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Re: Income Tax on Foreign Assets for New PR

Newbie

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Replies 3

Hi All,

 

Pardon my lack of knowledge on Australian Tax as I am new to this. I would like to confirm the following w.r.t new PR holders.

 

  1. Newly arrived PR holders will be Australian Tax residents as per resides test, right? (183 days test won't apply) so even if someone arrives in the last month of the financial year, they would be considered a resident for tax purposes.
  2. What happens to overseas investment after landing in Australia? My understanding is that as long I keep that investment, I don't need to pay any tax. But if I sell those investments temporarily or permanently then I need to pay tax. For example, if I have an investment in stocks and I hold 3 stocks. Then even if I sell one stock and make a profit on it then I will need to pay tax on that profit.
  3. As Australia have capital gain tax. So how does the calculation happens for the acquired assets/investments when new PR starts living in Australia? Will the calculation be on the original price (whatever that maybe) or would it be the price at the time of becoming tax resident in Australia?
  4. Do new PR have any tax commitments before arriving in Australia? My understanding is No. There is no commitment for tax purpose until you land in Australia.
  5. Does Australia have any tax on gold jewellery for women?

Current resident in Singapore, which has tax agreements with Australia to avoid dual taxation.

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Community Support

Replies 2

Hi @mail2ghost

 

Your residency for tax purposes is different than your residency for immigration purposes. You'll need to use either the resides test, or the domicile test if you have not recently arrived in Australia to determine your residency for tax purposes. Remember that your residency can change during the year. In your example, if someone started passing the domicile or resides test in June, but not before, they would be a resident only from June onward.

 

If you have capital assets, when your residency changes to being an Australian resident for tax purposes is the date you are taken to have acquired those assets as at. You are taken to have acquired them for their market value on that date. This forms the first element of the cost base. When you dispose of those assets, or when you cease being an Australian resident for tax purposes, a capital gains event happens, which means you're liable for tax on the profits you make (proceeds minus cost base).

 

The only capital asset this rule does not apply to is taxable Australian property, which Australian residents and foreign residents are liable for capital gains on.

 

If you do not have Australian sourced income prior to becoming a resident for tax purposes, you will not have tax obligations in Australia. The easiest way to know, though, is to us our Do I Need To Lodge? tool on our website.

 

Jewellery is a type of collectable for CGT purposes, and if it is acquired for above a certain value, when it is sold you will incur a capital gains event. When you purchase the jewellery in Australia, you likely will be charged GST by the sellar. If you import the jewellery and it is valued at more than $1,000, GST will be charged at the border by customs. 

 

Your tax residency

Foreign residents and CGT

Changing residency and CGT

Work out if you need to lodge a tax return

Collectables for CGT

3 REPLIES 3

Most helpful response

ATO Community Support

Replies 2

Hi @mail2ghost

 

Your residency for tax purposes is different than your residency for immigration purposes. You'll need to use either the resides test, or the domicile test if you have not recently arrived in Australia to determine your residency for tax purposes. Remember that your residency can change during the year. In your example, if someone started passing the domicile or resides test in June, but not before, they would be a resident only from June onward.

 

If you have capital assets, when your residency changes to being an Australian resident for tax purposes is the date you are taken to have acquired those assets as at. You are taken to have acquired them for their market value on that date. This forms the first element of the cost base. When you dispose of those assets, or when you cease being an Australian resident for tax purposes, a capital gains event happens, which means you're liable for tax on the profits you make (proceeds minus cost base).

 

The only capital asset this rule does not apply to is taxable Australian property, which Australian residents and foreign residents are liable for capital gains on.

 

If you do not have Australian sourced income prior to becoming a resident for tax purposes, you will not have tax obligations in Australia. The easiest way to know, though, is to us our Do I Need To Lodge? tool on our website.

 

Jewellery is a type of collectable for CGT purposes, and if it is acquired for above a certain value, when it is sold you will incur a capital gains event. When you purchase the jewellery in Australia, you likely will be charged GST by the sellar. If you import the jewellery and it is valued at more than $1,000, GST will be charged at the border by customs. 

 

Your tax residency

Foreign residents and CGT

Changing residency and CGT

Work out if you need to lodge a tax return

Collectables for CGT

Newbie

Replies 1



Thanks, @BlakeATO for your kind and detailed reply. Some follow up question to clear the understanding further.

 

  1. So personal gold jewellery when bringing first time to Australia will be considered as import if the cost is greater than $1000 and therefore GST will be applicable to this.

ATO Community Support

Replies 0

Hi @mail2ghost,

 

Generally, all goods imported into Australia are liable for duties and taxes unless an exemption or concession applies. You can view further information via our Australian border force website. They also provide information on GST and other taxes. However, if the jewellery is personal use and owned by the individual for 12months or more, it may not incur GST. You can read up on this under 'Imports that qualify for customs duty concessions are not subject to GST.' 

 

All the best.