April 2021

Investing overseas

Australians are taxed on their worldwide income, which must be declared in their tax returns.

Australians are taxed on their worldwide income, which must be declared in their tax returns.

Each of the following categories is included in foreign income and needs to be declared in annual income tax returns:

Income from employment and personal services

Income from work conducted and services provided outside of Australia should be declared as if it was earned within Australia.  This may include salary and wages, director fees, consultancy fees, business income, and any other remuneration.  There are circumstances in which a foreign salary is exempt, and individuals should discuss this with us.

Income from assets and investments

Any assets or investments and their relative returns need to be declared as if they were in Australia.  This may include interest from bank deposits or bonds, dividends from shares, royalties from intellectual property, rental income from real estate, pensions, annuities, lump sums from managed funds, income streams from super funds, and some foreign government pensions.

Capital gains on overseas assets

Upon selling an asset that you own overseas, you may have to pay Australian tax.  In cases where you owned the asset prior to becoming an Australian resident, the asset is treated as being acquired at the time you became a resident.  Similarly, if you cease being a resident, then the asset is treated as being disposed of at the time you cease residency.  As this is a complex area of tax law, it is beneficial to keep appropriate records of the asset.

You will receive a foreign income tax offset if you have already paid tax in another country.  In order to be eligible for the offset, you should have paid the tax overseas and have records to prove it has been paid.

The key to good outcomes is good planning.  If you have any questions about investing overseas, please contact us.

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