Australian Principal Place of Residence is now going to be taxed if you live overseas

[4MyEgo]

For those of you who own a property back in Australia, i.e. that is your principal place of residence, Scott Morrison is about to put through changes to the parliament that your property should be taxed when you sell it if you reside overseas.

 

Best read the entire article, updated June, copy and paste the wording and email your partition to Scott Morrison email address which is a link in the article.

 

http://www.aussieproperty.com/Competitions/Petition-Against-Removal-Of-Principal-Residence-Exemption-For-Overseas-Expatriates/0b9409d0-d875-4b51-969e-4694716c71eb

[Woofer]

Thanks for organizing the petition. Taking away the capital gain tax exemption for your PROR for Australian citizens living overseas is totally unfair.

[hansnl]

16 minutes ago, Woofer said:

Thanks for organizing the petition. Taking away the capital gain tax exemption for your PROR for Australian citizens living overseas is totally unfair.

Since when are governments fair to people?

[despicable alien]

such a despicable place to live that the government is engaged in what seems a never ending legislative move to try and stem the flow outta the place, just law after law for years to the same effect. try wake up and smell the roses the place stinks but they are incapable of doing anything about it besides wielding the threatening hammer. yep true penal colony

[aussieinphuket]

so my advice given to me when i left Australia back in 2005 was you must not own any properties or cars or golf club memberships or bank accounts when you leave if you wish to become a non-resident for tax purposes so seems

my lawyers and accountants were 100 pct correct. if you dont have any assets there they cannot tax you.

 

if you maintain any of the above and work outside the country or earn income on assets outside you are still liable

for tax payable to the ATO...

 

i have been given the all clear by the ATO as i was born prior to 1960 and when i applied to have whatever Superauunation money paid into a fund was cleared by the ATO and sent to me overseas... 

 

so maybe i am one of the fortunate ones .... my principal place of residence and tax purposes are resolved also

as in Thailand under our Retirement Visa we are not allowed to work and earn money so they accept this.

 

 

 

 

 

 

 

[impishbynature]

What is the definition of "living overseas"?

 

eg if you returned to Australia once a year for a month are considered living overseas?

 

Seems when you look at the tax residency laws they increasingly want their bread buttered on both sides, starting to regret taking out Australian citizenship and not just staying a Kiwi...

[harleyblacknight]

31 minutes ago, aussieinphuket said:

so my advice given to me when i left Australia back in 2005 was you must not own any properties or cars or golf club memberships or bank accounts when you leave if you wish to become a non-resident for tax purposes so seems

my lawyers and accountants were 100 pct correct. if you dont have any assets there they cannot tax you.

 

if you maintain any of the above and work outside the country or earn income on assets outside you are still liable

for tax payable to the ATO...

 

i have been given the all clear by the ATO as i was born prior to 1960 and when i applied to have whatever Superauunation money paid into a fund was cleared by the ATO and sent to me overseas... 

 

so maybe i am one of the fortunate ones .... my principal place of residence and tax purposes are resolved also

as in Thailand under our Retirement Visa we are not allowed to work and earn money so they accept this.

 

 

 

 

 

 

 

Not completely true to my knowledge provided by my accountant.  You could have an account and declare non residency with the bank and you pay withholding tax. Of course that might change soon knowing the Oz government!!

[damian]

I have a property back in Aus, rent it out and pay tax on that rent and file a tax return each year. I have lived OS for 25 years as a non resident for tax prurposes which means I get no free tax threshold. I have done jobs back in Aus and likewise declared the income. I have bank accounts and my super is still in Aus. ATO knows this and no issues so far. 

 

If I want to sell my property I can always transfer ownership to a family member and have them sell it or go and live in it for longer than 6 months and become a resident again then sell it. 

 

[NoshowJones]

3 hours ago, Woofer said:

Thanks for organizing the petition. Taking away the capital gain tax exemption for your PROR for Australian citizens living overseas is totally unfair.

If this works for Australia, you can bet that the UK will get into it as well.

[Lacessit]

I predicted this would happen, and sold up accordingly. My principal place of residence when I am in Australia is my son's house.

People living overseas are not a big enough pressure group to worry politicians, so they will jerk us around. The onus is on us to arrange our affairs so we are not vulnerable.

 

[NoshowJones]

2 hours ago, hansnl said:

Since when are governments fair to people?

Maybe going a bit off topic, but I feel this question should be asked. Is there any government in the world that is mostly fair to the average working class person?

[impishbynature]

21 minutes ago, possum1931 said:

Maybe going a bit off topic, but I feel this question should be asked. Is there any government in the world that is mostly fair to the average working class person?

New Zealand seems way fairer than Australia now, they were just talking about this on ABC Radio National this morning in Australia.

[zaZa9]

Im no expert , but if I was in government I would be doing as little as possible to drive self funded retirees living  quietly overseas to  start flooding back  home  with their hands out .

[Lacessit]

5 minutes ago, zaZa9 said:

Im no expert , but if I was in government I would be doing as little as possible to drive self funded retirees living  quietly overseas to  start flooding back  home  with their hands out .

The mindset of some sectors of the bureaucracy is that we should be spending our pensions in Australia, instead of contributing to a foreign economy. And if that means we have to live under a bridge due to unaffordable rents, that's not their problem.

One Centrelink employee tried it on with me by saying I needed permission to go overseas. She shut up when I asked her to show me the specific regulation that said that. Wouldn't surprise me if some four-eyed bureaucrat was working on it.

[Baerboxer]

1 hour ago, possum1931 said:

If this works for Australia, you can bet that the UK will get into it as well.

 

Bit late with that mate. They removed the tax exemption on selling your prime residence property for UK citizens non resident a few years back.

 

They only allowance they made was the tax is based on the difference between the selling price and the value when they brought the legislation in (2014 or 2015?) rather than the value when you bought it.

 

 

[natway09]

They say you cannot get blood out of a stone. The ATO are getting closer

[StevieAus]

3 hours ago, harleyblacknight said:

Not completely true to my knowledge provided by my accountant.  You could have an account and declare non residency with the bank and you pay withholding tax. Of course that might change soon knowing the Oz government!!

Your statement is correct I have an Australian account and pay the withholding tax.

I don’t own anything else and have no wish to do so, it’s not only the people who leave who are disadvantaged  but with the changes to the assets test for the pension many retired persons are treated appallingly.

[Sailor42]

2 hours ago, zaZa9 said:

Im no expert , but if I was in government I would be doing as little as possible to drive self funded retirees living  quietly overseas to  start flooding back  home  with their hands out .

Sensible, but governments of both stripes have surely proved incapable of thinking beyond the next election. They are busy squeezing older Australians in every way, particularly Centrelink benefits (age pension) and taxation. Anyone resident overseas is an easy target, there are comparatively few of us, and I imagine most of us don't vote anyway, so we are probably not a strong enough group to prise the current snouts from the trough. On the other hand, we chose to live overseas, and probably should accept both the benefits and the downside of that decision - if we don't, we can always go back! Am I right or not?

On 8/30/2017 at 10:04 PM, dfdgfdfdgs said:

 

Whoever wrote this must be hard of hearing.

 

On 12/7/2014 at 11:55 PM, connda said:

So what do you do if your definition of 'sexy' is a slightly aging, attractive (stunning in her youth), 50-something Thai woman that you are married to, that would have 'knocked you sock off' ten years earlier (actually, she knocked my socks off 8 years earlier, but who's counting?). But now? Hell, we all get old. I still have the hots for my wife! So go where you want with this thread! Have fun boyz1 Will my wife give me a 'Soapy???" If I wanted one, I'm sure she would. A 'Special?" Yep. Don't knock monogamy with your Thai woman. She has treated me a hell of a lot better than any 'farang' woman that has been in my life.

 

On 4/8/2018 at 8:58 AM, jonwilly said:

"Trust me, they were not "impressed", that is your own stupid view of the world here. "

 

Trust you ! Er, wrong, sorry, NO.

I have never had any dealings with Thai Police where they where not Polite and Correct in their manner.

I have however learned from this board that manny folk do have problems with The Police and Authority in general.

So just be honest, who do you think has a STUPID view on life in Thailand.

 

john

Remember if you do not like Thailand or Thailand does not like you, You may go back to where you came from, Easy.

 

[Lacessit]

5 hours ago, possum1931 said:

Maybe going a bit off topic, but I feel this question should be asked. Is there any government in the world that is mostly fair to the average working class person?

I don't know about fair. However, the less affluent are always going to be treated better by a Labor government than a Liberal government.

[NoshowJones]

16 minutes ago, Lacessit said:

I don't know about fair. However, the less affluent are always going to be treated better by a Labor government than a Liberal government.

The Labour Government in the UK have never been the party of the working class in my lifetime.

But going by your spelling you are American.

[Jingjock]

6 hours ago, impishbynature said:

Seems when you look at the tax residency laws they increasingly want their bread buttered on both sides, starting to regret taking out Australian citizenship and not just staying a Kiwi...

That was your big mistake becoming an Aussie, even now we are not means tested, and still get the pension no matter how much you have in the bank, also we still get the increases on our portable package pension that allows us to go back any time. bad luck

[ELVIS123456]

Anyone who is already living overseas and is a non-resident, will probably be exwmpted - in fact it is extremely likely that they would be.

 

When the ATO changes the legilation, they are legally obliged to exempt people who have already untertaken a certain course of financial action based upon what was 'legal' at that time. 

 

If it happens, what will probably happen is that it will apply for all property purchased after a certain date, and/or it will only apply for people starting the live overseas after a certain date.

 

If the Labor Govt changes the tax allowance for rental properties (losses), it will (probably) only apply to properties purchased after a certain date.

 

[4MyEgo]

8 hours ago, damian said:

I have a property back in Aus, rent it out and pay tax on that rent and file a tax return each year. I have lived OS for 25 years as a non resident for tax prurposes which means I get no free tax threshold. I have done jobs back in Aus and likewise declared the income. I have bank accounts and my super is still in Aus. ATO knows this and no issues so far. 

 

If I want to sell my property I can always transfer ownership to a family member and have them sell it or go and live in it for longer than 6 months and become a resident again then sell it. 

 

So you would be paying withholding tax on any interest earned in a term deposit.

 

As for your super, my understanding is that if you take out $200,000 at preservation age and you are retired, you will pay no tax up to that amount, after that amount, if you take any more out before age 60, you will be taxed, after 60 your home free, no tax.

 

Your principal place of residence is subject to capital gains tax the moment you departed Australian shores, i.e. 25 years ago, you would get the 50% capital gains tax discount on it till 8 May 2012 when they moved the goal posts, as they do, so you would be best talk to an accountant who would probably say, you need a property valuation as at the date you moved out, and another as at the 8th May 2012 when they changed the goal posts for foreign residents, because after that date, the 50% capital gains tax discount doesn't apply, from my understanding, but like I said, best check with your accountant.

 

If you move back into your principal place of residence, you will require another valuation, not from real estate agents as they are not qualified property valuers, that said, you will be up for capital gains tax from the date you left Australia (or the day your property started producing income), up to the day you moved back in, an example would be below.

 

Let's say you purchased your property in 1990 and moved overseas in 1993, well no capital gains tax is payable on the property in the 1st 3 years, they will know what you paid for it, and they will know what it was worth on the 1st property valuation, so they will work it out from that valuation, to the 8th May 2012 and give you the 50% discount, then they will work out the value when you moved into it, and apply the full capital gains tax from the value as at 8 May 2012 and the date you moved back in. If you stayed in the property for the next 10 years before you sold it, then the increased value from the time you moved in until the time you sold it, would have ZERO capital gains tax payable.

 

When you go to transfer the property to a family member, you do not get off Scott free, because at the time of transfer, a property valuation is required for stamp duty purposes, so that the solicitor will know how much stamp duty is payable on the value, and of course you will need one for the Australian Taxation Office to determine how much capital gains tax is payable.

 

If you didn't know all about this, your up <deleted> creek as we say.

 

If you need anymore info and your property is in Sydney, PM me as I might be able to suggest a couple of scenarios for you.

 

Knowledge is a powerful tool someone once told me, so I studied property for 6 years, practiced it for 25 years, so I have a little bit of knowledge that might be able to steer you in the right direction as to maybe reduce some of your tax liabilities, the rest will be up to your accountant.

 

[4MyEgo]

48 minutes ago, ELVIS123456 said:

Anyone who is already living overseas and is a non-resident, will probably be exwmpted - in fact it is extremely likely that they would be.

 

When the ATO changes the legilation, they are legally obliged to exempt people who have already untertaken a certain course of financial action based upon what was 'legal' at that time. 

 

If it happens, what will probably happen is that it will apply for all property purchased after a certain date, and/or it will only apply for people starting the live overseas after a certain date.

 

If the Labor Govt changes the tax allowance for rental properties (losses), it will (probably) only apply to properties purchased after a certain date.

 

Yes you are correct Elvis, they have till 30 June 2019 to dispose of their properties, if it is passed in the parliament, see below article in the link:

 

https://taxbanter.com.au/banter-blog/cgt-main-residence-exemption/

 

You will see how in the example how Ozzie paid $100,000 for his property in 1986 then went overseas in 2016 when his property was worth $2.2 million, then sold it in 2021 for 2.5 million and had a capital gain of 2.4 million for capital gains tax purposes, as for what discounts if any back to 8 May 2012 he might have, best read it yourself.

 

It's another big bad stick for Xpats unfortunately, and as we cannot vote, we cannot do them any harm.

[4MyEgo]

5 hours ago, StevieAus said:

Your statement is correct I have an Australian account and pay the withholding tax.

I don’t own anything else and have no wish to do so, it’s not only the people who leave who are disadvantaged  but with the changes to the assets test for the pension many retired persons are treated appallingly.

Just remember this, you can have money in the Australian Stock Exchange and pay no capital gains tax on any shares you sell for a profit, and dividends that are 100% fully franked shares, means you also don't pay any tax on them. Yes the withholding tax is 10%, forget holding property, too much tax and capital gains tax, foreign annual land tax, etc etc, so the only real options you have are above.

[The manic]

10 hours ago, hansnl said:

Since when are governments fair to people?

Especially expats

[JG27]

19 hours ago, damian said:

 

"If I want to sell my property I can always transfer ownership to a family member and have them sell it "

Wouldn’t this attract Capital Gains Tax ?

[Lacessit]

13 hours ago, possum1931 said:

The Labour Government in the UK have never been the party of the working class in my lifetime.

But going by your spelling you are American.

I'm an Aussie. The Labor Party in Australia spells it that way.

[Peterw42]

20 hours ago, damian said:

If I want to sell my property I can always transfer ownership to a family member and have them sell it or go and live in it for longer than 6 months and become a resident again then sell it. 

Transfer ownership "is" a sale and at that point taxes would be due. There is no avoiding tax by selling to a family member, as far as the ATO is concerned that is a sale.

The new legislation is stopping any of the principle resident exceptions (6 months) for a property owned by a non resident, now and in the future,  thats the whole point of the legislation.

[Peterw42]

As with all of the issues with the Australia Government, taxation, pensions, medicare it comes down to your resident status, "where you declare you live".

There is a big difference being outside of Australia "and" living somewhere else. Unless you declare that you have left Australia for good, live in another country etc. you can remain a resident with all the resident status, taxation, pensions, medicare etc.

 

For some reason Australians (I think its the convict streak) love telling the government that they live in Thailand and volunteer to loose any resident status.

 

You can overcome 99% of resident/non-resident issues by continuing (as far as the Government is concerned) to live in Australia, Tax returns using an Australian address and tick the resident box, enrol to vote with

an Australian address, get a new Medicare card sent to your oz address every 6 months, you lost the old one.

If any government department asks where you live, the answer is Australia. 

 

As per this thread, You dont loose the principal residence exceptions the second you pass through immigration at the airport, you loose it when you declare you "live" somewhere else.

 

The irony of the situation is lots of Australians become non-residents declaring they live in a country that they are not a resident of, they are only ever recognised as on a temporary stay.