Source
r/fiaustralia•
Runckey

Any Kiwis here know about the foreign income exemption for temporary residents?

I'll be moving across the ditch soon to Australia and trying to figure out the most tax efficient ways to invest. Apparently temporary residents in Australia are exempt from paying tax on foreign income including not paying CGT on non 'taxable Australian property'

New Zealanders are issued a temporary visa (SCV) and as long as they arrived after 2001 (and don't have an Australian spouse) are not considered Australian residents.

It seems sensible that I should take advantage of this exemption to avoid CGT in particular. I'm hoping someone understands this a bit better than me and can explain:

  1. It appears that shares are not considered 'taxable Australian property'. Does this mean that any ETFs I purchase on the ASX are exempt from CGT (even if they include Australian shares)?

  2. Is it possible to get a super provider to acknowledge this exemption? If not, would it be better to not salary sacrifice and just invest my after tax income (before tax salary of ~$110k). I'm not planning to live in Australia my whole life, but I know I should be able to get my super transferred back to my kiwisaver.

  3. Is it as simple as not declaring any CGT or foreign income to the ATO? It appears even the ATO might be confused by this little loophole

Posted Feb 5, 2019, 9:34 AM UTC

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redditcomment1•

Short answer:

You will pay no CGT on the sale of AUS or International shares, including any ETF's you buy on the ASX.

You will pay no tax on dividends received from International shares, and no tax on Australian franked ones, however Australian non-franked dividends will be subject to tax.

Super- not relevant I believe, I don't think theres any way of getting this exemption applied to your super howéver note super is subject to different taxation rules anyway. I would contribute', but not salary sacrifice assuming you are under 50 and plan to retire early (anywhere).

Your accountant should be able to handle putting the figures in the right boxes, as long as you note to them you are a kiwi in AUS- make sure you do this.

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3
RunckeyOP•

Thanks for that summary, good to have confirmation.

Your accountant should be able to handle putting the figures in the right boxes, as long as you note to them you are a kiwi in AUS- make sure you do this.

Is it necessary to have an accountant do this? My situation isn't particularly difficult as I don't own any NZ property. I only have 1 NZ share fund and my Kiwisaver, and the rest of my investments are ETFs that I bought on the ASX anyway. I'm just wondering if you would need to declare tax exempt income to the ATO and not pay any tax or not even declare it.

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redditcomment1•

When you move here you'll find you need to submit a tax return every year vs NZ where you don't necessarily.

As part of this you can DIY or use an accountant which for a basic return costs $150-200 p/a.

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iamastreamofcreation•

My accountant explained that I would end up paying more take on my ordinary earnings if I indicate I'm not an Australian for tax purposes. I think he explained you get chucked in the highest tax bracket, and possibly miss out on the tax free threshold

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RunckeyOP•

I'm pretty sure the rules for 'Australian resident' and 'Australian resident for tax purposes' are different. You can be a temporary resident while still being a resident for tax purposes

From the ATO:

You do not have to pay tax on most of your foreign income if you:

are an individual who is an Australian resident for tax purposes, and satisfy the requirements of being a temporary resident.

So income tax on Australian sourced income should be just normal, whereas we would be exempt from foreign sourced income and CGT on non real Australian property

3