Temporary Residents – Australia’s Tax Concessions for Expats

A range of income tax concessions are available to individuals who become resident of Australia and who qualify as temporary resident.

Many have the impression that Australia is a very high taxing country with very few tax concessions.

While that may be true in many cases, Australia also has very generous tax concessions in relation to temporary residents.

Australia, being a worldwide tax regime, taxes its residents on their worldwide income.

This means that if you move to Australia any foreign investment income your have will be taxable here.

Can you be a “temporary resident”?

If you are the holder of a “temporary resident” visa, and provided your spouse is also not an Australian citizen or permanent resident then you will qualify as a temporary resident and you can take advantage of these generous concessions.

This would mean that you would not be required to pay tax on your foreign investment income in Australia, even if you bring that income in Australia.

It is also the case that you would only be subject to capital gains tax in Australia on a very narrow range of assets, which would typically only include Australian real estate investments.

Foreign sourced capital gains would not be taxable in Australia.

This makes Australia a very compelling jurisdiction for foreign nationals to move to on a temporary basis without having to worry about all the complexity associated with bringing foreign investment “on shore”.

However, if you move to Australia and then decide to become permanent resident or if your spouse becomes an Australian citizen then you would cease being a temporary resident for tax purposes.

Note that the definition of “spouse” includes a person who you are legally married to or who you live with on a genuine domestic basis as a couple.

If you have questions about your eligibility to this very important tax concession, please reach out to CST Tax in Sydney and we would be happy to advise you further.