When planning your move overseas, it's vital to address your tax responsibilities first. Understanding your tax residency is key, as it determines whether you'll need to continue lodging Australian tax returns and declaring your worldwide income.

Utilising your MyGov account simplifies managing these obligations from abroad. Additionally, remember that study and training support loan repayments remain consistent, regardless of your location. Proactive planning in these areas ensures a smoother transition and avoids potential complications.

Determining Tax Residency

Even if you're living overseas, you might still be considered an Australian resident for tax purposes. This means you'll likely need to keep lodging Australian tax returns, which will include your worldwide income. To figure out where you stand, think about things like how long you'll be away, your ties to Australia, and whether you plan to come back.

The length of your overseas stay is a significant factor in determining your tax residency. A prolonged period overseas can lead to you being considered a non-resident for tax purposes. While there isn't a strict "time limit" for living overseas, you must keep the Australian Taxation Office (ATO) informed of your situation. This includes updating your contact details and understanding your reporting obligations. 

Reporting Your Income and Obligations

If you remain an Australian resident for tax purposes, you must report your worldwide income, including any foreign employment income on your Australian tax return. You can manage your details online through MyGov, for example, updating your contact info or checking your superannuation.

Additionally, if you have a Higher Education Loan Program (HELP) or other study support loan, you'll have the same repayment obligations as those living in Australia.

Capital Gains Tax (CGT) and Your Assets

Your assets may also be subject to capital gains tax (CGT) when moving overseas. If you sell your home in Australia while being a non-resident, you may be liable for CGT. 

However, if you meet certain eligibility requirements under the 6-year rule, you can continue to treat your home in Australia as your main place of residence for up to 6 years for CGT purposes. If you sell the property within 6 years, and meet the eligibility requirements, you may not need to pay CGT on the gain made from the sale. 

For more information about capital gains tax, please visit here.

Tax Treaties: Avoiding Double Taxation

When living overseas, it's also important to understand tax treaties, or double taxation agreements. These agreements between countries are designed to prevent you from paying tax on the same income twice in multiple countries.

These treaties often allow for tax credits, where tax paid in one country can be offset against tax owed in the other. For example, if you earn income in your new country of residence and have Australian tax obligations, a tax treaty can provide assurance that you won’t be double taxed. 

The specifics of each tax treaty vary, so it's essential to understand the agreement between Australia and your new country of residence.

Pensions and Living Overseas:

The impact on your Age Pension depends on how long you're away and your history of Australian residency. Short trips generally have minimal impact. However, longer stays can affect your pension payments.

Specifically, if you are overseas for more than 26 weeks, the amount of age pension that is payable to a person, is dependent on the person's length of residency in Australia. It is very important to notify Services Australia of your intentions to live overseas to understand how your specific circumstances will affect your pension.

Overseas Departure and Your Super:

Your superannuation remains subject to Australian rules, regardless of where you live. You generally cannot access it until you meet the standard conditions of release. Temporary residents who worked in Australia and accumulated superannuation can apply for a Departing Australia Superannuation Payment (DASP) when they permanently leave the country, provided their visa has ceased to be in effect.

Seeking Advice

We're here to assist you if you're planning an overseas move or already living abroad and want to learn more about your Australian tax obligations. Contact us

In summary, while you live overseas, the duration of your stay will influence your tax residency and pension entitlements. Clear communication with the ATO and Services Australia is crucial for a smooth transition. 

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