NZ Property Investors Moving to Australia

Posted on Saturday, June 22 2013

What you need to know if you are considering moving to Australia

 

It’s becoming more and more common for New Zealander’s to move to Australia for better job opportunities among other things. While I’m sure you have identified a number of upsides about moving to Australia, one downside is the fact that Australia has a capital gains tax.

So, if you retain property in NZ which isn’t subject to any capital gains tax in NZ, you’ll want know the rules on whether Australian capital gains tax will apply to that property once you arrive in Australia.

(1) Temporary Residents Not Taxed on Foreign Income

If you qualify as a temporary resident of Australia, then it’s only your income earned in Australian and property situated in Australia that is subject to Australian income tax and capital gains tax.

More information about temporary residents can be found here:

http://www.ato.gov.au/individuals/content.aspx?doc=/content/76537.htm

So, if you meet the definition of a temporary resident of Australia, then you don’t need to worry about Australian income tax or capital gains tax on your NZ properties.

(2) Definition of a Temporary Resident

You are a temporary resident of Australia if you are a tax resident of Australia and you:

a) Hold a temporary visa granted under the Migration Act 1958; and
b) You or your spouse are not an Australian resident as defined within the Social Security Act 1991

New Zealander’s arriving in Australia are automatically granted a Special Category Visa which is a temporary visa. So, if you are a NZ citizen arriving in Australia, you will hold a temporary visa and satisfy (a) above.

More information about Special Category Visa’s can be found here:

http://www.immi.gov.au/allforms/travel-documents/new-zealand.htm

An Australian resident under the Social Security Act 1991 includes a person who lives in Australia under a Special Category Visa and is a protected SCV holder. A protected SCV holder is a person that was in Australia on or before 26 February 2001.

NZ Moving to Australia

So, you are arrived in Australia after 26 February 2001, you will not be an Australian resident under the Social Security Act 1991 and will satisfy (b) above.

(3) Summary

If you and your spouse are NZ citizens and move to Australia after 26 February 2001, then your NZ property will not be subject to Australian income tax or capital gains tax.

(4) Ceasing to be a Temporary Resident

If you cease being a temporary resident and remain as an Australian tax resident, then you are deemed to have acquired property that is not situated in Australia (ie your NZ rental properties) for their market value at the time you cease being a temporary resident.

This would happen if you became an Australian citizen or holder of a permanent visa so the tax implications of that would need to be considered being applying for either of those.

 

By Tony Thorne
www.ThorneAccounting.co.nz

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Expert's Bio

Tony Thorne

Thorne Accounting has been providing specialised accounting and tax services to residential and commercial property investors since 2004. Our mission is to provide the highest quality tax and accounting services to property investors. We are constantly fine tuning the way we work with property investors so we can provide this superior service at competitive prices.

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