Things you need to know before leaving Australia:
So you’ve landed yourself a new job overseas and you make plans for your trip. You go through your checklist of things to do – Air tickets? Check. Accommodation? Check. Currency? Check. Passport & VISA? Check. But wait, have you considered how your new job could affect the Australian taxes you pay?
Recovery of HELP and TSL debts from overseas Australians
Commencing 1 July 2017, the Australian Government has introduced changes to Higher Education Loan Program (HELP) or Trade Support Loan (TSL) obligations. This is part of an initiative to recover tertiary repayments lost to Australians going overseas beyond the reach of the Australian Tax Office. Previously being overseas meant you didn’t have to make compulsory repayments, but that has now changed.
This means that you if you plan to, or already reside overseas, for 183 days or more in any 12 months, will need to:
1. Submit an overseas travel notification.
- Notify the ATO within seven days of leaving Australia
- Continue to update your contact details via myGov
- Lodge a subsequent overseas travel notification if your residency changes when you come back to Australia
2. Lodge a worldwide income or non-lodgment advice.
- If income you earn in Australia and overseas (worldwide income) for the financial year is below the minimum threshold for reporting ($13,717 for 2016-17 year), you will need to submit a non-lodgment advice form.
- If worldwide income is above the minimum threshold for reporting a worldwide income advice or tax return must be lodged. Repayment thresholds are the same as for residents and for 2017-18 currently start at $55,874. The 2017 Budget announced a plan to reduce the minimum repayment threshold to $42,000.
- When declaring worldwide income to the ATO, all foreign income, deductions and tax paid must be converted into Australian dollars, using the average exchange for the Australian income year (1 July – 30 June).
No CGT exemption if selling your home whilst overseas
Yet to become legislation, the Government proposes that Australians that are non-residents for tax purposes will be ineligible for Main Residence Exemption if they are overseas when their property is sold. This represents a significant change to CGT Main Residence Exemption rules and can impact Australian citizens that are simply non-resident for tax at the time they sell. It will mean that you will be taxed on the full profit of your home if you sell whilst overseas and non-resident for Australian tax purposes at the time the contract is entered into.
This means that current (and ongoing) exemptions for occupying the property as your principle residence and partial exemption under the absence rule and using the property to produce income rules will not apply. The tax law will treat the property as it was an investment property that you have never lived in. It also means that people should be diligent and thorough in their record keeping for their properties and all associated costs of purchase, renovation and ownership.
The proposed transitional provisions will however, allow for foreign residents to access the CGT main residence exemption if the CGT event occurs on or before 30 June 2019 and the property was held before 7:30pm on budget night 9 May 2017.
So next time you have long term plans to travel overseas for work, it’s worth checking in with your trusted tax advisor to see what’s new with taxes and how it may affect you.