Bon voyage. . .

If you're waving goodbye to Australia's sandy shores either permanently or simply for a couple of years overseas, you'll need to get your affairs into order before you go.

But just to clarify, you will still be classified as a 'resident' for tax purposes. So if you depart  Australia with a view to living abroad for some of the year (as opposed to simply holidaying) you should still answer 'yes' to that question ('Are you an Australian resident?') on your tax return. This may seem counter-intuitive, since you know you will be 'residing' in another country for some of the year. However it ensures that you are taxed at resident rates for the whole of the tax year, (non-residents are taxed at a much higher rate.)

It is basically asking you 'Have you earned an income in Australia during the tax year?' To find out more about being a resident or non-resident for tax purposes, take the test, here.  The fact that you have been out of the country for some of the year will get taken into account by a reduction in the tax-free threshold – you're entitled to a pro-rata tax-free threshold for the months you were an Australian resident.

Working overseas?
If you're travelling overseas for work, a lot of the information you'll need to become organised can be found in Working Overseas.

Early lodgement
If you're hoping to tie-up all your loose ends before you leave Australia, the good news is the Tax Office will accept early lodgement of tax returns and baby bonus claims – but only in certain circumstances. See 'How to lodge an early tax return, here'

Capital gains
There are implications regarding capital gains tax (CGT) and the retention of assets in Australia whilst going overseas.

If you leave your Australian home temporarily, you have the option to continue to treat it as your main residence, while you are away – for example if you are transferred away temporarily with your work, or study, or even an extended holiday. You are able to rent your vacated home out to produce an income, and still treat it as your main residence, without worrying about CGT for a period up to six years.   If your home remains vacant while you are away, and it is not used to produce an income for you, you can treat it as your main residence for CGT purposes for an unlimited period.

In order to meet main residence requirements, you cannot nominate another dwelling as a main residence during your time away. You can only have one 'main residence' as far as the Tax Office is concerned.  If you have another residence overseas, and you nominate the foreign dwelling as your main residence you cannot then claim a main residence CGT exemption on the first home within Australia. Australian residents are generally taxed on any capital gains made on an overseas asset and must report the gain on their income tax return. To find out more see Investing Overseas - property.

If, however, you are relocating from one residence to another, there is a maximum six month period of time that you can qualify for the exemption on two homes.

What about my super?
Did you know that millions of dollars in superannuation is left behind by temporary residents each year? Temporary residents may be able to claim back their super – to find out more see Taking your super when you go.

Higher Education Loan Program (HELP) and Student Financial Supplement Scheme (SFSS) debts
If you have a HELP or SFSS debt and are going overseas, your debt will continue to be indexed each year until the debt is paid off. You can still make voluntary repayments – see voluntary payments.

Dependent spouse?
If you need to claim a tax offset for a dependent spouse, you both have to be Australian residents for tax purposes. You should reduce your claim to take into account the time you were both non-residents of Australia.

Medicare
Non-residents do not have to pay the Medicare levy, so you will be able to claim the time that you are not an Australian resident for tax purposes in your return as exempt days. For more information regarding Medicare ses Rebates & Offsets:  the Medicare levy.

Auf wiedersehn!
The good news is, even though Australians are taxed on their global income, from the date you stop being an Australian 'resident', you don't have to disclose any foreign sourced income in your tax return.  If you're still earning interest, dividends or royalties in Australia after you've left,  these are subject to the withholding tax provisions as a final tax and don't need to be included in your tax return.

Last reviewed 9/08/2012