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Category : Australian Expats

Comfort for Australian Expats after decision from Full Federal Court.

  • Willard Lloyd
  • March 7, 2019

Australian expatriates have been offered some relief after a Full Federal Court decision against the ATO in a tax residency case clarified the definition of “permanent place of abode”.
Harding v Commissioner of Taxation, ruling that the taxpayer’s “temporary” apartment qualified as a “permanent place of abode” under the tax residency test and was not liable for tax in Australia.

Your E3 Visa remains safe.

An announcement by Congress, concerning the current status of the E3 Visa, left a vicarious feeling amongst Australians planning on making the move to the USA.  As it stood, the E3 visa came as a part of a 2005 Australian-US fair trade agreement under the Bush administration.  It had become the envy of many nations as, unlike many other visas, it allows its recipients, and their spouse, to work within the US unrestricted and has unlimited renewals.  The Visa is relatively cheap and allows Australians to by-pass many other applicants attempting to gain entry in the US.  To qualify applicants must be employed in a specialty occupation, have a legitimate offer of employment in the US, and possess the necessary academic or other qualifying credentials. 

Capital Gains Tax Changes to Hit Expatriates

Capital Gains Tax changes will mean that Australian expats will be denied the capital gains tax (CGT) main residence concession if they sell their former main residence while living abroad.  To date, this stands to affect over 100,000 Australians who currently live and work overseas whilst owning property back home. 

The GST tax advisers acknowledge that the Senate committee believes the CGT exemption may provide improved housing outcomes for Australians. However, they believe that there may actually be a counterintuitive reaction from expats as they decide not to sell properties until they return to Australia, creating a ‘lock-in’ effect rather than improving the quantity of housing inventory for sale. In other words; to avoid losing their ‘retirement plan’ to taxes, they will hold onto their property, potentially not selling it for decades, contributing to a lack of housing stock for sale. 

In Hong Kong, expatriates have come together in an attempt to create a campaign that would influence the Senate Committee to overturn the proposal. They believe that such a policy will make it difficult for firms, both Australian and international, to employ Australians to work offshore if they have the potential to have life savings wiped as a result of selling their home while not residing in Australia. 

Australian expats could see a jump in tax liability on their home

The Australian Government is considering new housing affordability laws which could indicate that Australian expats may see a jump in tax liability on the sale of their Australian homes.

Homeowners, who sell while they’re living overseas, could lose the capital gains tax exemption on a home which used to be their main residence in reforms targeted at foreign investors to safeguard the opportunity for Australian buyers to purchase.

The reforms announced as part of the 2017-18 Federal Budget in May. are a part of a host of changes to policy investment rules aimed at improving housing affordability,

Under current laws, Australian residents get a full exemption from capital gains tax on the sale of a home, that was their main residence, throughout the ownership period. Capital gains tax is a tax on the profits earned on an asset in the time that a person buys, then disposes of it. It’s not a separate tax but rather the capital gain is included in a person’s taxable income in the year when the sale was made, then calculated as part of income tax.

Australian residents also receive a partial exemption if the home was their main residence for only part of the ownership period. And they benefit from an “absence rule,” which allows them to treat a dwelling as their main residence for capital gains tax purposes for an unlimited period of time, as long as they keep it empty and don’t rent it out.

What are some of the risks inside an Australian expats superannuation fund?

We often hear Australian expats taking the age-old ‘set and forget’ approach when it comes to their superannuation. Here we wanted to explore some of the risks you may be exposed to in an Australian expats superannuation fund.

Generally, the superannuation can’t be touched for years. With this in mind, we are often asked why should expats bother looking into it before they jet off or even while they are abroad? A recent article out of the Australian Financial Review (AFR) has placed the spotlight on how our superannuation is invested and potentially exposing expats to investment risk that they may not have been aware of.

It points out the lack of transparency that members face when it comes to knowing where their super is invested and what the actual level of risk members take on by being in specific investment option (i.e. Balanced, Growth and High Growth).