Speak with an Australian Expat Financial Adviser

Australian Expats who are non-residents for tax purposes may be able to invest in Australian Shares and other listed investments without accruing a Capital Gains Tax (CGT) liability with the Australian Tax Office (ATO). This is because Australian Shares and other listed investments are considered non-taxable Australian real property (non-TARP) and are therefore treated differently by the ATO. Accordingly, this offers an effective way to build wealth as an Australian Expat. However, care should be taken in understanding any CGT in your overseas location.

Dividends from shares paid to a non-resident Australian Expat are subject to minimal to no income tax payable to the ATO. This is because shares are generally considered non-taxable Australian real property (non-TARP) and are subject to ATO withholding tax rules. Dividends received from Australian shares can be subject to a flat rate of withholding tax between 15% and 30% of the dividend, depending on your location overseas. However, where there is a franking (tax) credit attached to the dividend, this can be used to offset the entire amount of withholding tax. Dividends paid from international shares are considered conduit foreign income by the ATO. For this reason, these dividends are not assessable income and are exempt from taxation in Australia.

Expats may elect to apply the ATO’s deemed disposal rules (similar to an “exit tax”) to assets such as shares and other listed investments when they depart Australia. The deemed disposal rules operate so that an Expat is “deemed” to have disposed of certain assets at their market value as at date of departure. It is important to remember that the use of the deemed disposal rules is voluntary and there are various pros and cons to consider (depending on your circumstances) when deciding to apply these rules. Further, these rules only apply to assets considered Non-Taxable Australian Property (Non-TAP). Therefore, they do not extend to real estate assets.

Many popular share brokerage services in Australia generally prohibit access for Australian Expats because of their overseas residency status. There is also the issue of finding a platform that correctly withholds tax under the foreign resident withholding tax (WHT) rules. If tax is not withheld under the WHT rules, you may be required to file a tax return in Australia to ensure compliance with the ATO. Accordingly, it is crucial to an expat’s wealth management strategy that they choose to invest with a compatible platform that is not adverse to their overseas location.