It’s your choice – and it can save you lots if you manage it right!

Australian tax Residency

Your Australian tax status will usually have a large bearing on the level of tax that you will pay in Australia, depending on the type of assets you own, when you plan to sell those assets, and where you derive your retirement income.

When you move overseas for an extended period you can usually choose whether you remain an Australian tax resident or become a non-Australian tax resident.

Care should be taken when making this decision. The difference between Australian resident and non-resident tax rates for individuals are as follows:

RESIDENT TAX RATES 2021-22 

Taxable IncomeTax on this income
0 - $18,200NIL
$18,201 - $45,00019 cents for each $1 over $18,200
$45,001 - $120,000$5,092 plus 32.5 cents for each $1 over $45,000
$120,001 - $180,000$29,467 plus 37 cents for each $1 over $120,000
$180,000 and over$51,667 plus 45c for each $1 over $180,000

FOREIGN RESIDENT TAX RATES 2021-22

Taxable IncomeTax on this income
0 - $120,000NIL
$120,001 - $180,000$39,000 plus 37 cents for each $1 over $120,000
$180,000 and over$51,667 plus 45 cents for each $1 over $180,000

Non-Tax Resident Status

To become a non-tax resident, the Australian Taxation Office (ATO) will use several rules in conjunction with your specific set of circumstances in determining your tax residency status. As a very general rule, if you are planning to move overseas for the long term (greater than 12 months), have established a home overseas (even if only rented) and have rented out your home in Australia, then you generally can become a non-tax resident of Australia. However, just because you can become a non-tax resident of Australia does not mean that you should. In our experience, many Australians that retire overseas should not give up their Australian tax status for financial reasons. Please be aware there are ways to retain your Australian tax residency status should you be in your best interest to do so. In saying that, the longer that you remain overseas, generally the higher the chance that the ATO may deem you to be a non-Australian tax resident. But even then, you do have options available to you to either reverse this decision or reset and start all over again.

Seeking advice

We understand that this can be a complicated area for most people. Our main point here is to seek help if you need to understand what’s best for you.

The team at Retire to Asia can assist in answering questions regarding this topic. We can help you determine what tax status is best suited for you and provide tips in how you can structure your overseas retirement to beast suit your tax status with the ATO. 

If you’d like more information or have any questions, please feel free to call 1800-961-377 or email info@retiretoasia.com.au and let the team at Retire to Asia help make your dream lifestyle a reality.