How to Take Advantage of Tax Laws as a Non-Resident Expat

26 July 2018
 Categories: , Blog


If you've moved overseas to pursue a different career opportunity or to take advantage of a more favourable tax regime, then you will need to look at all your tax obligations very carefully. This can be a difficult area to navigate, but the first thing to consider is whether you are classified as a "resident" or "non-resident" for tax purposes. From there, you can really begin to explore your solutions.

Shareholder Advantages

Many situations present themselves for those who are classified as nonresidents. These are people who have typically made a long-term move and do not expect to return for more than a few days at a time, during the next year. If you fall into this category, then you should look at investing in shares in particular companies, where a tax break is available.

Tax on Dividends

Some companies are expected to pay tax on any dividends that they issue to their shareholders. This is known as a "franked dividend" and can present the non-resident expat with a tax advantage. If you are eligible, you will receive a credit from the organisation in addition to the dividend, to certify that they have already paid the relevant tax to the ATO.

Furthermore, you may not even need to declare those dividends when you send in a tax return, so long as you continue to be a non-resident expat for tax purposes.

However, if you invest in a company that does not account for tax in this way, then your dividend may be subject to a non-resident withholding tax, which can be up to 30%.

Capital Gains

You may also have capital gains tax benefits as an investor. In your situation and in some circumstances, any gains made after an investment are not subject to capital gains tax, unless the company concerned is mostly involved in property investments. However, you do need to be careful here as if you subsequently become resident for tax purposes again, your shares may be reassessed at re-entry and this may affect your capital gains.

Where to Start

Very few areas connected to taxation are easy to understand, and this is especially true when it comes to expats. Perhaps the most important step is to make sure that you are either resident or non-resident, as this can have a considerable bearing on your liabilities.

Being Certain

Before you do anything else, talk with an experienced tax agent so that you are always on the right side of the equation.