Tax paid by Expat in Thailand

[darrenr]

Hello , i am considering retiring in Thailand from Australia. I know Thailand and Australia have double tax treaties in place so as to avoid double taxation. I also know that if you reside in Thailand 180 days or more then your income in Thailand and in your home country are assessable.

 

Question: Do the majority of expats living in Thailand greater than 180 days per year, actually pay tax, declare their income in their home countries and lodge a tax file return, and do the authorities follow this up given most are on some sort of retirement visa? Do alot of Expats just fly under the radar.

Reason i ask is that in Australia the first $18000 AUD is tax free , so by declaring your income from bank interest (Bank in Australia) that means you would have to pay tax in Thailand ?

many thanks

[darrenr]

Forgot to say As Australia does not tax you on the first $18000 AUD (tax free component), and then starts taxing you on amounts over $18000 AUD (477,000 Baht), does that mean if you a resident in Thailand that technically Thailand could charge you 10% tax on the $18000 AUD?

[topt]

On ‎04‎/‎03‎/‎2017 at 1:02 AM, darrenr said:

Forgot to say As Australia does not tax you on the first $18000 AUD (tax free component), and then starts taxing you on amounts over $18000 AUD (477,000 Baht), does that mean if you a resident in Thailand that technically Thailand could charge you 10% tax on the $18000 AUD?

See this thread here

or search in the banking forum for many other.....

I don't know specifically about Australia but most just "fly under the radar"

 

Last month I submitted to reclaim tax on bank interest for last year and was sent a Thai Income tax form this week in the post. Went back to the tax office and after explaining I was retired and had no Thai income the guy took it off me and basically said forget it.

[4MyEgo]

On 04/03/2017 at 5:02 AM, darrenr said:

Forgot to say As Australia does not tax you on the first $18000 AUD (tax free component), and then starts taxing you on amounts over $18000 AUD (477,000 Baht), does that mean if you a resident in Thailand that technically Thailand could charge you 10% tax on the $18000 AUD?

There are a couple of questions here that are hard to answer, so I will ask them, and once you have answered them, I will reply with my unqualified views, having recently retired in Thailand and done extensive research prior to moving here and afterwards.

 

If you want to keep this private then PM me, but best put here so as to assist any other Oz expats in the future.

 

1) Do you intend on returning to Australia every year and remaining in Australia for the balance of the 183 days to retain your residency status.

2) Have you reached the old age pension age

3) Have you reached retirement age 55 and over

5) Have you taken out your superannuation (if any)

 

Also did you know that if you remained overseas for more than 183 days and did not own property back in Oz there are some benefits such as:

 

1) You only pay 10% withholding tax on interest earned in the bank back in Oz, which is taken out automatically, no tax payable here in Thailand.

2) No tax payable on fully franked shares, and no capital gains tax on shares

 

If you own a property you will be at a loss as they will slug you 32.5c in every $ and charge you 100% capital gains tax on any increase in value on your property from the date you departed.

 

The 183 day rule so you know is not so cut and dry, although you will get a lot of conflicting opinions, but from my own research, it is up to you to prove that you are a resident of Australia, and that can mean a lot of proof on your part as far as the ATO is concerned, the guys flying under the radar will eventually become unstuck, but hey if they can sleep at night, why not 555 

 

[BaanOz]

On 14/03/2017 at 10:28 AM, 4MyEgo said:

no capital gains tax on shares

Not bad but on the otherhand you can't claim loses back.

I'm just wondering about the actual switch when you become a non-resident for tax. I understand this will mean a CGT event on any shares you hold prior.

Not sure of the mechanics but anyone know if this CGT is just reported to the ATO (and pay any tax) or should you (or better to) sell shares you hold at the time?

Thanks.

[simoh1490]

I'm from the UK and resident in Thailand year round, here's what I do:

 

I earn some income that arises in the UK which I leave there as it is earned and then perhaps transfer to Thailand every one or two years. That income falls within the tax free personal allowance hence it is tax free.

 

I also have income in Thailand from savings accounts and investments and the UK doesn't want to know about these because I'm not resident there. So every year I file a simple tax return in Thailand and reclaim the tax paid since that income falls within the tax free personal allowance in Thailand, all perfectly legal.

 

The above is double dip in some respects and in the future my UK personal allowance will probably be taken away from me, until then I'm not doing anything wrong.

[Peterw42]

On 14/03/2017 at 5:28 PM, 4MyEgo said:

10% withholding tax on interest

Isnt the 10% withholding only for non residents ? I have been out of oz for more than 180 days and nobody is withholding any tax on interest.

Doesnt it all come down to resident/non-resident for taxation purposes ?

 

As per the online calculator on the ATO website, its not hard to keep "resident for taxation" status. The calc comes back with a determination and says "you are a resident for taxation, print this and keep on file".

 

[Peterw42]

OP, a lot of this stuff comes down to what you disclose, declare, advise to the Australian Government. 

A lot of Australians (I think its the convict streak) seem to want to "stick it to the man", telling all the Government departments, I am leaving for good, never coming back, buying a house in Thailand, severing all ties with Australia etc.

 

And Yes, if you do this then you are a non-resident for taxation purposes, no Tax free threshold, higher tax rates, different CGT etc. In reference to your original question, if you are non longer a resident for taxation in Australia, that would negate any dual taxation reporting requirements in Australia.

 

As I said in an earlier post, Its not hard to keep "resident for taxation purposes", The ATO has an online calculator. It asks questions like "do you intend to return", "are you leaving to live forever in another country" etc. If you answer coming back, not moving permanently etc, you can still be a "resident for Taxation". There is a big difference between going to live somewhere else, and being outside of Australia.

 

So far as the Australian Gov is concerned I am travelling the world , spending my savings, visiting my facebook friends, lol

 

If you keep "resident for Taxation" status in Australia its business as usual, same tax rates, do tax returns, declare income, dividends etc. One of the first questions on a tax return is "Are you a resident for taxation purpose's"

 

As for the Thai reporting requirements, lots of Europeans retire to Thailand for that very reason, the dont need to report or pay tax on income outside Thailand (unless it comes to Thailand in the same year etc), as they would need to do at home, avoiding taxation on worldwide income..

 

All the tax treaties, resident/non resident exsist to tax people that are "working" offshore, getting tax benefits in one country but being paid in another etc, its about "Tax avoidance". Price Waterhouse has whole departments that deal with offshore workers, expats and taxation. 

 

If your not doing any structured Tax avoidance, lodging returns in Australia, declaring income and "paying any tax due", I dont think you would be of any interest to the ATO or the Thai equivalent.

 

 

 

 

 

[4MyEgo]

4 hours ago, BaanOz said:

Not bad but on the otherhand you can't claim loses back.

I'm just wondering about the actual switch when you become a non-resident for tax. I understand this will mean a CGT event on any shares you hold prior.

Not sure of the mechanics but anyone know if this CGT is just reported to the ATO (and pay any tax) or should you (or better to) sell shares you hold at the time?

Thanks.

I only invested in the share market in the new financial year at the time which coincided with the time required of me to be a foreign resident, so no CGT even from my part.

 

If you did hold shares at some point in time and you sold them later, I wouldn't think about letting the ATO know as you didn't sell them or are going to sell them until you become/became a foreign resident, in other words, no CGT even was made until you became a foreign resident, so no CGT payable as a non resident on shares.

 

Too easy...next !!!

[4MyEgo]

3 hours ago, Peterw42 said:

Isnt the 10% withholding only for non residents ? I have been out of oz for more than 180 days and nobody is withholding any tax on interest.

Doesnt it all come down to resident/non-resident for taxation purposes ?

 

As per the online calculator on the ATO website, its not hard to keep "resident for taxation" status. The calc comes back with a determination and says "you are a resident for taxation, print this and keep on file".

 

Yes, the 10% withholding tax is for non residents, i.e. if you are retaining your residency as an Australian resident, then you pay tax as per the tax scale, zero to $18,200 then 19c for every $1 up to $27,000 me thinks, then 32c for every $1 up to $37,000 and then 42c for every $ over 32c, me thinks again, plus the medicare levy which I think is now 2.5%

 

There are benefits for being a non resident and benefits for being a resident.

 

The way I see it as a non resident:

 

I eventually lose Medicare

 

I cannot vote

 

I have no $18,200 threshold so any income made in Australia is taxed at 32.5c in every $1, unless I have my money in the stock market which I do, suffice to say, if I buy shares that are fully franked (tax already paid by the company when it pays me my dividend) and no CGT, however it is an unfranked stock, i.e. (tax not taken out), then I have to pay 32.5c in every $1 of the dividend, so I avoid unfranked stocks as I don't want to do tax returns, i.e. I am retired 555

 

10% withholding tax taken out for money in the bank

 

I have to return to Australia for two years before I can get my OAP and satisfy CentreLink that I am there to stay, once approved, I can change my mind and take it with me overseas

 

I have weighed it all up and in my case for the next 8 years, its all happy days, i.e. if I return to collect, otherwise I will just keep going and making tax free $'s because as we know the cost of living here in Thailand is cheap, and not having to pay tax on Australian income via the stock market, just makes it that much better 555 

 

 

[Peterw42]

13 minutes ago, 4MyEgo said:

Yes, the 10% withholding tax is for non residents, i.e. if you are retaining your residency as an Australian resident, then you pay tax as per the tax scale, zero to $18,200 then 19c for every $1 up to $27,000 me thinks, then 32c for every $1 up to $37,000 and then 42c for every $ over 32c, me thinks again, plus the medicare levy which I think is now 2.5%

 

There are benefits for being a non resident and benefits for being a resident.

 

The way I see it as a non resident:

 

I eventually lose Medicare

 

I cannot vote

 

I have no $18,200 threshold so any income made in Australia is taxed at 32.5c in every $1, unless I have my money in the stock market which I do, suffice to say, if I buy shares that are fully franked (tax already paid by the company when it pays me my dividend) and no CGT, however it is an unfranked stock, i.e. (tax not taken out), then I have to pay 32.5c in every $1 of the dividend, so I avoid unfranked stocks as I don't want to do tax returns, i.e. I am retired 555

 

10% withholding tax taken out for money in the bank

 

I have to return to Australia for two years before I can get my OAP and satisfy CentreLink that I am there to stay, once approved, I can change my mind and take it with me overseas

 

I have weighed it all up and in my case for the next 8 years, its all happy days, i.e. if I return to collect, otherwise I will just keep going and making tax free $'s because as we know the cost of living here in Thailand is cheap, and not having to pay tax on Australian income via the stock market, just makes it that much better 555 

 

 

Its an interesting comparison because it appears similar circumstance but I am a resident and you are not.

I'm not understanding the advantages of being a non resident. 

Surely an 18k tax free is an advantage. I dont get any tax withheld on savings or interest. We both dont pay tax on franked dividends but I can use the 30% already paid against any other taxable income. eg: I get rent and interest above the 18k that is taxable but the tax already paid on dividends offsets this tax liability, and I dont pay any, most years I get a refund.

 

Some rough figures for an example. Lets say an income of $20,000 in rent, $5,000 in interest and $5,000 in franked dividends. Gross income 30k, less 18k tax free, less a couple of deductions of 2k, leaves a taxable income of $10,000. Tax of around $2,000 owing. But I have already paid $2000 tax via franked dividends, so no tax payable.

 

How would those same figures work if a non-resident ?

[BaanOz]

19 minutes ago, 4MyEgo said:

If you did hold shares at some point in time and you sold them later,

Thanks.

Just found this at the ATO website and had to read it 1/2 doz times but I think if you do not sell shares before you become a non resident you are liable for any CGT for the total time they are held.

https://www.ato.gov.au/General/Capital-gains-tax/International-issues/Changing-residency/

Under "Choosing to disregard capital gains and losses".

The effect of making this choice is that the increase or decrease in the value of the assets from the time you cease being a resident to the time of the next CGT event, or of you again becoming a resident, is also taken into account in working out your capital gains or losses on those assets. The way you prepare your tax return is generally sufficient evidence of your choice.
 

[Peterw42]

40 minutes ago, BaanOz said:

Thanks.

Just found this at the ATO website and had to read it 1/2 doz times but I think if you do not sell shares before you become a non resident you are liable for any CGT for the total time they are held.

https://www.ato.gov.au/General/Capital-gains-tax/International-issues/Changing-residency/

Under "Choosing to disregard capital gains and losses".

The effect of making this choice is that the increase or decrease in the value of the assets from the time you cease being a resident to the time of the next CGT event, or of you again becoming a resident, is also taken into account in working out your capital gains or losses on those assets. The way you prepare your tax return is generally sufficient evidence of your choice.
 

A capital gain is a capital gain, resident or non resident its taxable. Buy and sell shares, property or piccaso paintings, if you make a profit thats a capital gain, taxable at your nominal rate etc. A resident may get some principal residence CGT exemptions and a tax free 18k etc, A non resident pays a flat 32%.

If its a large capitial gain, the 32% rate is less than the top 50% resident rate.

[BaanOz]

AFAIK a non resident pays no CGT on shares.

[Peterw42]

12 minutes ago, BaanOz said:

AFAIK a non resident pays no CGT on shares.

CGT is not only property, its "any" capital gain, basically a capital gain on anything gets added to your taxable income. Its only that property has some exceptions and discounts depending on circumstances, and its usually a large amount and common so the Gov keeps track of it.

Buying and selling baseball cards for a profit attracts the same CGT. 

The main reason negative gearing exists is, just enough incentive, to let them know about your future capital gains liability.

[4MyEgo]

1 hour ago, BaanOz said:

Thanks.

Just found this at the ATO website and had to read it 1/2 doz times but I think if you do not sell shares before you become a non resident you are liable for any CGT for the total time they are held.

https://www.ato.gov.au/General/Capital-gains-tax/International-issues/Changing-residency/

Under "Choosing to disregard capital gains and losses".

The effect of making this choice is that the increase or decrease in the value of the assets from the time you cease being a resident to the time of the next CGT event, or of you again becoming a resident, is also taken into account in working out your capital gains or losses on those assets. The way you prepare your tax return is generally sufficient evidence of your choice.
 

I'm no tax expert, and I had to read it half a dozen times too, but I would think that this refers to Australian property, although they do use the word assets:

 

"This does not apply to assets you acquired before 20 September 1985 (pre-CGT assets) and assets that were taxable Australian property.

 

If you became a resident, the general cost base rules apply to any capital gains tax assets that are taxable Australian property".

 

Personally I wouldn't worry about it

[4MyEgo]

4 hours ago, Peterw42 said:

OP, a lot of this stuff comes down to what you disclose, declare, advise to the Australian Government. 

A lot of Australians (I think its the convict streak) seem to want to "stick it to the man", telling all the Government departments, I am leaving for good, never coming back, buying a house in Thailand, severing all ties with Australia etc.

 

And Yes, if you do this then you are a non-resident for taxation purposes, no Tax free threshold, higher tax rates, different CGT etc. In reference to your original question, if you are non longer a resident for taxation in Australia, that would negate any dual taxation reporting requirements in Australia.

 

As I said in an earlier post, Its not hard to keep "resident for taxation purposes", The ATO has an online calculator. It asks questions like "do you intend to return", "are you leaving to live forever in another country" etc. If you answer coming back, not moving permanently etc, you can still be a "resident for Taxation". There is a big difference between going to live somewhere else, and being outside of Australia.

 

So far as the Australian Gov is concerned I am travelling the world , spending my savings, visiting my facebook friends, lol

 

If you keep "resident for Taxation" status in Australia its business as usual, same tax rates, do tax returns, declare income, dividends etc. One of the first questions on a tax return is "Are you a resident for taxation purpose's"

 

As for the Thai reporting requirements, lots of Europeans retire to Thailand for that very reason, the dont need to report or pay tax on income outside Thailand (unless it comes to Thailand in the same year etc), as they would need to do at home, avoiding taxation on worldwide income..

 

All the tax treaties, resident/non resident exsist to tax people that are "working" offshore, getting tax benefits in one country but being paid in another etc, its about "Tax avoidance". Price Waterhouse has whole departments that deal with offshore workers, expats and taxation. 

 

If your not doing any structured Tax avoidance, lodging returns in Australia, declaring income and "paying any tax due", I dont think you would be of any interest to the ATO or the Thai equivalent.

 

 

 

 

 

The one very important fact which wil bring down a lot of Xpats is that you do not stay at any one place during your absence, meaning you visit other countries to establish that you do not have an abode overseas, i.e. a place a fixed (address) that you are at all the time.

 

I read the legislation a while back, as long and boring as it was, I did pick up, that an abode can be a park, get it, an abode could be a park, so if your not constantly moving around, your toast as far as the ATO is concerned, and yes there are other things taken into consideration, like do you have a home back in Australia, car, memberships with clubs, family etc etc

 

Keeping your residency is up to everybody's different circumstances, personally I would have kept my residency, but it wasn't up to me, i.e. the government did me a favour, to think that if I kept my property I would have to provide them with 32.5c in every $1 wasn't going to happen, especially after I couldn't be given the usual $18,200 threshold, just think about it, the ATO is loosing tax dollars from me every year, what has it gained by that, what Medicare will lapse for me, "big deal", I lose my voting right, again, "big deal", I get charged a flat rate of 10% withholding tax for money in the bank, and they don't allow me to have an Australian threshold of $18,200, idiots, I pay no tax through their legislation buying shares as a foreign resident, which includes no CGT, and if I want to get the OAP, all I have to do is return for 2 years meet the assets test and then go once approved.

 

So where are the benefits in retaining residency for me, I have my Citizenship, that's going no where quick.

 

The current set up works in my situation, i.e. retired and earning tax free $'s by investing in the ASX, and some one did mention in an earlier post that I can't offset any losses, well if your not savy enough to buy the right stock and sell when its down, well serves you right.

[4MyEgo]

2 hours ago, Peterw42 said:

Its an interesting comparison because it appears similar circumstance but I am a resident and you are not.

I'm not understanding the advantages of being a non resident. 

Surely an 18k tax free is an advantage. I dont get any tax withheld on savings or interest. We both dont pay tax on franked dividends but I can use the 30% already paid against any other taxable income. eg: I get rent and interest above the 18k that is taxable but the tax already paid on dividends offsets this tax liability, and I dont pay any, most years I get a refund.

 

Some rough figures for an example. Lets say an income of $20,000 in rent, $5,000 in interest and $5,000 in franked dividends. Gross income 30k, less 18k tax free, less a couple of deductions of 2k, leaves a taxable income of $10,000. Tax of around $2,000 owing. But I have already paid $2000 tax via franked dividends, so no tax payable.

 

How would those same figures work if a non-resident ?

As a non resident you would be crazy to own property for starters as you wouldn't get the $18,200 threshold, and be paying 32.5c in the $, the $5,000  withholding interest we know is 10% i.e. $500 and the franked dividends have no tax paid on them.

 

I would look at it this way, if you earned $20,000 in dividends, you have no tax threshold and no tax payable, the $5,000 interest sets you back $500 so you are $500 worse off as a non resident working on your scenario, however, you will PAY CGT on your investment property, whereas you won't pay any CGT on the shares you have purchased and sold.

 

Just doing the math for example on a million dollar property that was purchased say 5 years ago and doubled in value, so its now worth 2 million, less the million, buying and selling costs, for arguments sake there is a $900,000 profit, added to your taxable income for the financial year, assuming you earned $100,000, you would be up for about a third, i.e. $300,000 whereas if you made that kind of gain in the stock market, it would be tax free.

 

Being a non resident has its advantages, especially if you do not own property, owning property in Australia as a non resident is a curse, and there are more changes coming into play next year, i.e. the 6 year rule is out, anyone who though they could use the 6 year rule, i.e. no CGT is going to be in for a rude awakening.

[4MyEgo]

1 hour ago, Peterw42 said:

A capital gain is a capital gain, resident or non resident its taxable. Buy and sell shares, property or piccaso paintings, if you make a profit thats a capital gain, taxable at your nominal rate etc. A resident may get some principal residence CGT exemptions and a tax free 18k etc, A non resident pays a flat 32%.

If its a large capitial gain, the 32% rate is less than the top 50% resident rate.

Excluding the stock market if your a non resident

[4MyEgo]

1 hour ago, Peterw42 said:

CGT is not only property, its "any" capital gain, basically a capital gain on anything gets added to your taxable income. Its only that property has some exceptions and discounts depending on circumstances, and its usually a large amount and common so the Gov keeps track of it.

Buying and selling baseball cards for a profit attracts the same CGT. 

The main reason negative gearing exists is, just enough incentive, to let them know about your future capital gains liability.

Peter42 do you accept that buying and selling shares in the ASX as a non resident is tax free, just wanting to clear things up ?

[Peterw42]

1 minute ago, 4MyEgo said:

Peter42 do you accept that buying and selling shares in the ASX as a non resident is tax free, just wanting to clear things up ?

Buying and selling shares is subject to CGT, any gain is. If I buy telstra at $10 and sell at $20 thats a capital gain for a. resident.

I have seen contradictory information about non-residents CGT shares etc. It reads something like, CGT on shares were the company owns Taxable Australian property, land, controls land, leases land, mining rights etc. There would be a CGT on Telstra, Woolies, Santos because they own land, shopping centres and mining rights. But No CGT on a company that only has websites.

Its a very grey area and I dont know how it could ever be enforced.

[4MyEgo]

27 minutes ago, Peterw42 said:

Buying and selling shares is subject to CGT, any gain is. If I buy telstra at $10 and sell at $20 thats a capital gain for a. resident.

I have seen contradictory information about non-residents CGT shares etc. It reads something like, CGT on shares were the company owns Taxable Australian property, land, controls land, leases land, mining rights etc. There would be a CGT on Telstra, Woolies, Santos because they own land, shopping centres and mining rights. But No CGT on a company that only has websites.

Its a very grey area and I dont know how it could ever be enforced.

Nothing grey about it at all, the ATO and my accountant both agreed, no tax or CGT for foreign residents, on shares, fully franked shares that is, after all the Australian government has to attract foreign money into the country, stock market, etc etc

 

https://www.ato.gov.au/individuals/international-tax-for-individuals/investing-in-australia/interest,-unfranked-dividends-and-royalties/

 

The below is straight off the ATO's website:

 

"You do not need to lodge an Australian tax return if you are a foreign resident and your only Australian-sourced income was interest, dividends or royalties from which non-resident withholding tax has been correctly withheld".

 

The above meaning if your bank withheld the 10%, the shares withheld the tax prior to paying you your dividend, i.e. fully franked shares, and royalties would mean the same, nothing to do with what companies hold in Australia.

 

There is no way in the world I would be investing my money into the stock market if I had to pay tax.

[Peterw42]

14 minutes ago, 4MyEgo said:

Nothing grey about it at all, the ATO and my accountant both agreed, no tax or CGT for foreign residents, on shares, fully franked shares that is, after all the Australian government has to attract foreign money into the country, stock market, etc etc

 

https://www.ato.gov.au/individuals/international-tax-for-individuals/investing-in-australia/interest,-unfranked-dividends-and-royalties/

 

The below is straight off the ATO's website:

 

"You do not need to lodge an Australian tax return if you are a foreign resident and your only Australian-sourced income was interest, dividends or royalties from which non-resident withholding tax has been correctly withheld".

 

The above meaning if your bank withheld the 10%, the shares withheld the tax prior to paying you your dividend, i.e. fully franked shares, and royalties would mean the same, nothing to do with what companies hold in Australia.

 

There is no way in the world I would be investing my money into the stock market if I had to pay tax.

One is the dividends while you hold shares, yes tax already paid, the other is the capital gain when you sell shares, its 2 different things. 

As an example, The same as you may get rent while you own a house and a capital gain when you sell it. Your saying because the rent is tax free then the sale of the property later is tax free,

[4MyEgo]

22 minutes ago, Peterw42 said:

One is the dividends while you hold shares, yes tax already paid, the other is the capital gain when you sell shares, its 2 different things. 

As an example, The same as you may get rent while you own a house and a capital gain when you sell it. Your saying because the rent is tax free then the sale of the property later is tax free,

http://stanleywilliamson.com.au/cgt-rules-for-non-residents/

[mfd101]

When I was preparing to leave Oz permanently in 2015, my financial advisor said I could CHOOSE whether to remain a 'resident-for-tax-purposes' (even though no longer actually resident & not intending to be) or become a non-resident. There was no suggestion that I had to comply with a set of ATO rules or criteria. His advice was - in my circumstances - to remain a resFTP.

 

My circs were & are: Incomes (superannuation + pension-related investments) solely from Oz; no OAP & never will be because my superannuation well exceeds that. So I sign off on an Oz tax return each year, full of technical stuff about investment earnings & offsets etc, and no Thai tax to worry about. My Medicare card will run out in another 3 years & I will then cease to pay the Medicare Levy. All seems fine to me.

[BaanOz]

4 hours ago, 4MyEgo said:

I'm no tax expert, and I had to read it half a dozen times too, but I would think that this refers to Australian property, although they do use the word assets:

Thanks yes, think your right and I'm just trying to understand this! :)
I like doing some research before heading to the accoutant.

Something I found in my search is a thread talking about a few things mentioned here including CGT on shares for a non resident plus my concern about holding shares and converting from resident to non.
https://www.propertychat.com.au/community/threads/becoming-non-resident.14781/#post-300560

The accountant mentions you have two choices, report a capital gain (or loss) on your shares when becoming a non resident or defer but "must later calculate the resulting gain and apportion for the period between acquisition and the sale using the standard CGT rules (remember the loss of the discount!!)".

Yes, guess you would lose the 50% discount if you held shares over 12 months!

Don't think I need to actually sell shares but just report any CGT at the time of converting from resident to non.

Tricky this ATO.

[4MyEgo]

15 hours ago, Peterw42 said:

One is the dividends while you hold shares, yes tax already paid, the other is the capital gain when you sell shares, its 2 different things. 

As an example, The same as you may get rent while you own a house and a capital gain when you sell it. Your saying because the rent is tax free then the sale of the property later is tax free,

If the link I provided you earlier wasn't enough evidence for you to accept the clear difference between real property and shares in Australia for foreign residents, here is a copy and pasted note from the ATO

 

Foreign residents

Foreign residents who are individuals are subject to CGT on:

• direct interests in real estate located in Australia
• an interest in an entity where they and their associates hold 10% or more of the entity and the value of their interest is principally attributable to Australian real estate
• an asset they have used in carrying on a business through a permanent establishment in Australia
• an option or right to acquire one of the above.

 

Peter42 will you now accept that there is no CGT payable on shares for foreign residents ? 

[4MyEgo]

15 hours ago, Peterw42 said:

One is the dividends while you hold shares, yes tax already paid, the other is the capital gain when you sell shares, its 2 different things. 

As an example, The same as you may get rent while you own a house and a capital gain when you sell it. Your saying because the rent is tax free then the sale of the property later is tax free,

Here is another from another site, copy and pasted below, read the second last paragraph which I have highlighted in bold for you.

 

Taxation of non-property income after you cease residency - NonRes tax rates

• Dividends. Only unfranked income is taxed on a withholding basis (advise registry to avoid this obligation) If withholding has been deducted do not include in tax return. . Franked dividends are exempt. Do not include in a return.
• Interest. Also taxed ona withholding basis. Advise bank to deduct. If so do not include in return. If not withholding will be assessed (only). If paid to a non-bank seek tax advice !!
• All Australian source income must be declared. ie ignore foreign income paid by a trust.
• Capital gains and losses on shares in PUBLIC companies are ignored unless your own more than 10%. If a CGT event was deferred above then a CGT event will need to be calculated and reported on those investments.
• Ignore all non-Australian income of all sources

[4MyEgo]

12 hours ago, BaanOz said:

Thanks yes, think your right and I'm just trying to understand this! :)
I like doing some research before heading to the accoutant.

Something I found in my search is a thread talking about a few things mentioned here including CGT on shares for a non resident plus my concern about holding shares and converting from resident to non.
https://www.propertychat.com.au/community/threads/becoming-non-resident.14781/#post-300560

The accountant mentions you have two choices, report a capital gain (or loss) on your shares when becoming a non resident or defer but "must later calculate the resulting gain and apportion for the period between acquisition and the sale using the standard CGT rules (remember the loss of the discount!!)".

Yes, guess you would lose the 50% discount if you held shares over 12 months!

Don't think I need to actually sell shares but just report any CGT at the time of converting from resident to non.

Tricky this ATO.

These bastards don't leave any stone unturned do they !

 

Having read the comments in the site you provided, I would say YES you would either have to sell your shares as an Australian Resident and pay CGT, or defer them and pay CGT on their value at the time you become a Foreign Resident, a bit like if you had a property (investment) and then sold it at the time you became a Foreign Resident.

 

I don't know how many shares you hold and what income you make, but you are obviously are wanting to give this some serious thought with your accountant.

 

You might want to see if you can take a salary sacrifice putting the maximum $'s you can into your super, so as to reduce your income for the year you dispose of your shares.

https://www.ato.gov.au/Individuals/Super/Growing-your-super/Adding-to-my-super/Salary-sacrificing-super/

 

Depending on which way you chose, don't forget there is also a departing pro-rata threshold for when you have worked and departed in the financial year, i.e. for every month you worked, they credit that to you towards the threshold, e.g. 6/12 = half the threshold or something like that, I will search the ATO site and put it below for you.

https://www.ato.gov.au/individuals/ind/tax-free-threshold-if-you-are-leaving-australia-with-the-intention-to-reside-overseas/

 

 

 

[4MyEgo]

13 hours ago, mfd101 said:

When I was preparing to leave Oz permanently in 2015, my financial advisor said I could CHOOSE whether to remain a 'resident-for-tax-purposes' (even though no longer actually resident & not intending to be) or become a non-resident. There was no suggestion that I had to comply with a set of ATO rules or criteria. His advice was - in my circumstances - to remain a resFTP.

 

My circs were & are: Incomes (superannuation + pension-related investments) solely from Oz; no OAP & never will be because my superannuation well exceeds that. So I sign off on an Oz tax return each year, full of technical stuff about investment earnings & offsets etc, and no Thai tax to worry about. My Medicare card will run out in another 3 years & I will then cease to pay the Medicare Levy. All seems fine to me.

I think you will find that as you remain a resFTP your Medicare card should stay in tact because you are paying tax as a resident of Australia and the Medicare levy should be applied to it, you only lose Medicare if you are a non resident.