also a 'domicile' test which can trip people up. There are some ATO calculators if you are really keen.
Residency - the resides test
Cheers skip

They way i’ve read about it for example you move overseas but family doesn’t and they remain in family home and you return regularly it can be difficult to prove you are not a resident, irrespective of 183 days. Yet if you move overseas, take the family and either sell or rent out the family home that goes some way to demonstrate your domicile is outside Australia. I don’t believe you need to sell property - but helps to rent it out - there are plenty of foreign investors holding property ! The catch is if you do want to sell will be subject to CGT.

 

[davidj]

I've done the OS thing and looking to go back. Yes the grass can be greener, but only in certain areas.

I'm now trying for Singapore but finding it incredibly difficult to secure a role (been looking for 1yr +). In theory obtaining a visa should be straight forward but you need to compete with locals and other foreigners etc.

Point is, if theres a will, apparently there may not be a way!