If you are Australian resident for tax purposes, , you will need to declare and pay tax on your worldwide income (i.e. income from all sources, whether in or out of Australia) in Australia. When you leave Australia, you will need to work out if you continue to remain Australian resident for tax purposes or become foreign resident permanently dropping your Australian tax residency.
What is tax residency?
You are considered to be an Australian resident for tax purposes if you:
There are four statutory tests to determine your tax residency:
As per ATO, a person who fails to cut their connection with Australia will be treated as an Australian resident for tax purposes.
Consequences of changing tax residency:
Following are some of the tax implications if your status changes from resident to foreign resident during the income year:
When does the capital gains tax liability arise?
If you choose to defer your tax liability until you sell the assets, your non-TAP asset will be considered as a TAP assets which means, disposal of such assets while you are non-resident will be taxed in Australia even if you are no longer an Australian resident for tax purposes.
Get in touch with us today, If you have recently left Australia or planning to leave Australia and have questions on tax implications of changing your tax residency.
Disclaimer: This article is provided as general information only and does not consider your specific situation, objectives, or needs. It does not represent accounting or tax advice upon which any person may act. Implementation and suitability require a detailed analysis of your specific circumstances. Before taking any action, consider your own circumstances and seek professional advice.