Australians enjoy travelling and they often enjoy it so much they stay for a short time and in some cases for a very long time.

There are some major pitfalls when you are departing that you need to be aware of. In Australia the ATO work on “self-assessment” which legally means that they assume you have a perfect knowledge of the Tax Act – good luck. So, seeking advice on departing when you are seeking to become a non-tax resident is critical. To qualify you cannot meet the residency test.

The residency test means you do not have a permanent place of abode in Australia; intend to spend less than 183 days per annum in Australia and have a “settled intention” to reside outside of Australia. There are other factors the ATO also assess such as whether you have a spouse or dependent children living in Australia, whether you own or rent in Australia and whether you have active business or employment ties to Australia. The ATO also considers whether you have set about severing your ties with Australia by selling property, resigning from your employment, and closing bank accounts. By qualifying as a non-resident for tax purposes you may well save significant monies in Australian taxes, however there are a range of benefits you no longer become entitled to. The key tip is seeking advice before you go.

Separately, returning to Australia depending on where you’re coming from, is difficult and requires preparation. We suggest allowing 18 months lead time before you return. Every tax jurisdiction you are returning from is different –  but they have one thing in common.  What they have in common is they all seek to retain their superannuation and pension funds within their jurisdiction.

Should you seek to withdraw those funds prematurely and don’t seek advice, then the “tax take” on these redemptions can be significant. Further, Australia’s treatment of foreign pension income is also predatory, seeking to further tax these foreign pensions creating a “double whammy”.

The point we are making is that going overseas is easy. Returning can prove problematic and expensive if you don’t seek advice sufficiently in advance of your return. Reminds me of the 5 “P”s – PRIOR PREPARATION PREVENTS POOR PERFORMANCE.