Australian Income Tax
Potential Tax Implications of an International Move
It is a really good idea before you leave your home country and before you arrive in Australia to get some basic (or complex, depending on your personal position) Australian income tax advice from both your accountant at home and a tax professional in Australia. You can also get advice from someone who has tax experience (and the accreditations) for both countries.
This is particularly relevant if you are moving to Australia on a permanent residence visa as when you arrive in Australia to live you are “deemed” to become an Australian tax resident on the day you arrive in Australia to live. You are also “deemed” to have acquired all assets, foreign and domestic (in and outside Australia) on the day you arrive to live. Australia also taxes all permanent residents for tax purposes on all their worldwide income, regardless of source. This means if you have a rental property outside Australia, you will need to pay tax in Australia on this rental income at your personal tax rate.
This could have some tax implications for you if you do not get some good tax advice so that you aren’t presented with any unexpected tax bills or associated issues at a later stage.
Most migrants are really fortunate that Australia does have treaties for the avoidance of double taxation with most countries where migrants move to Australia from. Essentially this means that the Australian Taxation Office (ATO) will give you a credit for tax paid in a country where a double tax treaty exists. A list of countries where such treaties exist can be found on the Australian Treasury Website.
CPA Australia is an accounting body is Australia with over 150,000 members worldwide and its members adhere to a strict code of conduct set by CPA Australia. You can engage a CPA Member for initial tax advice in Australia to seek their advice before you leave as applicable to your own circumstances and at the advice of your current accountant to ensure that your affairs are in order before you arrive in Australia. Remember to keep your migration agent updated (as relevant) as part of the process, this may be important if you are applying for a visa under the Business Migration Program. Visit the CPA Australia Website to Search for a CPA Member, remember to ask them if they can assist with international tax advice for migrants.
Potential Australian Income Tax Implications for South African Migrants
A move from South Africa to Australia will expose you to both countries’ tax regimes. If the situation is not handled correctly you may end up paying tax twice, paying tax that could have been avoided, or even having a simple application to transfer money out of South Africa declined.
To remain compliant and keep your tax obligations to a minimum it’s wise to appoint a specialist in South African migrant tax before you leave the country. Your provider should also be completely familiar with the exchange control system in South Africa, as it will have a direct tax impact on you.
All transfers out of South Africa are subject to exchange control regulations and necessitate an active, up to date tax record; whether it’s the balance of a bank account, an inheritance, a distribution from a trust or the proceeds of an investment, life policy or pension, there is always a tax requirement.
As a South Africa emigrant, it’s also important to seek pre-departure (from South Africa) and arrival (into Australia) advice on the South African (and potential Australian) tax implications associated with the following:
- selling South African property.
- calculating capital gains.
- converting South African retirement annuities to cash (before age 55).
- claiming refunds relating to pension withdrawals.
- changing South African financial status to non-resident.
- retaining a business in South Africa.
- annual returns.
Cross border tax is complex – when you factor in exchange controls for South African emigrants it becomes even more complicated. A tax specialist will help you to take advantage of opportunities that your situation presents and unnecessary pitfalls are avoided.
The bottom line is, the right professional advice can save you time and money.
Cashkows have been assisting South African emigrants with their financial migration needs since 2009, their services include tax advice, wealth planning and foreign exchange needs (including exchange controls and transfers). They have offices in South Africa and Australia and have 65 professional staff waiting to assist you. Visit the Cashkows Website for their contact details and more information.
Australian Income Tax Rates
All people living in Australia and earning income in Australia are required to pay Australian income tax.
Most migrants and people living in Australia are regarded as tax residents in Australia for income tax purposes, this is regardless of your immigration status.
There are some tax concessions and considerations for holders of provisional (or temporary residence) visas and if you are one of these then we recommend that you ask an Australian certified tax accountant for their professional advice.
You will need to apply for a Tax file number (TFN) with the Australian Tax Office (ATO) before or when you arrive in Australia. This number is similar to the UK national insurance number and will remain the same for the rest of your life in Australia and is used by the ATO to identify you.
Once you have a TFN and are living in Australia the rate of income tax that will be deducted from your salary is based on how much you earn and the rates are currently as follows:
| Taxable Income (annual income) | Tax on this Income |
|---|---|
| 0 – $18,200 | Nil Tax |
| $18,201 – $37,000 | 19cents for each $1 over $18,200 |
| $37,001 – $80,000 | $3,572 plus 32.5cents for each $1 over $37,000 |
| $80,001 – $180,000 | $17,547 plus 37cents for each $1 over $80,000 |
| $180,001 and over | $54,547 plus 45cents for each $1 over $180,000 |
*These rates do not include the medicare levy of 2% or the Temporary Budget Repair Levy of 2% for taxable incomes over $180,000.
