Expats with Aussie IPs

[shuggy]

Yes great info, thanks Babushka.
Steve Douglas is also speaking in Hong Kong for anyone over there.
June 6th in Central, register here:
Hong-Kong-Annual-Budget-Review-2012

If only it was that easy

I like how if you are an Aussie resident at the time of sale, get the full discount. So you arrange the sale, get the contract signed, rush back before settlement, change your addresses and make yourself a proper kosher resident, grab your gains, pay your taxes then switch your residence back to overseas again I can live with that

 

[redwing]

Not sure if this got a mention here when the recent budget came down. We've had a few clients mention it with a degree of sadness recently.

Aussie expats with IPs here will lose the 50% CGT discount for all gains accrued from now on. So they need to get their properties valued - by a valuer, not an agent - NOW. For gains accrued up until now, the 50% CGT discount still applies.

Scott

Hi Scott

It appears to read "assets", I'm taking it that includes all investment classes (i.e. shares)?

How does this tie in with the six year rule for renting your PPoR whilst overseas also?

Is this aimed at foreign investors more so than Aussie's living overseas?

 

[joeExpat]

If only it was that easy

It can be that easy ... there's a certain amount of flexibility regarding when you're resident or not .. I've changed back and forth a few times & it's never exactly clear cut, so just choose the dates that suit best (within a genuine time period).
But you're supposed to be half the year in Aus for residency & I found out they have all the flight records for the last 10 years + (scary), so make sure the date you pick fits in with that as well, but they probably never check it.

Hi Scott
It appears to read "assets", I'm taking it that includes all investment classes (i.e. shares)?

No, shares are completely capital gains tax free for expats, it's great.

 

[redwing]

I've also read rumours of the below as the push for a surplus builds

"The living-away-from-home allowance for executives will be cut, saving $1 billion."

"Welfare payments for people travelling overseas for more than six weeks will be cut."

"Australia will adopt the American approach of taxing its citizens wherever they live in the world."

"The tax rate applying to concessional contributions to superannuation will increase from 15% to 30% for everyone earning more than $300,000 per annum; That is expected to affect 128,000 Australians"

"A 50% tax discount on savings earning up to $1,000 of interest income"

 

[DEC]

No, shares are completely capital gains tax free for expats, it's great.

And property used to have a 50% CGT discount
Apparently rules get changed

 

[Rob G.]

It can be that easy ... there's a certain amount of flexibility regarding when you're resident or not .. I've changed back and forth a few times & it's never exactly clear cut, so just choose the dates that suit best (within a genuine time period).
But you're supposed to be half the year in Aus for residency & I found out they have all the flight records for the last 10 years + (scary), so make sure the date you pick fits in with that as well, but they probably never check it.



No, shares are completely capital gains tax free for expats, it's great.

The 183 day test is but one test, specifically for visitors where the common law cannot decide.

If you have ever been a resident in the past then even minor and infrequent 'visits' to Australia can trigger residency under common law.

There is a lot of rubbish written about this on websites that should not be relied upon.

Even the ATO website is breathtakingly simplified, being a mere brief introduction to a complex subject and is nowhere detailed enough to form an opinion in most cases.

Cheers,

Rob

 

[joeExpat]

I've also read rumours of the below as the push for a surplus builds
"Australia will adopt the American approach of taxing its citizens wherever they live in the world."

That's scarier than any property CG rate changes, but I can't see it happening, or any compliance with it if it did. Taxing CG on shares wouldn't work either.

Looks like the new non res tax 32.5 % is greater than 30% imputation credits so perhaps this means 2.5 % tax on dividends now ?

If they really wanted to increase revenue they'd work out a way to identify non resident property holders and their rental incomes, many never pay any tax on it. 30% * 10 years * Sydney rent with no mortgage adds up. Wouldn't affect me since I declare it all & pay the ATO every year.

 

[Rob G.]

Portfolio investment:

Non-residents do not get imputation credits.

In fact they will not file tax returns for dividends.

Cheers,

Rob

 

[Terry_w]

if u run a company and or trust another thing to worry about is that someone, another beneficiary, could have u replaced as trustee if you remain outside of nsw for more than a year. if you are a director then there could issues with your company becoming foreign controlled.

then there could also be tax issues with this too

 

[joeExpat]

Portfolio investment:

Non-residents do not get imputation credits.

In fact they will not file tax returns for dividends.

Unfranked dividends are taxed, but franked did not have to be declared in the past because non-res tax rate = 30% = imputation credit. Now these rates are different, so I wonder how that will be handled.

 

[Rob G.]

Unfranked dividends are taxed, but franked did not have to be declared in the past because non-res tax rate = 30% = imputation credit. Now these rates are different, so I wonder how that will be handled.

Non-residents DO NOT get imputation benefits as such, they do not file returns for dividends.

The payer must withhold at a rate based on the country of residence, usually about 15% for treaty countries & 30% for non-treaty.

Withholding rate is zero for fully franked dividends.

However, this is not good, because unfranked dividends at 15% for a treaty country resident would be better than franked dividends which have had tax paid at 30%.

But then again, there is no CGT when sold.

Cheers,

Rob

 

[kristaje]

Yes great info, thanks Babushka.
Steve Douglas is also speaking in Hong Kong for anyone over there.
June 6th in Central, register here:
Hong-Kong-Annual-Budget-Review-2012

If only it was that easy

Many thanks for the info, Mr Ploppy. Much appreciate it.

 

[kristaje]

Hi All,

Thought I'd post an update on the GST discount matter for expats.

The Draft legislation was finally presented for public comment on the 8th March 2013. To voice your concern or help stop this regulations, you could go to Treasury's website
http://www.treasury.gov.au/Consulta...-of-CGT-discount-for-non-resident-individuals.

SMATS/Steve Douglas company still suggest no valuation as of 2012 is need at this stage, and said that they'd help negotiate on bulk valuations (with cheaper price) later on if this regulation goes ahead.

 

[Terry_w]

Hi All,

Thought I'd post an update on the GST discount matter for expats.
.

I think you mean CGT?

 

[kristaje]

I think you mean CGT?

Whoops! Yes, I meant CGT. Thanks Terry

 

[Rob G.]

To voice your concern or help stop this regulations, you could go to Treasury's website

I don't know whether there are enough non-resident individuals owning taxable Australian property who are Labor voters to actually make a difference ?

Cheers,

Rob

 

[babushka]

Webinar

For those who may be interested, Steve Douglas of smats has organised a webinar on this topic (CGT for non-residents). Details are as follows:

"We have arranged 5 webinar sessions to cover most time zones accross the world starting on Wedesday 20th March 12 noon through to Thurday 21st March 9am (Singapore Standard time). They should last approx 30 minutes.
Click here to register for our webinars."

 

[zed_kid]

So its IPs only no PPOR? What if I’m an expat for tax purposes but only have a PPOR under my name, does that PPOR become an IP automatically?

 

[babushka]

So its IPs only no PPOR? What if I’m an expat for tax purposes but only have a PPOR under my name, does that PPOR become an IP automatically?

I think the removal of the 50% CGT discount only applies to IPs and not PPOR. However, I have registered for the webinar, and will confirm this after the webinar.

 

[kristaje]

So its IPs only no PPOR? What if I’m an expat for tax purposes but only have a PPOR under my name, does that PPOR become an IP automatically?

PPOR will be exempted from CGT for the period you live in it and also until 6y afterwards (as long as you don't claim other property in Aus as PPOR for tax purposes during that time). I believe current rule is CGT will apply for period after the 6y, 50% discount will apply on this CGT as property would have been owned for more than a year.