I am Australian citizen and I migrated from Australia to Switzerland last February as I started a new career. I am permanently living here in Switzerland now. I am renting my apartment and I have a permanent work contract. In Australia end of June is the end of the financial year and we fill our tax return. I vaguely knew about this tax residency topic but I only now realize how complex it may be to determine whether someone leaving Australia is actually still a Australian resident for taxes purposes (will pay taxes to Australian Taxation Office wherever the income comes from), or not anymore, in which case he/she pays taxes in the new residential country. Without diving into the complexity of the rules, explained on the web, including this forum, I believe that my case is quite straightforward and that I am not a tax resident of Australia anymore since I left, as I have no ties there anymore and I do not own anything (no house). I kept a bank account there though. I spent already a few hours in reading/understanding rules and I do not think I should go into paying hundreds of dollars to sort out my simple case. On the ATO website there a tool for self assessment of residency status, in which the answer " yes " to this final question, " Are you an Australian resident who is emigrating to live permanently in another country? ", concluded in " not an Australian resident for taxation purposes " .
My questions:
1) Did other Aussies who, like me, migrated permanently from Australia to Switzerland (or to other countries) for work, without leaving any ties in AUS, encountered some difficulties in being declared non-resident for Australian taxes ? ... or any unexpected surprises ?
2) Could you declare yourselves non-resident for tax purpose straight after relocating from Australia to abroad ( from the date of the flight), or did that status started to count later than for the arrival date in the new residential country ?
3) The "permanently living abroad" notion is confusing me. I have read somewhere that we must intend to leave abroad 2 years at least to be a permanent expat (when will we know that actually ?). I my case I intend to stay for at least two years, but what if for any unexpected reason I need to move back to Australia in one year time ? Would ATO retroactively consider that I was not permanently residing in Switzerland ?
4) I have started my new job in Switzerland last February but I have not changed my new address at the ATO yet. Is that going to delay the official date when I became non-tax resident because I should have informed them earlier ?
Thanks for your advises and sharing your experience.
It's completely straightforward. You are not living in Australia, you are resident and work in Switzerland. Double taxation is not a problem (not like with USA and some other places)... You earn and pay tax in Switzerland, and you do not need to pay tax in Australia.
But - if you have a HECS debt then you do need to log in to the ATO website every year or two to declare your income, as over a particular threshhold you need to start to pay HECS.... but it's easy enough if your income is below the threshhold to declare it.
AND if you have any assets (incl bank accounts, investments) in Australia then those would be declared on your tax return in Switzerland.... for us that means declaring the (literally) 0.01 AUD (as in, one cent) interest that we earnt on our bank account - you need to also declare your bank balance as at 31 December to the Swiss. So don't move your assets around right after christmas (we never have any money then anyway!)
And one more thing, you were supposed to de-register as a resident and advise the Medicare office when you left the country.
Theoretically, when you re-enter as a tourist (eg. holiday back in Australia) you are not covered by medicare anymore, and need to ensure you are covered by your swiss health insurance or additional travel insurance (no 'health tourism')....
Best to talk to ATO and Medicare office now and explain and they will tell you what to do...
The other (and potentially biggest headache) is that the tax years are different in Australia than Switzerland, so to make the declaration to the ATO for HECS for financial year end in Australia 30 JUne 2023, we have to wait until either we finalise our taxes in Switzerland, which, with a requested delay of lodgement (normally March, we push it to September).... we can't declare to Australia until about 18 month after the end of the financial year.... ATO don't care (well, so far they haven't) and are just happy when you log in and clear it up with them and explain the situation.... if we waited until the Swiss tax office finalised our actual taxable income at one point we were 3-4 years behind being able to give that information (for the HECS declaration) to the ATO.... the only hassle was that they had to send us paper forms as the online lodgment that long ago was not possible... but the forms were sent by email, printed and then filled and signed by us and sent back by post.... it all got there in the end!
Thank you very much Swisspea for your comments.
I changed my address on the ATO website (it does not ask since when though). I found out that ATO does need to be informed about overseas new residence at tax return time only see this conversation: https://community.ato.gov.au/s/quest…3eqY/p00174273
About Medicare it is still confusing about how to proceed to inform because on their website (linked to the mygov) the form to inform about new residential address only allows to enter an Australian address. Is then calling to AUS medicare the next best advise ? (also I read that expats could get Medicare benefits until 5 years after leaving, or until Medicare card expiry, so I wonder if it makes a difference for them to know whether I am living in AUS or overseas because there will be an end to benefits anyway).
Swisspea, what did you mean by “So don’t move your assets around right after christmas” ?
Cheers
PS: how to “multi quote” a reply in this forum ?
Multiquote is next to the quote button. Click on it and it changes colour.
You intend to leave, so you'll be treated day one as having left. If you return within two years, you will retroactively be considered to have retained Australian residency.
UK tax law allows for split year treatment. So if you leave during the tax year, they'll only take you UK-wise to the day you leave. I wouldn't be surprised if Australia also did this as the tax laws do seem similar.
Thanks NotAllThere, this makes sense.