Recently there is a research showing that more and more Kiwis living in Australia are planning to move back to New Zealand permanently. It is essential that you get your tax right before and after your departure.
The information in this article is also suitable for anyone departed or planning to leave Australia permanently.
A lot of people thought they DO NOT have any Australian tax obligations AFTER their departure. This is not the case. Even if you are not living in Australia, your income sourced in Australia may still be taxed in Australia. This article will go through the 3 most common personal assets: Real property, cash in the bank and shares
Any rental income or capital gain from the real property situated in Australia is taxable in Australia no matter where you are. For a non-resident, the tax rate is higher and no 50% discount available on your capital gain. However, if that real property was your home before departure, a 6-year capital gain exemption may be available.
Cash in the bank
If you still have some cash in your Australian bank receiving interest, you need to pay 10% withholding tax on the interest income. You can notify the bank to withhold the 10% withholding tax for you.
You need to do a “deemed disposal” to your Australian shares on the date of departure. This means you will be taxed on the capital gain ONLY UP TO the date of departure. Any capital gains you have made from the departure date to the actual disposal date is NOT taxable in Australia. You can choose NOT TO do the deemed disposal, but you need to notify the ATO in writing. This can be done within your tax return.
Franked dividend is not taxable after your departure but you are not entitled to any franking credits. Unfranked dividend is subjected to 15%-30% withholding tax in Australia depending on the availability of the Double Tax Agreement between Australia and the country you are residing. Conduit foreign income is not taxable in Australia. You must keep all dividend statements you received as you will need them for tax filing.
The Information above is only a general guide. This area of Australian tax is complicated so please feel free to contact us for assistance.