Heading Overseas?

Moving overseas? Travelling for more than 6 months?  

Passport done, farewell dinner has been organised, kids are packed and ready to go, and the ATO has been notified!!

WHAT?

There are a number of things you must consider as an Australian Tax Resident, before you disappear overseas for a long period of time.

Are you a director of a company? Do you have a HELP/TSL debt? Do you manage a super fund? Are you going away for a short time or a long time? Will you still be an Australian Resident for tax purposes? Will you be earning income while you are overseas? Do you have an investment property? Are you going to rent out your home?
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If your answer is YES to any of the above, then your job is not yet done.

Pic: Flaticon

If you are the sole director of a private company (a company with PTY in the name) you must be an Australian Resident. The Corporation’s Act 2001 require that all private companies have at least one director whom resides in Australia. This doesn’t stop you from being able to travel overseas for a holiday, but it does put a spanner in the works if you are intending on being away for an undefined period of time. Don’t panic, you can still maintain your directorship, you just might need to put on a second or third director that is a resident in Australia.

We often find our clients overlook having a HELP (Higher Education Loan Program) debt or a TSL (Trade Support Loan) at the time they decide to move. Unfortunately, simply moving overseas does not enable you to run away from your repayment obligations. In 2016 the government put in place changes to the compulsory repayment of HELP and TSL debts. As a result, if you are living overseas and are earning more than the minimum repayment threshold you are still required to make compulsory loan repayments, just like you would if you were living in Australia.

Due to these changes you must now lodge an overseas travel notification form with the Australian Tax Office, notifying them of your date of travel, intended date of return and updated contact details. Each year you must then lodge an Australian Income tax return or notify the ATO that you are not required to lodge.

Other items that you might like to consider are:

• Capital Gains Tax – if you leave Australia and choose to rent out your home, and then later choose to sell your home, you may be required to pay capital gains tax. Furthermore, if you decide to sell your home while classed as a foreign resident you will not be entitled to the main residence exemption. Hot tip: get a market valuation on the property when it ceases to be your main residence.

 

• Superannuation – regardless of where you live, you must meet a condition of release to be able to access your super. Prior to leaving it may be a good idea to see a professional in regards to your superannuation, as they may be able to suggest a low fee fund or consolidate all your small super accounts so the total can work towards a better return. If you have a small super account that you wish to maintain, you must advise the superannuation fund, or they may send it to the ATO’s unclaimed super division.

 

• Self Managed Superannuation – make sure your fund will still meet the criteria of being an Australian superannuation fund. Failure to do so may cause the fund to become a non-resident fund, which will mean losing its tax concession and potentially being made non-complying. Best to seek an assessment from your superfund accountant.

 

• Non-Resident for tax purposes – non-residents only pay tax on their Australian income (and make HELP repayment based on their worldwide income). So if you are a non-resident and you don’t have a HELP/TSL debt and you don’t earn Australian sourced income, you are not required to lodge a tax return. You may still need to lodge a “Return Not Required” with the ATO so they know not to expect a tax return from you. You must update your contact details upon your move.

While all of the above can seem confusing and totally irrelevant, it’s important to not forget the ATO. The easiest way to ensure that you are `dotting your I’s and crossing your T’s' is to have a quick chat with your accountant when life changes start coming to view. We can help point you in the right direction and avoid any nasty surprises.