Question:
Going overseas – are you still a resident of Australia?
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
The question of residency is extremely important if you are going overseas. This is because the Australian tax system is based on residency. If you are going overseas on a permanent basis and cease to become a resident of Australia you are only taxed on Australian sourced income. Any income earned overseas is disregarded.
In a recent case, the taxpayer was a mechanical engineer who went overseas with his wife and was away for the 2006/07 and 2007/08 income years. He had sold his Australian property and worked in various countries, including Oman, United Arab Emirates, France, Korea and the UK.
However during all this time, he still maintained and used an Australian bank account.
He argued that he intended to live in the UK and had actually inspected various properties, but did not actually purchase any. He eventually returned to Australia in 2009 and continued living in Australia, buying a property in 2012.
The taxpayer lost the case in the Administrative Appeals Tribunal who held that because he did not seek to rent or lease premises personally in the UK and that he maintained an Australian bank account, his argument that he intended to live overseas did not stand up. Importantly when he filled in his official departure and arrival cards, he identified himself as a resident departing or returning or travelling to another country for business or employment.
Recent cases indicate that what you put on immigration departure cards has a very important bearing on determining your intention at the time of departing Australia. While it’s not the only test, it is a very important one. If you are intending to leave Australia on a permanent basis (and thereby cease to become subject to Australian tax laws in relation to overseas income) be very careful to ensure that you fill in your departure card correctly.
AATA604, re ZKBN and FCT
12 September 2013
Tony and Andrew Lovett
Disclaimer: The information contained in this publication is for guidance only and correct at the time of publishing. It should not be relied upon without obtaining professional advice regarding your circumstances. No responsibility for loss occasioned directly or indirectly to any person acting or refraining from acting wholly or partially upon or as a result of the material in this online publication or for any error in or omission from or external broken links within this online publication can be accepted by the publisher or any author, editor, contributor or consultant of any company referred to herein.
© Copyright Andrew and Tony Lovett – All rights reserved. No part of this publication may be republished in any form or by any means, electronic, photocopying, recording or otherwise without written permission.
