Yes skamy is right for once. Australians do have to pay tax on their worldwide income. The only exemption is if you become a non-resident for tax purposes, which generally requires you to live in another country for at least 2 years without the intention to return.
Its as simple as this, you can only be a tax resident of one country, work out which one it is.
By the way for all Aussies with massive capital gains in their houses. You can in your later years move to Queenstown and leave Australia properly and become a tax resident of NZ. Once you have done that, then you can sell the whole goddamn lot in one hit and not pay a brass razzo in CGT. Look on it as a very good all expenses paid long holiday exploring NZ, plus you owe me a box of Penfolds Grange for this tit-bit.
Yes skamy is right for once. Australians do have to pay tax on their worldwide income. The only exemption is if you become a non-resident for tax purposes, which generally requires you to live in another country for at least 2 years without the intention to return.
That is completely different from the situation for US citizens, who have to pay tax on worldwide income forever. To stop having to pay income tax to the US you need to renounce your citizenship.
If you went to the US, closed all your bank accounts except one and took up an open-ended job on a H1B visa, you could stop paying aussie income tax on foreign-earned income immediately. You never stop paying tax on Australian-earned income.
There are many tax accountants in oz who specialise in advising you on this.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
Yeah. Things may have changed since then (10 years ago) or I may have misunderstood my accountant's conniption.
I would be interested to know what you come up with.
it appears we were both a little off..
-No CGT to be paid on shares if a non-resident (and i understand no need to declare - just need paperwork on returning - but check with your own accountant first ) ------if however you own 10% of the company, or the stock is related to property are liable for CGT. -Can trade through your etrade/NAB, etc account if you wish and shouldnt affect your (non) residency ( thank god as i did just this last financial year !! ) -are liable on franked shares, etc in which cast there is withholding taxes, etc.. .
i would double check this with your own accountant - i will probably see if i can cold call another for a second opinion, particularly on the tax lodgment stuff... edit: i must admit, i dont have much use of an Aussie accountant here in China and my old one is not 100% up to speed on all this stuff.
Its as simple as this, you can only be a tax resident of one country, work out which one it is.
By the way for all Aussies with massive capital gains in their houses. You can in your later years move to Queenstown and leave Australia properly and become a tax resident of NZ. Once you have done that, then you can sell the whole goddamn lot in one hit and not pay a brass razzo in CGT. Look on it as a very good all expenses paid long holiday exploring NZ, plus you owe me a box of Penfolds Grange for this tit-bit.
Oh it is very possible to be a tax resident of more than one country. It is also possible to be a tax resident of no country. But getting out of paying tax to anyone is much harder. For example, I am not a tax resident of China, but I certainly have to pay income tax here. I could also become a tax resident of China if I am not careful, and then be assessed on my worldwide income. Worse, I would remain a tax resident of China for some time after I returned to Australia and be assessed on worldwide income in two countries.
I would be very careful with trying to avoid paying CGT like that. The way I understand it, the ATO wants its wedge on capital gains on Australian property whether or not you are a tax resident. And if you are not a resident, you do not get the benefit of the 50% "discount" and end up paying some of the highest CGT rates in the world.
Hong Kong IRS will chase you for tax on income from stock options long after you leave Hong Kong.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
I could also become a tax resident of China if I am not careful, and then be assessed on my worldwide income. Worse, I would remain a tax resident of China for some time after I returned to Australia and be assessed on worldwide income in two countries.
that darn 5 year rule.. though you "only" need to be out of China 9 months in the year to reset it if you didnt do your 31 days out so shouldnt be an issue if you permanently leave..
-No CGT to be paid on shares if a non-resident (and i understand no need to declare - just need paperwork on returning - but check with your own accountant first ) ------if however you own 10% of the company, or the stock is related to property are liable for CGT. -Can trade through your etrade/NAB, etc account if you wish and shouldnt affect your (non) residency ( thank god as i did just this last financial year !! ) -are liable on franked shares, etc in which cast there is withholding taxes, etc.. .
i would double check this with your own accountant - i will probably see if i can cold call another for a second opinion, particularly on the tax lodgment stuff...
Thanks for this! Certainly it was the withholding tax on dividends (or lack thereof) that was the problem for me, although it did not actually bite because there was no dividend. Maybe it was just my Suncorp brokerage which was unable to flag my non-resident status and hence take out the withholding tax.
Being able to invest in Aussie shares without causing conniptions would be a good thing for me at the moment. I had just shoved it in the too hard basket.
I will get advice from my accountant when I do my return. Obviously there may be a wrinkle in my situation that we have not considered.
Massive
20 Aug 2014, 06:44 PM
that darn 5 year rule.. though you "only" need to be out of China 9 months in the year to reset it if you didnt do your 31 days out so shouldnt be an issue if you permanently leave..
You can also have 90 days in the year outside China non-consecutively if you don't make the 31 consecutive day hurdle in that year. Most of my career I was spending well over 90 days of the year outside China on business travel, so the 31 days was not an issue. In fact for 6 years I "managed" to spend more than 181 days outside China each year so paid no IIT at all. Then they started counting the day you left and the day you arrived back both as days in China and it became quite a bit harder.
There was a time when I was having to count the days in three different countries.
Oh it is very possible to be a tax resident of more than one country. It is also possible to be a tax resident of no country. But getting out of paying tax to anyone is much harder. For example, I am not a tax resident of China, but I certainly have to pay income tax here. I could also become a tax resident of China if I am not careful, and then be assessed on my worldwide income. Worse, I would remain a tax resident of China for some time after I returned to Australia and be assessed on worldwide income in two countries.
I would be very careful with trying to avoid paying CGT like that. The way I understand it, the ATO wants its wedge on capital gains on Australian property whether or not you are a tax resident. And if you are not a resident, you do not get the benefit of the 50% "discount" and end up paying some of the highest CGT rates in the world.
Hong Kong IRS will chase you for tax on income from stock options long after you leave Hong Kong.
So are you saying that you are not a tax resident of China nor Australia then?
It is illegal to avoid paying CGT, I wouldn't recommend it either.
So are you saying that you are not a tax resident of China nor Australia then?
It is illegal to avoid paying CGT, I wouldn't recommend it either.
Correct. So I have to report income in the place where I earned it, but neither Australia nor China is interested in my worldwide income, technically speaking. Not that it makes any difference because I don't have income elsewhere.
Were one of them to become interested, then the double taxation treaty would mean I don't pay any more tax, but it would be a PITA.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
That is great until you consider that household debt in Australia sits at 1.8 times disposable income. The US is 1.1% and the UK 1.5%.
The thing I never get my head around, is why would you have money in the bank at the same time as having debt?
When I was buying my home, every penny I had went to my mortgage.
Offset mortgages? We have more than enough to pay off our mortgage, but it is convenient to keep should we want to upgrade. Keeps our credit rating up.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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