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COVID19: Tax Residency Update

Australian expats who have had to come back to Australia because of the corona virus pandemic, should recognise what it may mean for their income tax position. 

The latest advice from the Australian Taxation Office on this issue can be found here

The ATO’s view is that if you are an Australian expat and you are temporarily in Australia for some weeks or months because of the corona virus, then you will not become an Australian resident for tax purposes as long as you live overseas and intend to return as soon as possible.

However, the ATO guidance acknowledges that tax residency issues can become more complicated if the non-resident ends up staying in Australia for lengthy periods or does not plan to return to their overseas country of residency.

The ATO guidance also acknowledges that there will be unique situations with a range of potential tax outcomes.

Even though we are in the midst of a crisis a number of far reaching implications will arise if a person incorrectly classifies themselves for tax residency purposes. 

These can range from not declaring income which has become taxable in Australia and also incorrectly calculating capital gains (or losses) if the incorrect tax residency date is chosen. 

The ATO will expect people to take advice and make reasonable enquiries in situations where they are not sure of their income tax status.

CST Tax Advisors can assist Australian expats with expert advice in this area.

Expats and COVID-19: Beware of the issues other than health!

One of the key points coming out over the recent weeks about COVID-19 is the unintended impact it has had on the movement of global expats.

While many global expats are naturally focused on the potential health effect of the virus on themselves and their families – other more costly negative impacts are lying in wait to cause major issues.

Please read on and be careful COVID-19 does not hit you in ways you don’t expect.

Rushing to become an expat

Our evidence is that many companies and businesses are speeding up the deployment of expat executives to beat border shutdowns which are anticipated to come into effect.

While this is understandable from an employer perspective – making an employee move sooner than they plan – can negatively impact them in the areas of:-

  • tax management,
  • insurance planning for both life and property,
  • investment and pension management,
  • housing,

and more generally across the spectrum of their lives.

People need ‘time to plan’ in the above areas to make sure they get it right.

Leaving your home country sooner than you intend can trigger a tax disposal of your worldwide assets for tax purposes in some countries like Australia and Canada. Thus, being sure of the market value of some assets and being clear about what assets you are ‘taking’ into the new host country is important.

If you are speeding up your departure – things will slip through the cracks.

These mistakes can be challenging to recover from.

For example, you may arrive in your new country – uninsured medically (you or your family) and then suffer a health incident – COVID-19 or non COVID-19.

Wittingly or unwittingly there can be serious problems caused by failing to plan.

A recent case of a client moving to the US is illustrative.

The client left their home country and their family home empty as they planned to rent it.

This dragged on for a couple of months and they failed to notify their insurer of their move overseas or that the house was empty.

Following a storm and some rain damage – quite normal – the insurer denied the claim for water damage on the basis that the home roof leak would have been noticed earlier in the ordinary course of events (if they were living there as per their insurance coverage) and the excess water damage was greatly exacerbated by them being absent from the home.

Simple issues like this can be avoided by planning and working through our Expatland checklist.

Beware of hurrying home

Likewise – expats scurrying home can leave a host of other issues unresolved.

Many employees have stock options or other share plans. Not considering the consequence of arriving home with these share plans means – no time to plan and tax liabilities being triggered when they might otherwise have been managed.

Coming home earlier than you plan might mean that the cost base of assets you bring into a country, like shares, happens when the share price is much lower than what you bought the shares for.

Australia, for example, would give a deemed cost to a returning Australian expat based on the market value of the shares at the date they resumed Australian tax residency.

As global stock markets have been in ‘free fall’ many expats will be return home with their international share portfolios – in loss territory.

A year or two from now these shares may be back up to what they originally cost.

However, that is a ‘capital gain’ in the eyes of the Australian Tax Office.

Selling the shares ‘at cost’ would yield a capital gain.

Apart from tax, a returning expat has to deal with cancelling leases or leaving behind financial obligations in their host country. This might be a long-term saving plan contract – which requires you to make a monthly payment – which is no longer something you want to do when you leave the country and return home.

There may be penalties if you stop making contributions to some savings plans.

Hurrying up to get home – can be just as fraught with financial risk management issues as leaving for Expatland.

Our advice is for you to think carefully through any move and to realise that the Expatland Global Network is here to help you.

Our E-Teams are full of experienced professionals who know what to do in most situations. They can very quickly provide you with the advice and guidance you need to ensure you are fully aware of the consequences of your move. Once you know understand the risks, you can make more informed decisions.

For more info on how to cope with these and other issues please contact us and we’ll be happy to connect you with an E-Team member that can assist.

Enjoy the journey and keep safe!

James Cowper Kreston Budget Update

The Chancellor of the Exchequer will unveil the new Government’s first budget on 11th March 2020.

Our London E-Team Co-Group Leader, James Cowper Kreston, are hosting 2 seminars and a webinar at which they will cover the main changes that have been announced and how these will impact you and your business.

During the events particular attention will be given to any changes in:

  • Tax efficient profit extraction
  • R&D tax relief
  • Capital allowances
  • Tax planning opportunities
  • VAT & Customs Duty
  • Tax allowances
  • Inheritance tax
  • Capital gains tax

Date: Thursday 12 March 2020

Locations and time:

Newbury Racecourse, Newbury, 8.00am -10.30am (local time)

Solent Conference Centre, Southampton, 12.15pm -2.30pm (local time)

Webinar, your desk, 1.00pm -1.45pm (local time)

To Attend:

Please email Lizzie Uzzell stating which event you would like to attend.

Please click here to register for the webinar.

Relocate Migrate (UK) – Job Opportunities Abroad

Expatland E-Team members Canstaff and Heartland Immigration, are running a roadshow to assist UK residents looking for work abroad.

The roadshow will run throughout the UK in 6 key locations and will provide information and assistance regarding immigration, property search, foreign exchange and expat insurance in addition to job placement.

The Roadshow location and dates are as follows.

March 16, 2020 – Glasgow

March 17, 2020 – Middlesbrough

March 18, 2020 – Sheffield

March 19, 2020 – Birmingham

March 21, 2020 – Swindon

March 22, 2020 – London

For more information visit the website.

Change in Capital Gains Tax Exemption All Australian Expats Need to Know

The proposed removal of the main residence exemption on capital gains tax (CGT) for non-residents was met with criticism when it was first introduced in 2017. Although the Bill lapsed, a recent reworking was brought back on October 23rd, 2019. 

So, what’s new? More importantly, what does this mean for Australian expats who still own a former main residence?  

Changes with the main residence exemption for non-residents 

As a revisal of the original Bill, this new proposed measure delays the inevitable loss of the CGT exemption. Two primary changes have been introduced. The first is simply an extension of the transitional concessions. 

This concession applies for expats who owned a primary residence on May 9th, 2017. Existing Australian expats now have until June 30th,2020, to sell their main residence under the existing rules. (Previously they had until June 30th, 2019). 

The new Bill also introduced some exceptions whereby a non-resident may be able to access the main residence exemption. These exceptions apply in the event of death, terminal medical conditions, or divorce. However, these events must occur within 6 years of becoming a non-resident. This ensures that the 6-year absence rule can still be accessed by expats who face such unexpected life events.  

Retrospective application means there will be no expat CGT main residence exemption for any foreign resident.

It’s not all that often that major tax changes are applied retroactively. In this case, it does. Anyone who purchased their primary residence before a hint of these changes existed will still be caught by them. 

Were you a foreign resident with a main residence property held on May 9th, 2017? The main residence exemption will only apply for non-residents if you sell prior to June 30th, 2020. Of course, you still need to meet the usual requirements for main residence CGT exemptions. If you wait, then you’ll miss out. You won’t even be able to apply for a partial main residence exemption.  

No relief for long-term main residence

Imagine this scenario. 

You purchase and live in a home from 1989 through to 2019. You’re then given the opportunity of a lifetime and make a permanent move overseas. You put your home up for sale immediately. However, by the time your property sells, you are a non-resident for Australian tax purposes. This means you are hit with a CGT bill on the capital gain. It doesn’t matter how long you previously lived in the property. You don’t qualify for any exemption. On top of this, you’re missing out on potential capital gains reductions. That’s because you didn’t think it was necessary to keep the relevant records for the 20 years that you lived in the property.  

Anyone who purchased their main residence after May 9th, 2017 will be caught under the new laws when they sell as a non-resident. Whether they sell now or next year, they will be subject to the full CGT. 

Time To Act

While the Bill hasn’t passed into law yet, it is important to strategise. Be prepared for what it may mean for your situation and plans so that you have your contingencies ready and, if necessary, put any immediate plans into action. While CST Tax Advisors and other accounting bodies will continue to address the concerns with this measure, it’s important that you understand how these measures could impact you. 

 

Contact CST Tax Advisors to discuss your current situation and assess your options.

IAM Comments on Proposed New Rule Affecting Expats Moving to the USA

The president of the International Association of Movers (IAM), Charles White, recently submitted comments on the Customs and Border Protection Bureau regarding the Proposed Rule: Customs Broker Verification of an Importers’ Identity.

The proposed rule requires importers to provide additional information to U.S. customs brokers with the purposes of verification of the importer’s identity. The rulemaking requires the following details:

  • Email and business website
  • Business registration details
  • Recent credit report 
  • License with state authorities

In the submitted comments IAM challenges that the proposed elements are not applicable for individuals who don’t own a business and are just importing their used household goods and personal effects into the U.S. 

IAM states that “These requirements are clearly written for companies that import goods into the U.S. but do not recognize that people like our clients import goods as well.”

Expatland is a member of the IAM and we fully support the view that individuals moving their personal possessions to the U.S. should be exempt from these new requirements.

UK Roadshow – Job Opportunities Abroad

Expatland E-Team member Canstaff and Heartland Immigration, a global recruitment and staffing service providers are running a roadshow to assist UK residents looking for work abroad.

The roadshow will run throughout the UK in 6 key locations and will provide information and assistance regarding immigration, property search, foreign exchange and expat insurance in addition to job placement.

The Roadshow location and dates are as follows.

Oct 28,2019 – Glasgow

Oct 29, 2019 – Middlesbrough

Oct 30, 2019 – Sheffield

Oct 31,2019 – Birmingham

Nov 2, 2019 – Swindon

Nov 3, 2019 – London

For more information visit the website.

Harmony Relocation Network

Harmony Relocation Network and Expatland Global Network form Worldwide Agreement

Harmony Relocation Network, a global cooperative network of locally owned relocation companies and Expatland Global Network have today formed a worldwide agreement.

Harmony Relocation Network members that hold FIDI’s FAIM certification have the opportunity to co-lead Expatland’s E-Teams to develop their businesses and help global expats heading to Expatland.

FIDI is the global alliance of professional international moving and relocation companies. The FAIM certification plays a key role in maintaining standards within the international moving and relocation industry.

Harmony Relocation Network was founded in 1992 and consists of over 140 members in 60 countries, serving 180 countries across six continents, providing the same high level of high quality services, local expertise and personal commitment.

The Expatland Global Network is made up of E-Teams. Operating at city level, they have essential local knowledge and insight. They cut through complexity and drill down to the issues that are relevant to specific locations.

John Marcarian, founder of the Expatland Global Network, says, ‘We are very pleased that Harmony Relocation Network members will co-lead our E-Teams. We take comfort in knowing that these companies are highly qualified and globally recognised. We are very pleased to work with Harmony Relocation Network to ensure our members are moved by the best.”

Paul Bernardt, Managing Director, Harmony Relocation Network, comments: “The Expatland Global Network is a true innovation developed by John Marcarian. We believe that the Expatland Global Network offers an excellent integrated platform to assist global expats on the move. We are very pleased that our members now have the opportunity to lead Expatland’s E-Teams across this dynamic and growing network.”

 

‘Expatland’ origins

Expatland began as a book, written in 2015 by John Marcarian, as a result of John’s personal expat journey. Its focus was to help expats plan their move overseas.

 

E-Teams around the globe

The Expatland book was just the start. To solve the problem of lack of support for would-be expats, John launched the Expatland Global Network in 2018.

The Network is expanding rapidly. There are now E-Teams in more than 20 cities, including Sydney, Melbourne, Auckland, Prague, Budapest, Hong Kong, London and Singapore. With best-in-practice members recognising the importance of this service, many more will follow.

Businesses interested in joining an E-Team in their city can get in touch with Expatland: http://www.expatland.com/contact/

 

About Harmony Relocation Networkhttps://www.harmonyrelo.com/

Relocation is more than just moving people. It’s about moving people’s lives. That’s why, whatever we do, we do it with our heart and soul, striving to surpass the expectations of the people we work and care for.

Our global network was founded in 1992 with a focus on Europe and the USA. In the late nineties, the global expansion began, mainly because our customer base was also expanding. The network first expanded to Australia and Asia. Middle East, Latin America and Africa quickly followed suit.

 

 

International Association of Movers Conference

Our Founder, John Marcarian, will be attending the 57th Annual Meeting & Expo of International Association of Movers (IAM) to be held on 3rd October 2019 in Chicago, Illinois.

We invite Harmony Relocation Network members with FAIM certification to book a meeting with John to discuss the opportunities of joining an E-Team in our network

To book a meeting please email concierge@expatland.com

How to be an Expat

Our Founder John Marcarian, who has spent most of his life in Expatland, (A virtual country where expats live) was recently featured in Business Life. John talked about his experiences as an expat in Expatland.

He stresses that expats should always plan their departure before making the move.

John advises,” As an expat, one should plan for everything before departure, place to live, which school to send the children to and  even read your employment contract, even though you are being transferred to another branch of the same company, the local rules might be very different.”

You can read the full article at Business Life article July 2019