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Returning native Australians warned for hefty tax traps

Many of the Australian migrants are waiting to return home in this coronavirus pandemic, this has been urged to give a though that their respective tax affairs need to be considered to avoid hefty tax bill on return. According to the Accounts NextGen, it is believed that Australians have to be given consideration towards a range of tax issues. Keeping in mind that there are tax nuances depending on the legal obligations along with the length of time spent overseas.

Furthermore, it is seen that around 40,000 Australians are at present registered with the department of Foreign affairs along with the Trafe to return home. Even if someone is living and working abroad for a relatively short period of time, it will still be required to pay a hefty tax bill when they return to Australia. It is important to acknowledge that the nature of the coronavirus pandemic also means that some of the migrants have been laid off so there are circumstances that are indicating the return could also be a stressful task for them. So, if they have planned for financial strategy throughout while returning from overseas then it can go a long way in overcoming a lot of financial pressure.

What’s more to know about the hefty tax traps in Australia?

In addition to this, the native Australians need to account for any of the shareholdings and the employee’s share schemes, particularly in the events of redundancy. It is crucial to understand that the cash in the offshore bank accounts along with the pension funds are the important factors here. The property is another key that needs to be considered. In some of the countries, the charge non -residents pay is a higher rate of transaction tax or capital gains on the profits from the investments in properties. Remember, if you have retained the property while you are abroad then you may need to be better to move back before you think to sell it off.

This scenario clearly applies particularly to those who have a former family home as the non-residents to sell the property. This set of people are now excluded form the CGT main residence exemption along with the related rule labeled as “Six-year absence”.According to the CGT discount on the sale of properties is unavailable for any period after 8 May 2012. If you are thinking about the investment properties that are already owned at the time they left the residential area then there will need to be an apportionment of the CGT discount to relevant periods. There is a similar apportionment agreement highlighted by Accounts NextGen that is applied for the periods between the date they people return to Australia.

The concept further explained 

It is also seen that the pension system in the legal terminologies such as in the provinces of the UK, is estimated to have 40,000 Australians who reside at any given point of time and it can also create an ill effect as consequences. Moreover, the people who have been a resident in Australia since ling and shifted to work in London (say), will have a high income and hence need to pay close attention to their respective pension savings and to transfer the funds back in Australia.

The Accounts NextGen further explains that another common situation is when the people have switched their respective tax residency and paid the taxes in another country is not a good thing. They may be able to claim the credit for option a foreign tax paid set upon their respective returns. But they can only file the claim if they have proper records and structures in one place. The considerations around the shares and funds will also be required specifically if someone has become a non-resident during the period they moved out.

The gist of the topic 

These types of investment schemes are generally treated under the possible criteria set by the CGT rules as having been sold at the market value at the same time the tax residency is triggered, deemed, and face losses. It is a piece of good news that there are no further Australian CGT issues if such assets are sold by a Non-resident. However, if they still own that property in Australia then the tax residency is resumed along with the set of investments. The result of which explains that the non-residents have to pay a hefty amount of the tax for their respective properties whenever they return back from overseas.

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