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Moving overseas? Check your tax status first
While moving overseas for work can be an opportunity for workers to enhance future career prospects, they are being warned to know their tax status.
Moving overseas? Check your tax status first
While moving overseas for work can be an opportunity for workers to enhance future career prospects, they are being warned to know their tax status.
In a conversation with nestegg, H&R Blocks director of tax communications Mark Chapman explained the tax implications for Aussies looking to work overseas.
The tax professional explained it all depends on whether the Australian Taxation Office considers the individual to be an Australian resident for tax purposes.
“If you’re going overseas for good, for example, if you move to the UK because you get a job over there, you might buy a house, hook up with a partner, you decide to stay in the UK, you sever your tax ties to Australia and you no longer have to pay Australian tax,” Mr Chapman explained.
Mr Chapman explained income earned in Australia will still be taxed in Australia, but foreign income will no longer be taxed in Australia.
“In relation to any income that arises in Australia – for example, a rental property – you would still have to pay tax in regard to that. In terms of your UK income, the ATO could no longer touch that,” Mr Chapman continued.
The tax specialist explained the tax rules change for individuals who are only leaving temporarily and plan to return to Australia.
Mr Chapman explained: “In a scenario where you might move to the UK for a period of time but you always tend to come back, in that situation you’ll often have to pay tax here in Australia in relation to your UK income because you have not severed your tax ties with Australia as you’re still regarded as a tax resident in Australia.
“Where the dividing line between going for good and going temporarily is quite a grey area. So, it’s definitely worth while taking advice just to determine whether you’ll have an Australian tax liability.”
Who counts as an Australian tax resident?
The ATO considers an Australian overseas as a tax resident if they:
- Reside in Australia
- Have a permanent home in Australia
- Have spent more than half of the financial year in Australia
- Are a government employee working at an Australian overseas post
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