Navigating the tax implications of living overseas or returning to Australia requires more than just understanding two tax systems. With over 1.35 million Australians expected to be living abroad by 2030, and many holding international investments, inheritances or planning a return home, strategic planning becomes essential.
This article builds on themes explored in Craig Holding’s previous pieces, including:
Key 2025 changes to Australia’s Foreign Resident Capital Gains Tax
Why Australian expats should consider a Superannuation refresh
1. Report All Income, Even If Taxed Abroad
One of the most common mistakes Australians make is assuming that paying tax in one country clears their obligations in another. Australia’s double tax agreements don’t exempt you from reporting income. Treaties usually allocate taxing rights between countries, but you are still required to disclose global income to the ATO.
Key point: Declare all foreign and Australian income, and claim foreign tax credits where applicable.
2. Residency for Tax Purposes Isn’t Always Clear
You don’t need to spend 183 days in Australia to be classified as a resident. The statutory residency tests under Australian tax law (Subsection 6(1) of the Income Tax Assessment Act 1936) include:
- The Ordinary Concepts Test (do you ordinarily reside in Australia?)
- The Domicile Test
- The 183-Day Test
- The Commonwealth Superannuation Test
Meeting any one of these can trigger tax residency, meaning your entire global income is taxable in Australia (ATO Ruling TR 2023/D1).
3. Withholding Tax Can Be a Final Liability
If you are a confirmed non-resident with no other Australian income, and you notify your bank or payer correctly, withholding tax may be your final Australian liability. For example, a 10% withholding tax on interest income is considered a final tax in many cases.
However, if the payer isn’t notified, or if you have other income, you may still need to file a return.
4. Superannuation Rules Differ Based on Where You Are
- Departing Australia on a temporary visa? You may be eligible for a Departing Australia Superannuation Payment (DASP), taxed at up to 65% for some components. (
- Returning to Australia? You can’t access your super early unless you’ve met a condition of release (e.g. retirement). Once eligible, super income is generally tax-free up to the cap ($1.9 million from July 2024 per the Budget 2024–25).
- Transferring pensions from overseas (e.g. UK SIPPs) requires using a Recognised Overseas Pension Scheme (ROPS). Transfers are treated as non-concessional contributions and count toward the annual or bring-forward caps (HMRC).
Eligibility for DASP and applicable tax rates depend on visa class and the nature of your superannuation contributions. Individuals should refer to the ATO or a qualified tax adviser to confirm their position. GSB does not facilitate DASP applications or provide advice on the tax treatment of superannuation withdrawals.
5. Insurance Coverage May Not Travel With You
Many expats assume international or private health insurance is valid across countries. But unless your policy explicitly provides coverage for your country of residence, you may be at risk. Additionally, if you’re returning to Australia, you may be liable for the Medicare Levy Surcharge unless you have private cover in place with an Australian provider from the correct start date.
Action point: Always review whether your health and life insurance remains valid after a move.
6. Receiving an Inheritance May Trigger Reporting
Australia has no inheritance or gift tax, but income earned from inherited assets is taxable. For example, rental income from an overseas property inherited from a parent must be declared. If you inherit more than AUD 250,000 in foreign currency or assets, the ATO may require additional reporting under the Taxation of Financial Arrangements rules. This is a complex area of law, and specialist tax advice is essential before making any financial decisions involving foreign inheritances. Foreign currency fluctuations can affect the tax outcome, even if the asset’s value hasn’t changed locally.
7. Track Foreign Currency Exposure
Capital gains and foreign exchange fluctuations can result in unrealised taxable events. For example, selling a property or converting foreign funds may result in a gain when converted into AUD, even if the asset value hasn’t changed in local currency.
This is particularly relevant if you’re receiving lump sum payments, inheritances, or transferring assets across borders. Maintain detailed records of exchange rates, transfer dates and original values for every transaction.
6. Track Foreign Currency Exposure
Capital gains and foreign exchange fluctuations can result in unrealised taxable events. For example, selling a property or converting foreign funds may result in a gain when converted into AUD, even if the asset value hasn’t changed in local currency.
This is particularly relevant if you’re receiving lump sum payments, inheritances, or transferring assets across borders. Maintain detailed records of exchange rates, transfer dates and original values for every transaction.
8. Choose a Specialist With Cross-Border Knowledge
Many traditional accountants and advisers are not equipped to handle multi-jurisdictional planning. Look for a tax adviser with international experience and preferably part of a global network. This ensures they can coordinate filings and structure your finances in a way that avoids duplication, tax inefficiencies and compliance errors.
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Contact GSB today if you would like to discuss any of these matters with our in-house team.
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Disclaimer
This article is for general information purposes only and does not constitute legal, financial or tax advice. GSB Capital Ltd does not provide tax advice. The information is intended for Australian expatriates, including those residing in the United Arab Emirates (UAE), who may face complex cross-border tax considerations. It draws on publicly available sources including the Australian Taxation Office (ATO), HM Revenue & Customs (HMRC), the 2024–25 Australian Federal Budget, Morningstar Australia, and PwC. While the information is believed to be accurate at the time of publication, tax laws, residency definitions and reporting obligations are subject to change and will vary depending on your personal circumstances. You should always seek independent, personalised advice from a qualified tax professional in your jurisdiction.
GSB Capital Ltd is registered with the Dubai International Financial Centre (DIFC), licence no. CL4377, and is regulated by the Dubai Financial Services Authority (DFSA), reference no. F006321.