Australian expat self funded retirees - non-resident tax laws & shares etc. How to structure investments?

[aussienam]

Hello to all fellow Aussie expats who are living the self funded retirement life in Thailand (and anywhere else in the world outside Australia).  I was wondering if I could ask some of you to take time to read my post and offer suggestions, personal experience?  It is fairly detailed so if you don't want to read for a few minutes probably best to skip this.  Thanks.  

 

I was medically retired in my 40's and given a lump sum payout.  No pension.  I had to work out how to draw an income stream off the payout and my own savings.  Have made heaps of investment mistakes that have been very costly and (loss of future potential wealth as well) and lots of bad advice.  I still haven't been able to find the holy grail of financial advisers and investment structure.  

 

I have been in Thailand back and forth and now back again after quarantine a few months ago.  I have always retained my residency status in Australia due to spending good portions of my life there.  

I am in my early 50's now and have a non O-A visa (retirement visa). 

 

There is the possibility that at some point I may be deemed a non-resident for tax purposes in Australia.  I have ascertained that some of my investments are not tax friendly in respect to the dreaded non-resident taxation rules in Australia.  And Australian non-resident taxes and other rules are brutal.  

 

The main issue I have is that I have a significant investment in Australia shares - both in managed funds and a personally managed share portfolio.  I rely on dividends for income to live off.  There is some buying and selling of shares in my managed funds that also attract capital gains.  

 

I have ascertained that as a non-resident: 

* You cannot claim Franking Credits on your dividends

* You are taxed different to franked dividends

* You are taxed at the non-resident rate for income on shares (and any other income source) which means losing the tax-free threshold - you are taxed at the non-resident rate from $0 onwards.  

 

I realise this is a major problem and will ravage my dividend income stream.  The Franking Credits were significant in reducing my taxable income and the tax-free threshold meant the first $18,200 was not taxed in my overall income.  

 

The second main problem is that at the point I may be deemed a non-resident for Australian tax purposes, the tax office will determine how much my shares are worth and calculate what the capital gains would be at that point.  I am then charged a Capital Gains Tax on my shares, despite never selling them.  So my tax bill will be exorbitant and I may need to actually sell shares to help pay for the tax bill.  

 

The other issue is that if my shares fall in value and I have a loss/less gains, I cannot claim back that capital gains tax charged.  

The upside is that if I sell my shares after that point and I have made a gain as a non-resident then I do not pay anymore Capital Gains Tax.  But if I return to Australia and regain residency, I am not sure what happens if I sell them at a profit (will I get charged a double capital gains tax?)

 

I do not have my shares in a Self Managed Super Fund structure (if only I knew all this years ago) and I currently have an account in an Industry Super Fund that I cannot contribute to for three years (non-concessional fund I have made maximum contributions with the three-year carry forward provision and then converted that to a pension account using permanent incapacity early release provision - gives me a tax-free income that is very modest).  The only other Super fund account I can contribute to is my concessional account and only allowed a maximum of $25,000 per year.  Luckily this fund also allows me to invest in shares, within a limited capacity 

 

But my share portfolio cannot be shifted into a Super fund structure.  

 

I have been told of non-franked dividend shares as well as International shares as possibly an option for dividends, but this won't circumvent the capital gains tax issues and non-resident income tax.  I would be interested in what other expats do who don't use Self Managed Super Funds or their Super funds for income.  

 

The other investments are:

 

* an investment property - I can still take advantage of depreciation.  Downside would be maintenance, rates, fees and non-resident income tax.  

* Savings account - very low interest rate

* Peer to Peer lending - interest rates have fallen considerably making this a poor choice investment for me now.  Good portion of P2P loans are locked up for a few years before principal and interest repaid to me.  

 

I would prefer if I could retain my status as a resident in Australia as long as possible.  Post COVID I would consider spending 2-3 months a year for a few years to do that, if I considered staying overseas more.  Cost of living in Thailand versus Australia is considerably less and I am eking out a very modest self funded income stream that I need to live off for life.  But if I become a non-resident the combined taxes will make it near impossible to live.  It is frugal already and I have maybe another 30 years of life.  

 

I am not eligible for any disability benefit in Australia (I exceed the assets threshold because of the lump sum and the assets) or any other assistance.  

 

I am doing my head in at the moment with worry and what to do.  I really want a stress free life with investments in the right structures to be able to do what I want in early retirement.  At the moment all I have is stress.  I need help as I have stuffed up way too many times with making very costly panicked decisions.  Thanks in advance if you read this far.  

 

 

 

 

 

 

 

 

[Lacessit]

Hello,

I can sympathize with your dilemma, because I am in a similar position due to the pandemic. I was retaining tax residency by returning to Australia regularly.

 

As I see it, two options. Return to Australia, or move all your assets to Thailand and invest in the stock market here. The second option is fraught with risk.

 

Are you aware that if you engage a tax accountant, the deadline for submitting a tax return ( for them ) is March of the following year? If you are in Australia at the time the return is submitted, IMO you can tell the ATO to pound sand. You need a professional to confirm that, PM me for the one I use.

 

I agree financial advisers are not worth urinating on.

 

Best of luck.

[Will27]

You will probably get a lot more advice from Aussies if you ask the mods to move this to the Home Country forum.

 

There are quite a few threads on residency etc.

[cmarshall]

As an American I have no knowledge of Australian taxation rules, but what the OP is describing sounds brutal.  If you move your assets overseas are you still liable for taxes on them?  If send your assets abroad is indeed a solution then I wouldn't necessarily consider Thailand if I were he.  The benefit of locating the assets in Thailand is that your assets and ongoing liabilities are all in Thai baht, so the exchange rate risk goes away.  But the new risk is that you do not automatically have the right to move them out of Thailand should the need arise, such as if your permission to stay were not to be renewed for some reason.  Singapore might be a better destination.  

 

 I don't understand why the UK and Australian governments take such a punitive attitude toward their retirees who prefer to live abroad.  It's bad enough for Americans that we still have to pay income tax, but at least our Social Security benefits are fully intact no matter where we live.

[Fat is a type of crazy]

A key issue is  residency. You can call the ATO and say you wish to speak to someone about your residency - make sure they put you through to an expert which they will if you persevere. You don't have to provide your details and they will discuss it with you in detail. 

They may decide it is clearly yes or no or somewhere in between. In my case if I live in Thailand I will always be a resident of Australia because I'll receive a super pension from my government employer. I mention that because there could be something you are not aware of which makes the decision easier than you think.

Once you know that, and if you are deemed a non resident, it is probably worth getting professional advice for peace of mind and so you can invest appropriately in the long term. Finding a good one may be the issue. 

I do note you seem to say there could be Australian tax on non Australian shares  - if you are a non resident you only pay tax on income sourced from Australia. 

 

[Will27]

5 hours ago, Fat is a type of crazy said:

A key issue is  residency. You can call the ATO and say you wish to speak to someone about your residency - make sure they put you through to an expert which they will if you persevere. You don't have to provide your details and they will discuss it with you in detail. 

They may decide it is clearly yes or no or somewhere in between. In my case if I live in Thailand I will always be a resident of Australia because I'll receive a super pension from my government employer. I mention that because there could be something you are not aware of which makes the decision easier than you think.

Once you know that, and if you are deemed a non resident, it is probably worth getting professional advice for peace of mind and so you can invest appropriately in the long term. Finding a good one may be the issue. 

I do note you seem to say there could be Australian tax on non Australian shares  - if you are a non resident you only pay tax on income sourced from Australia. 

 

I'm not sure if that's the case TBH.

I wish it was as I'm in the same boat.

 

I am under the impression that once you stop being a contributing member, ie have left the Public Service, the superannuation test does not apply.

 

[Jai Dee]

Topic moved to Home Country Forum.

 

/Moved.

[Fat is a type of crazy]

1 hour ago, Will27 said:

I'm not sure if that's the case TBH.

I wish it was as I'm in the same boat.

 

I am under the impression that once you stop being a contributing member, ie have left the Public Service, the superannuation test does not apply.

 

In my case I have a defined benefit scheme and when I retire I'll take the super as a pension and obviously cease making contributions at that time - around the age of 60.  I was told by people in the know that if you are receiving a superannuation pension from the Australian government you remain a resident of Australia for tax purposes. 

Edited April 30, 2021 by Fat is a type of crazy

[Will27]

11 minutes ago, Fat is a type of crazy said:

In my case I have a defined benefit scheme and when I retire I'll take the super as a pension and obviously cease making contributions at that time - around the age of 60.  I was told by people in the know that if you are receiving a superannuation pension from the Australian government you remain a resident of Australia for tax purposes. 

I wish that was the case but I don't think it is.

 

Under the test, you are an Australian resident if you are a contributing member of:

• the Public Sector Superannuation Scheme (PSS), or
• the Commonwealth Superannuation Scheme (CSS).
• If you are no longer employed by the Public Service, you will fail this test.

 

https://www.ato.gov.au/Individuals/coming-to-australia-or-going-overseas/In-detail/Residency/Residency---the-superannuation-test/

[Fat is a type of crazy]

4 minutes ago, Will27 said:

I wish that was the case but I don't think it is.

 

Under the test, you are an Australian resident if you are a contributing member of:

• the Public Sector Superannuation Scheme (PSS), or
• the Commonwealth Superannuation Scheme (CSS).
• If you are no longer employed by the Public Service, you will fail this test.

 

https://www.ato.gov.au/Individuals/coming-to-australia-or-going-overseas/In-detail/Residency/Residency---the-superannuation-test/

It looks pretty clear cut in your link. For the last couple of years I had assumed I had an out but it doesn't look like I have. I'll tell that person their advice sucks. Thanks for that.

[Will27]

5 minutes ago, Fat is a type of crazy said:

It looks pretty clear cut in your link. For the last couple of years I had assumed I had an out but it doesn't look like I have. I'll tell that person their advice sucks. Thanks for that.

Best to just try and fly under the radar wherever the ATO is involved.

[Leaver]

19 hours ago, Lacessit said:

As I see it, two options. Return to Australia, or move all your assets to Thailand and invest in the stock market here. The second option is fraught with risk.

 

Why Thailand?

 

Singapore is safe.  

[Lacessit]

6 hours ago, Leaver said:

 

Why Thailand?

 

Singapore is safe.  

The OP said he was in Thailand. He also said his assets were limited due to some poor decisions.

Singapore may well be safe. However, I understand the cost of living in Singapore is nearly double that of Bangkok.

[Leaver]

56 minutes ago, Lacessit said:

The OP said he was in Thailand. He also said his assets were limited due to some poor decisions.

Singapore may well be safe. However, I understand the cost of living in Singapore is nearly double that of Bangkok.

 

The OP is in Thailand, but his income is generated in Australia and / or he holds assets in Australia.

 

So, cash out the asset/s and move the proceeds to Singapore.   Th OP can still live in Thailand.

 

I never suggest the OP lives in Singapore, nor does he need to.

 

I wouldn't be moving my life saving to Thailand.  

 

Basically, all he should leave behind in Australia for the tax man is his citizenship.  ????

[Lacessit]

1 hour ago, Leaver said:

 

The OP is in Thailand, but his income is generated in Australia and / or he holds assets in Australia.

 

So, cash out the asset/s and move the proceeds to Singapore.   Th OP can still live in Thailand.

 

I never suggest the OP lives in Singapore, nor does he need to.

 

I wouldn't be moving my life saving to Thailand.  

 

Basically, all he should leave behind in Australia for the tax man is his citizenship.  ????

Sorry, that doesn't make sense to me. How does he invest the proceeds in Singapore for income, and with whom? My guess would be there are just as many financial sharks there as in Thailand or Australia.

[wprime]

 

On 4/29/2021 at 11:45 PM, aussienam said:

I have been in Thailand back and forth and now back again after quarantine a few months ago.  I have always retained my residency status in Australia due to spending good portions of my life there.  

I am in my early 50's now and have a non O-A visa (retirement visa). 

 

There is the possibility that at some point I may be deemed a non-resident for tax purposes in Australia.  I have ascertained that some of my investments are not tax friendly in respect to the dreaded non-resident taxation rules in Australia.  And Australian non-resident taxes and other rules are brutal.  

 

If the reason is because you're stuck here due to COVID-19, you won't be deemed a non-resident for that.

 

On 4/29/2021 at 11:45 PM, aussienam said:

 

I have ascertained that as a non-resident: 

* You cannot claim Franking Credits on your dividends

* You are taxed different to franked dividends

* You are taxed at the non-resident rate for income on shares (and any other income source) which means losing the tax-free threshold - you are taxed at the non-resident rate from $0 onwards.  

 

You aren't taxed at all on your franked dividends. You also don't need to pay capital gains tax either once you're a non-resident (other than if related to Australian property).

 

On 4/29/2021 at 11:45 PM, aussienam said:

The second main problem is that at the point I may be deemed a non-resident for Australian tax purposes, the tax office will determine how much my shares are worth and calculate what the capital gains would be at that point.  I am then charged a Capital Gains Tax on my shares, despite never selling them.  So my tax bill will be exorbitant and I may need to actually sell shares to help pay for the tax bill.  

 

Yes you'll trigger a capital gains event by changing to a non-resident.

 

If you have a huge amount of unrealised capital gains, you should sell some shares before Jun-30 and repurchase then set your move date to after Jan-1. This will split the income across two taxable years allowing you to use more of the resident tax-free threshold. Remember your capital gains are halved also if you've owned them for more than a year.

 

On 4/29/2021 at 11:45 PM, aussienam said:

The other issue is that if my shares fall in value and I have a loss/less gains, I cannot claim back that capital gains tax charged.  

The upside is that if I sell my shares after that point and I have made a gain as a non-resident then I do not pay anymore Capital Gains Tax.  But if I return to Australia and regain residency, I am not sure what happens if I sell them at a profit (will I get charged a double capital gains tax?)

 

On average shares go up so you'll save more in capital gains tax than the amounts you can't claim back.

 

If you return, capital gains tax will only accumulate on the valuation from the day you become a resident.

 

But, be aware that if you return the ATO may decide you never ceased being an Australian resident which would be a major pain. Talk to an accountant about whether you're really a non-resident because it's a lot stricter than just not being in Australia. They need you to cut off ties to Australia and show you have no intent on returning.

 

On 4/29/2021 at 11:45 PM, aussienam said:

* an investment property - I can still take advantage of depreciation.  Downside would be maintenance, rates, fees and non-resident income tax.  

 

This is your big problem, if you're a non-resident this would be fully taxable with no CGT concession. Get rid of it and invest in equities if you become a non-resident.

 

On 4/29/2021 at 11:45 PM, aussienam said:

  I really want a stress free life with investments in the right structures to be able to do what I want in early retirement.

 

Another reason to get rid of the investment property. Stick your wealth in assets that can easily be managed from abroad like equities not tied to Australian property. As a non-resident, equity investments with fully franked dividends make your tax returns very simple.

Edited May 1, 2021 by wprime

[gearbox]

OP,  I'm more or less in the same boat regarding investments, income and tax.

 

So far my strategy is to try to maintain residence as much as possible. If that fails at some stage, I'm not sure what I'll do next.  I still have a few years to figure this out. I have also an EU citizenship,  but I haven't studied my options there. I strongly prefer to keep my assets in Australia.

 

I have a SMSF which has other trustees back in Australia, so no immediate danger there. But the big advantage with super and residency is that after 60 you get your super pension tax free, and the investment income of the super is tax free too. Can't beat this anywhere else.

 

There is a false belief that if you stay outside Australia for X number of years you would lose residency. I believe this is not the case. If asked you may need to prove to ATO that you maintain strong ties with the country.

 

You can be outside Australia and still a resident if your stay outside is considered "travel", and you can prove it.  If you are in Thailand that means you travel to other countries and spend considerable time there. In other words you haven't made a new abode anywhere else. The retirement extensions are not PR visas, so that's OK. It could be detrimental if you buy a few properties in Thailand and declare them in your Australian tax return. Traveling back to Australia helps too. If you are just staying here all the time in some Isaan village you may lose your residency.

 

Other things I do to keep my residency:

* I work a fair bit of time remotely, and one month per year in Australia for Australian customers, and get paid there. I file a tax return with employment income every year. However sooner or later this would stop.

* I have a car registered in NSW and still pay third party insurance.

* I have monthly Internet bills on my name.

* I travel a lot (before covid), and spend only 1/3 - 2/3 of my time in Thailand. As I was stuck outside due to covid I was away from Thailand nearly 11 months.

 

So basically if ATO looks at my activities it does look like I'm just temporarily away from Australia, and I don't think ATO is going to challenge my status in the near future.

 

All the above is not valid for Medicare,  but the checks there are less strict, if you keep quiet and go back from time to time to pick up the new Medicare card you should be fine.

 

 

 

 

 

[mark5335]

2 hours ago, gearbox said:

if ATO looks at my activities it does look like I'm just temporarily away from Australia

I'm curious as to the circumstances that might prompt the ATO to look at your activities. Would it be solely in the context of annual filing of ITR's and consequential income tax assessment for yourself and the SMSF, or, is it a great overall concern that the ATO has become more like a 'big brother is watching' with the capability to track whereabouts with passports / passing through borders, bank account transactions etc.

[Leaver]

4 hours ago, Lacessit said:

Sorry, that doesn't make sense to me. How does he invest the proceeds in Singapore for income, and with whom? My guess would be there are just as many financial sharks there as in Thailand or Australia.

 

It's called, a bank.  ????

 

HSBC Singapore is popular with expats in Thailand.  

 

If the OP wants / needs to, he can buy some shares. 

 

If he gets the right advice, and moves his money the right way, he may even be able to receive an aged pension back in Australia.  

[Leaver]

1 hour ago, mark5335 said:

I'm curious as to the circumstances that might prompt the ATO to look at your activities. 

 

Immigration records linked to your annual filling.  Eg. exit Australia 1/1/21.  Enter Australia after 1/7/21 - equals more than 6 months outside Australia. Does this person submit an annual tax report - yes.  Does this person earn any income - yes.  Red Flag residency status.  The data base does the lot.  

 

In the OP's case, he simply informed his bank, who informed the tax department.  

[Leaver]

3 hours ago, gearbox said:

OP,  I'm more or less in the same boat regarding investments, income and tax.

 

So far my strategy is to try to maintain residence as much as possible. If that fails at some stage, I'm not sure what I'll do next.  I still have a few years to figure this out. I have also an EU citizenship,  but I haven't studied my options there. I strongly prefer to keep my assets in Australia.

 

I have a SMSF which has other trustees back in Australia, so no immediate danger there. But the big advantage with super and residency is that after 60 you get your super pension tax free, and the investment income of the super is tax free too. Can't beat this anywhere else.

 

There is a false belief that if you stay outside Australia for X number of years you would lose residency. I believe this is not the case. If asked you may need to prove to ATO that you maintain strong ties with the country.

 

You can be outside Australia and still a resident if your stay outside is considered "travel", and you can prove it.  If you are in Thailand that means you travel to other countries and spend considerable time there. In other words you haven't made a new abode anywhere else. The retirement extensions are not PR visas, so that's OK. It could be detrimental if you buy a few properties in Thailand and declare them in your Australian tax return. Traveling back to Australia helps too. If you are just staying here all the time in some Isaan village you may lose your residency.

 

Other things I do to keep my residency:

* I work a fair bit of time remotely, and one month per year in Australia for Australian customers, and get paid there. I file a tax return with employment income every year. However sooner or later this would stop.

* I have a car registered in NSW and still pay third party insurance.

* I have monthly Internet bills on my name.

* I travel a lot (before covid), and spend only 1/3 - 2/3 of my time in Thailand. As I was stuck outside due to covid I was away from Thailand nearly 11 months.

 

So basically if ATO looks at my activities it does look like I'm just temporarily away from Australia, and I don't think ATO is going to challenge my status in the near future.

 

All the above is not valid for Medicare,  but the checks there are less strict, if you keep quiet and go back from time to time to pick up the new Medicare card you should be fine.

 

 

 

 

 

 

Like many countries, the immigration data base talks with the tax department data base.  For how long do you think you can get away with Australia's 6 months rule?  

[gearbox]

48 minutes ago, Leaver said:

 

Like many countries, the immigration data base talks with the tax department data base.  For how long do you think you can get away with Australia's 6 months rule?  

AFAIK there is no such thing as hard enforced 6 months rule. The Australian residency test is based on "abode":

 

https://www.ato.gov.au/Individuals/Coming-to-Australia-or-going-overseas/In-detail/Residency/Residency---the-domicile-test/

 

Determining your permanent place of abode

There are no hard and fast rules that can be used to determine your permanent place of abode. Taxation Ruling IT 2650: Income tax: residency - permanent place of abode outside Australia outlines some relevant factors that are used by the courts, tribunals and ATO in deciding such cases.

The relevant factors are:

• intended and actual length of stay overseas, including the continuity of that stay
• existence of an established home overseas
• existence of a residence in Australia (while overseas)
• family and financial ties.

You would not be considered to have adopted a permanent place of abode outside Australia and would therefore be considered an Australian resident under the domicile test if you:

• have no fixed or habitual place of abode overseas but move from one country to another
• move constantly within the one country.

 

[aussienam]

1 hour ago, Leaver said:

 

It's called, a bank.  ????

 

HSBC Singapore is popular with expats in Thailand.  

 

If the OP wants / needs to, he can buy some shares. 

 

If he gets the right advice, and moves his money the right way, he may even be able to receive an aged pension back in Australia.  

Thanks for the advice. This is truly extremely daunting now.  If I were to sell up all my shares and move my AUD to Singapore, then my biggest fear is then who can I trust there to reinvest my funds?  

I have yet to have found a decent financial adviser in Oz where I am may least familiar with a lifetime in that place and know the legal avenues for restitution (I have had two non-disclosure settlements paid to me from two 'financial advisers' who I threatened legal action against).  

Singapore - I wouldn't know where to start.  I really need my hand to be held all along with this as I am clueless. 

 

I am not comfortable with self managing a large portfolio of shares either.  I have managed funds holding the bulk as I have a nervous disposition and need fund managers making the decisions.  

 

I am in my early 50's at the moment and did not meet criteria for disability pension as exceeded the asset's test threshold.  

I think old age pension threshold is $300,000 in assets outside a primary residence.  I am assuming by that time (67 years old) I will still be over that (assets are calculated both in Australia and abroad). And to qualify for an old age pension we need to be in Australia for two full years before applying.  

 

I truly need advice and help as I can't do this alone.  Just too complex.  It's really ramped up my PTSD and depression.  

[gearbox]

2 hours ago, mark5335 said:

I'm curious as to the circumstances that might prompt the ATO to look at your activities. Would it be solely in the context of annual filing of ITR's and consequential income tax assessment for yourself and the SMSF, or, is it a great overall concern that the ATO has become more like a 'big brother is watching' with the capability to track whereabouts with passports / passing through borders, bank account transactions etc.

It would be the border crossing records,  they do get that data. They also get all overseas bank transfers, even with Transferwise, trust me on this. They don't have your credit card purchases although...not yet, otherwise they would pinpoint your location quite well. They do have the records of your overseas ATM withdrawals, so if you want to pretend you don't live in Thailand don't withdraw cash every 10 days from the ATM next to your house ????

 

ATO is also linked to DHS so your DHS activity is with them too.

 

When you travel outside Thailand try to get your passport stamped, as this is a record of your movements between countries.

 

They may also get data when you purchase substantial asset overseas, but that data sharing would be with a few countries only...I don't think Thailand makes it there.

 

There is a lot of big data analytical software deployed there, which gradually gets more data and better algorithms.

 

For example if you wire 500K to Thailand and they get records of your boarding passes going always to Bangkok, the analytics can raise a potential case for investigation which may require further ATO officer intervention.

 

How important is this for them I can only guess, probably there is plenty of other stuff on their plate.

 

 

[Leaver]

14 minutes ago, gearbox said:

AFAIK there is no such thing as hard enforced 6 months rule. The Australian residency test is based on "abode":

 

https://www.ato.gov.au/Individuals/Coming-to-Australia-or-going-overseas/In-detail/Residency/Residency---the-domicile-test/

 

Determining your permanent place of abode

There are no hard and fast rules that can be used to determine your permanent place of abode. Taxation Ruling IT 2650: Income tax: residency - permanent place of abode outside Australia outlines some relevant factors that are used by the courts, tribunals and ATO in deciding such cases.

The relevant factors are:

• intended and actual length of stay overseas, including the continuity of that stay
• existence of an established home overseas
• existence of a residence in Australia (while overseas)
• family and financial ties.

You would not be considered to have adopted a permanent place of abode outside Australia and would therefore be considered an Australian resident under the domicile test if you:

• have no fixed or habitual place of abode overseas but move from one country to another
• move constantly within the one country.

 

 

 

 

I accept the information in your post.  Just wondering if point number 3 overrides the domicile test.  

 

Are you an Australian resident for tax purposes?

Generally, we consider you to be an Australian resident for tax purposes if you:

• have always lived in Australia or you have come to Australia and live here permanently
•  
• have been in Australia continuously for six months or more, and for most of that time you worked in the one job and lived at the same place
•  
• have been in Australia for more than six months of the year, unless your usual home is overseas and you do not intend to live in Australia
•  
• go overseas temporarily and you do not set up a permanent home in another country

•  
• are an overseas student who has come to Australia to study and are enrolled in a course that is more than six months long.

 

[aussienam]

5 hours ago, wprime said:

 

 

If the reason is because you're stuck here due to COVID-19, you won't be deemed a non-resident for that.

 

 

You aren't taxed at all on your franked dividends. You also don't need to pay capital gains tax either once you're a non-resident (other than if related to Australian property).

 

 

Yes you'll trigger a capital gains event by changing to a non-resident.

 

If you have a huge amount of unrealised capital gains, you should sell some shares before Jun-30 and repurchase then set your move date to after Jan-1. This will split the income across two taxable years allowing you to use more of the resident tax-free threshold. Remember your capital gains are halved also if you've owned them for more than a year.

 

 

On average shares go up so you'll save more in capital gains tax than the amounts you can't claim back.

 

If you return, capital gains tax will only accumulate on the valuation from the day you become a resident.

 

But, be aware that if you return the ATO may decide you never ceased being an Australian resident which would be a major pain. Talk to an accountant about whether you're really a non-resident because it's a lot stricter than just not being in Australia. They need you to cut off ties to Australia and show you have no intent on returning.

 

 

This is your big problem, if you're a non-resident this would be fully taxable with no CGT concession. Get rid of it and invest in equities if you become a non-resident.

 

 

Another reason to get rid of the investment property. Stick your wealth in assets that can easily be managed from abroad like equities not tied to Australian property. As a non-resident, equity investments with fully franked dividends make your tax returns very simple.

 

"Yes you'll trigger a capital gains event by changing to a non-resident.

 

If you have a huge amount of unrealised capital gains, you should sell some shares before Jun-30 and repurchase then set your move date to after Jan-1. This will split the income across two taxable years allowing you to use more of the resident tax-free threshold. Remember your capital gains are halved also if you've owned them for more than a year.

 

On average shares go up so you'll save more in capital gains tax than the amounts you can't claim back.

 

If you return, capital gains tax will only accumulate on the valuation from the day you become a resident."

 

That's yet another issue: at what point can you determine when you become a non-resident to an actual date? Is this some sort of pre-determined arrangement with the tax office? Moving out and move in dates? 

 

I have heard of the ATO also backdating people's non-resident dates when they determine someone was a non-resident earlier on. 

And the opposite as well with non-resident status being changed to never being a non-resident. This of course causing all sorts of investment decisions that most likely will be to the detriment of person.  

 

So, with selling and buying back my own shares to take advantage of the resident capital gains tax laws, I'd have to know of course when I was definitely going to be a non-resident on a particular date I'd assume? 

 

And this adds to the huge quandary, as I am not sure of my residency intentions anywhere at this time.  I have not committed to anywhere in full.  And this muddies my resident status.  

[gearbox]

31 minutes ago, aussienam said:

Thanks for the advice. This is truly extremely daunting now.  If I were to sell up all my shares and move my AUD to Singapore, then my biggest fear is then who can I trust there to reinvest my funds?  

I have yet to have found a decent financial adviser in Oz where I am may least familiar with a lifetime in that place and know the legal avenues for restitution (I have had two non-disclosure settlements paid to me from two 'financial advisers' who I threatened legal action against).  

Singapore - I wouldn't know where to start.  I really need my hand to be held all along with this as I am clueless. 

 

I am not comfortable with self managing a large portfolio of shares either.  I have managed funds holding the bulk as I have a nervous disposition and need fund managers making the decisions.  

 

I am in my early 50's at the moment and did not meet criteria for disability pension as exceeded the asset's test threshold.  

I think old age pension threshold is $300,000 in assets outside a primary residence.  I am assuming by that time (67 years old) I will still be over that (assets are calculated both in Australia and abroad). And to qualify for an old age pension we need to be in Australia for two full years before applying.  

 

I truly need advice and help as I can't do this alone.  Just too complex.  It's really ramped up my PTSD and depression.  

 Enjoy your life mate. What matters is that you appear to have sufficient money. You'll figure it out.

[gearbox]

18 minutes ago, Leaver said:

 

 

I accept the information in your post.  Just wondering if point number 3 overrides the domicile test.  

 

Are you an Australian resident for tax purposes?

Generally, we consider you to be an Australian resident for tax purposes if you:

• have always lived in Australia or you have come to Australia and live here permanently
•  
• have been in Australia continuously for six months or more, and for most of that time you worked in the one job and lived at the same place
•  
• have been in Australia for more than six months of the year, unless your usual home is overseas and you do not intend to live in Australia
•  
• go overseas temporarily and you do not set up a permanent home in another country

•  
• are an overseas student who has come to Australia to study and are enrolled in a course that is more than six months long.

 

 This is just a different test. There are 4 different tests and I think you need to satisfy only one, not all. Have a look here:

 

https://www.ato.gov.au/Individuals/Coming-to-Australia-or-going-overseas/In-detail/Residency/Examples-of-residents-and-foreign-residents/

• Residency – the resides test
• Residency – the domicile test
• Residency – the 183 day test
• Residency – the superannuation test.

 

https://www.ato.gov.au/uploadedFiles/Content/IND/Downloads/Occupation_guides/n75127-DE-5543_Residency-for-tax-purposes-factsheet_W.pdf

 

 

Unfortunately the cases don't cover nomads like me, but I think I'll pass the residency test. Think about this....If I perpetually travel around the world where my abode is? If I'm not a resident of Australia then where is my residency? Am I a stateless person?

 

 

 

 

 

 

 

[gearbox]

13 minutes ago, aussienam said:

 

And this adds to the huge quandary, as I am not sure of my residency intentions anywhere at this time.  I have not committed to anywhere in full.  And this muddies my resident status.  

 

If you have not committed to anywhere that may make you a non-resident. Don't communicate this to ATO ????

[aussienam]

5 hours ago, wprime said:

 

 

If the reason is because you're stuck here due to COVID-19, you won't be deemed a non-resident for that.

 

 

You aren't taxed at all on your franked dividends. You also don't need to pay capital gains tax either once you're a non-resident (other than if related to Australian property).

 

 

Yes you'll trigger a capital gains event by changing to a non-resident.

 

If you have a huge amount of unrealised capital gains, you should sell some shares before Jun-30 and repurchase then set your move date to after Jan-1. This will split the income across two taxable years allowing you to use more of the resident tax-free threshold. Remember your capital gains are halved also if you've owned them for more than a year.

 

 

On average shares go up so you'll save more in capital gains tax than the amounts you can't claim back.

 

If you return, capital gains tax will only accumulate on the valuation from the day you become a resident.

 

But, be aware that if you return the ATO may decide you never ceased being an Australian resident which would be a major pain. Talk to an accountant about whether you're really a non-resident because it's a lot stricter than just not being in Australia. They need you to cut off ties to Australia and show you have no intent on returning.

 

 

This is your big problem, if you're a non-resident this would be fully taxable with no CGT concession. Get rid of it and invest in equities if you become a non-resident.

 

 

Another reason to get rid of the investment property. Stick your wealth in assets that can easily be managed from abroad like equities not tied to Australian property. As a non-resident, equity investments with fully franked dividends make your tax returns very simple.

 

"This is your big problem, if you're a non-resident this would be fully taxable with no CGT concession. Get rid of it and invest in equities if you become a non-resident.

 

 

Another reason to get rid of the investment property. Stick your wealth in assets that can easily be managed from abroad like equities not tied to Australian property. As a non-resident, equity investments with fully franked dividends make your tax returns very simple."

 

I did not want to invest in shares only and have always been told to diversify my investments, hence why I chose both property and shares.  I am not comfortable with investing nearly everything I have into shares/equities.  My risk tolerance has reduced, albeit needing risk for higher returns to offset the lower tier of wealth I have managed to accumulate. 

 

The non-resident capital gains tax rate really sux as there's no CGT discount of 50% and no tax-free threshold. But at least I would have rental income (albeit taxed at non-resident resident rate again with no tax-free threshold) and depreciation to offset tax liability. 

 

If I sold the property now I'd still face a loss due to extensive very expensive renovations/repairs I had to pay when I bought the property. 

And right in the middle of a property boom too.  And in an undetermined resident status too. I may flip from a resident to non-resident to resident again.  

 

At the least  I would still potentially make a Capital Gain of whatever profit I made from a future sale with possibly the deduction from that of a full non-resident rate capital gains tax @ 33-50%?