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Old 22nd Aug 2010, 14:01
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Numero Crunchero
 
Join Date: Oct 2006
Location: Hong Kong
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aussie tax rules

Some misinformation has been posted here in earlier posts.

For tax purposes you can be deemed to be a dual resident. That would mean you would pay tax in Oz on world wide earnings. To avoid that, move family to HK, close every bank account you don't need, end gym memberships, sell cars, rent out or sell your house. Show that you have the intent of a 'permanent' move to HK. The ATO fully accept that 'permanent' is not forever - they grey area is around 2 years. Once you exceed that you are probably safe being a non resident of Australia for tax purposes. You won't have to pay tax in OZ on your HK income for those two years - just if you go back within those two years they may deem you to be a resident for that 2 years.

Now onto tax for Aussie items. If it is a taxable Australian asset then you pay Capital Gains tax on its sale. Shares (less than 10% of any company) are CGT free if you sell them as non resident. However, if you own shares as you leave Australia you have two options - keep them and then pay CGT if/when you sell them or you can 'deem' to have sold them on the day of departure. So if your share prices are less than what you paid, the latter option would suit you better as then any subsequent gain would be tax free.

Dividends from shares have withholding tax of 30% - but I believe that is dropping over the next 2-3 years. Just make sure that you give a HK address and no tax need be paid on fully franked dividends but unfranked dividends will have withholding tax(30% or the new lower figure) taken out.

Interest on cash/term deposits have 10% withholding tax taken out. So if you get say 6% then you will end up with 5.4%. You will also note that the figures quoted for AUD term deposits in HK are lower by this amount as obviously they withholding tax has been factored into the quoted rate.

If you have positively geared property you will have non-resident rates paid - you can easily find them on the ATO site. But basically there is no tax free threshold and if memory serves you pay 30% until the level where it kicks up to 40% for resident tax payers. So it isn't much worse than being a resident.

If you can negative gear that is better as you can accumulate losses indefinitely and then in your first year or two back in Oz you won't pay any tax as your income will be offset against your losses.

You will hear erroneous information from many pilots about the 183 day rule. This rule is a secondary test, not primary. You can be deemed resident even if you don't set foot in Australia for a year or more. You can read lots of case histories on the ATO site to get a feel for how varied and inconsistent the rulings are on Residency.

If you have any specific questions feel free to PM me.
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