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Completing your tax return Once you have determined your residency status, you will be in a position to give a correct answer to the question asked on page one of the TaxPack return form, namely 'Are you an Australian resident?'.Where your status has changed during the year of income from resident to non-resident, you still need to answer 'yes' to this question as you would have been an Australian resident for part of the year. This ensures you are taxed at resident rates for the tax year. Your non-residency for part of the year is taken into account by a reduction in your tax-free threshold. You are entitled to a pro-rata tax-free threshold for the number of months you are an Australian resident.
Investment FAQ Non-resident aliens can hold investments in the United States quite easily. A "non-resident alien" (NRA) is the U.S. government's name for a citizen of a country other than the U.S. who also lives outside the U.S. The only thing non-resident aliens have to be concerned about if they have U.S. investments is taxation.
Effect of being a non-resident? - pay tax on all salary and wage income earned in Australia. The non-resident tax rates are different from resident tax rates.
- have 10% of any interest earned from your Australian bank accounts withheld for tax. This interest is not included as assessable income. You need to advise the Australian financial institution of your overseas address so that this tax can be withheld otherwise tax will be withheld at the higher rate of 46.5%
Capital Gains Tax Under Australia's domestic taxation laws, and in particular the relevant CGT provisions, the gain on the sale of Australian real property is subject to Australian income tax. Under Australia's double tax agreements ('DTAs'), Australia generally reserves the right to tax a gain on the sale of Australian real property - refer to the Alienation of Property Article (Article 13) of most DTAs. Therefore, where a non-resident makes a gain on the sale of Australian real property, the non-resident will be subject to Australian income tax on that gain
Non-Resident Tax Issues For Australian income tax purposes, a non-resident is generally only assessable on income arising from sources in Australia. Gains arising from the sale of an interest in Australian real property is regarded as having a source in Australia. In addition, gains arising from the sale of interests in a company or trust that has assets being Australian real property interests is also regarded as having a source in Australia where those real property interests represent more than 50% of the market value of the underlying assets ('land rich' entities).
The CGT Reforms will also result in assessable Australian capital gains arising on the sale of non-resident entities being taxable in Australia where those entities (on a trace through basis) are land rich in Australia. Existing interests will transition into the Australian tax net with a cost base equal to market value on 10 May 2005.
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