Kids Abroad

Australian property tax and expatriate tax expert STEVE DOUGLAS discusses the pros and cons of renting versus purchasing a property to house your children while studying overseas.

For many of you with children, there will inevitably be a day when you’ll face the decision as to where you would like your children to undertake their tertiary education and whether you will be back in Australia to provide a home for them during their educational pursuits. When it comes to housing matters, the simple solution is to rent an apartment, room or university dormitory for them. Although this option is an easy one, the cost soon mounts and, at the end of the study period, becomes a substantial non-recoverable burden. Here are a few key factors to consider when renting:

The alternative to renting is to buy a property that is suitable for your child, then sell it at the end of the study period or keep it as an ongoing investment. This move can serve as an opportunity for you to recover some or all of the costs of occupation and of your child’s study from the potential capital gains on the property over the years it was held. This has been a successful strategy for many and should be considered an advantageous option.


tart early Even if your children are very young, the advantage of buying a property sooner than later is significant. You will have the advantage of today’s price, which tends to be lower than the potential price in the years ahead when the property is needed.
Selection is very important As with all property investment decisions, it is essential to purchase the right property. You should be careful to avoid ‘specialised student accommodation’ as it can be very small and extremely difficult to re-sell later, even though the rent returns are very attractive.

Buying a property in Australia is always a big decision. When it can provide the advantage of housing your children through their academic life, however, the rewards can be very attractive and, in most cases, make the decision to buy a more astute option than the alternative of renting accommodation.

Steve Douglas is the co-founder and Managing Director of Australasian Taxation Services (ATS), established in Singapore in 1995. ATS provides specialist taxation services to people of any nationality investing in Australian property, as well as Australian expatriates living overseas. Areas of specialisation include the Australian taxation aspects of property investment, as well as expatriate and migration planning.


INFORMATION Australasian Taxation Services Pty Ltd 10 Jalan Besar #17-01 Sim Lim Tower Singapore  208787 Tel:    6293 3858     Fax:    6293 4332     Email:     Web:

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Posted by smats Mon, 21 Jul 2014 06:41:00 GMT

2014 Aussie Budget

Australian property tax and expatriate tax expert STEVE DOUGLAS shares his knowledge about the recently announced Australian Federal Budget and its implications on property investment for Australian expats and foreign investors.

Australian Treasurer Joe Hockey presented his first Federal Budget to Parliament on May 13, 2014. This Budget has been poorly received in Australia as it comes as the “tough medicine” that Liberals need to resolve the current budget crisis, which has seen Australia’s national debt spiral from nil in 2007 to over A$300 billion now. The Labour Government made several funding announcements in the last six budgets that have yet to be implemented, leaving the current Government with many tough choices to make. Previous spending decisions saw Australia lead the world in Government spending increases that were based on overly optimistic revenue forecasts, most of which have proven incorrect. 

For the record, Australia’s past peak debt was approximately A$96bn in 2002. Under the leadership of then Liberal Prime Minister John Howard and his Treasurer Peter Costello, this was paid off entirely in 2007. It seemed impossible in 2002 to consider that this debt could ever be paid off, but somehow this was achieved and it was a proud moment for Australia. Being debt-free gives any country a real chance to plan its future and not be beholden to financial interests or global uncertainty. This was clearly evident in the fact that Australia, more than any other country, survived the Global Financial Crisis of 2007-08 relatively unscathed. 

Given how the debt has now increased so rapidly in such a short period of time, the new Liberal Government feels there is a crisis and wants to remedy the situation. As a result, they have made a series of decisions and cutbacks on spending promises of the last Government, all of which are proving to be unpopular in the country. Given the public backlash, many of the announcements in this Budget will struggle to pass the required legislation through the Senate. Careful negotiation and compromise may be required to achieve their desired outcomes. Some of the key announcements in the budget include:

  • Introduction of a Budget Repair Levy of two percent of any taxable income above A$180,000pa for the next three years only.
  • Removal of the Mining Tax and Carbon Tax.
  • Medicare Co-Contribution payment which will initially go to fund the creation of an A$20bn Medical Research Fund.
  • Re-introduction of the indexation increase on Fuel Excises, with new funds dedicated to road infrastructure.
  • Deregulation of University Fee Structures and increases to University Loan interest rates to reflect the cost of Government borrowing.
  • Freezing of increases and thresholds for many Government Welfare payments that usually increase with inflation.
  • Removal of almost A$80bn of forward funding promises to the State Governments for Health and Education initiatives of the previous Labour Government.
  • “Work for the Dole” rules for recipients of unemployment benefits requiring them to either undertake training, education or controlled work duties together with more stringent qualification rules.

These are but a few of the announcements and perhaps the more contentious ones at that. Australia now faces a great test in how it reacts to this budget. Do we want to continue an “Era of Entitlement” or create a stable platform that safeguards the country’s financial future and allows it the ability to afford to support those in need from a strong financial footing? Now is not the time to complain, that should have been done when the massive budget deficits were being recorded and the debt jumped ever higher. Now is the time to let the new Government take action and let them move forward with conviction

Steve Douglas is the co-founder and Managing Director of Australasian Taxation Services (ATS), established in Singapore in 1995. ATS provides specialist taxation services to people of any nationality investing in Australian property, as well as Australian expatriates living overseas. Areas of specialisation include the Australian taxation aspects of property investment, as well as expatriate and migration planning.


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Posted by smats Fri, 27 Jun 2014 03:58:00 GMT

Super savings

As an expatriate with no Australian superannuation support, you may be worried about not having any retirement benefits to fall back on when you return home. Fear not. Australian property tax and expatriate tax expert STEVE DOUGLAS suggests an alternative option to help you prepare for your golden years.


When many Australians move overseas to work, they often take up positions that do not have the superannuation (or pension) support they might have while living and working in Australia, where every salaried employee is covered by a mandatory nine-percent employer contribution into superannuation, which accrues for their eventual retirement.



Simply put, superannuation is government-regulated savings, a controlled form of financial accrual where various rules are enforced to ensure you cannot simply spend your money and then rely on government support in your retirement. Living overseas and not participating in the forced superannuation savings can translate into a greater savings potential for you if you are disciplined and are actually putting aside your money on your own. Whether you should place your savings into a formal superannuation investment or keep it in your personal account will depend on a variety of issues


Flexibility and access

Once funds are placed into an Australian superannuation fund, it’s very difficult to gain access to them prior to retirement. Indeed, it is unlikely you will be able to retrieve your money for many years. This may be less of a concern if you are closer to retirement age of 60.


Importance of a debt-free residence on return

Without doubt, the biggest financial burden for anyone living in Australia is making rental payments or mortgage repayments on their family home. One great tragedy for many Australians is living with the burden of private home debt and not being able to use cash built up in their superannuation to relieve themselves of this financial pressure each month. As an expat with funds in your own name, when you return to Australia, you can enjoy financial freedom and use your funds to reduce this debt rather than have your cash locked up in a savings pot.


Overseas pensions and savings plans

When replacing your Australian superannuation with an overseas savings or a pension plan, do practice caution. Other plans do not carry the same tax advantages as those in Australia and often come with very high expenses as they are not protected by the same regulation as funds are in Australia. It is especially important not to sign up for any savings plan with a term of your contribution greater than the time you intend to be overseas. 


Potential for rule changes

The Government can change the rules affecting superannuation at any time, so your plan could be forced to change against your will.  By keeping your savings out of the superannuation system, you can make the choices that are best for you, regardless of any changes that are out of your control.


Danger of a Self-Managed Superannuation Fund (SMSF)

If you are operating a SMSF’s and you move overseas, there are significant traps to be wary of. While living in Australia and before departing, you cannot contribute to this fund at all, as it may trigger your fund to become non-compliant and subject to severe penalties. In addition, within two years of leaving Australia, you must switch the ongoing management to an Australian-based person or also risk becoming non-compliant. It is essential you seek professional advice to confirm your situation if you had a SMSF when you left Australia.  Failure to clarify and set everything in place could risk 45 percent of your fund value being taken as a fine for becoming non-compliant.



The best time to put funds into your superannuation fund as an expatriate is when you actually return to live permanently in Australia. At that time, you can evaluate your personal circumstances and make a voluntary, tax-free contribution of up to A$450,000 per person (subject to prevailing rules) and then enjoy the various tax advantages on offer, including tax-free pensions from your fund. As a general rule, the funds you should place into superannuation should be what is left over from your savings after you have:



Paid out the mortgage on your purchased, long-term residence. Acquired personal essentials such as a car and furniture. Set aside a cash pot to cover life’s emergencies, including your children’s education and holiday funds. This way you will have covered all the personal costs and lowered your cash cost of living while having a comfortable life. 


Steve Douglas is the co-founder and Managing Director of Australasian Taxation Services (ATS), established in Singapore in 1995. ATS provides specialist taxation services to people of any nationality investing in Australian property, as well as Australian expatriates living overseas.  Areas of specialisation include the Australian taxation aspects of property investment, as well as expatriate and migration planning.




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Posted by smats Thu, 26 Jun 2014 23:54:00 GMT

Investing in bricks and mortar verses shares

Looking to invest your well-earned cash? Australian property tax and expatriate tax expert STEVE DOUGLAS discusses the pros and cons of investing in shares versus property and offers advice on making a practical decision to get your wealth portfolio into shape.

The question of where one should invest their money, whether in property or shares, has been a topic of discussion for quite some time and is still a widely discussed matter. Despite how many people believe the long term return of shares and property are very similar, there are some key tax issues you need to take note of before making a decision.
When living outside of Australia, there is no capital gains tax on profits made from the sale of shares. Nor is there any income tax on dividends received each year. Non-resident taxpayers who invest in shares usually enjoy a tax-free status, making this an extremely attractive investment option for many expatriates and foreign investors in Australia. Many expatriate zones allow tax-free status on international shares, but you should note that you may still face tax issues in the country you are living in, so it’s best to clarify and check on the matter first before you make a decision. Having a tax-free status is a major positive, but it’s not the only advantage. Other plus points include the following:
• Shares are easy to accumulate as they can be bought in parcels from A$500 upwards.
• It’s easy to sell shares listed on a stock exchange, with sale proceeds usually available within three days from the sale. In many cases shares can offer very attractive dividend yields, which currently can be well above the interest rates on offer for bank deposits.
Nothing is perfect though, and there are a few issues you need to take note of before investing in shares. The market risk of shares can be very volatile, as proven by outcomes in the recent past. And because there are many share options in the market, it can get confusing when you need to make choices as to which shares to buy. Nonetheless, shares can be a sensible part of any investment portfolio and well worthy of consideration.
Property, on the other hand, holds very different characteristics in comparison to shares. Owning Australian property will always be a taxable activity regardless of where you live. But it can be a very tax-effective investment, as the Australian government allows property-related expenses, such as interest on loans, maintenance, agent fees and insurance on the property, to be offset before any tax is levied. In addition there are special write-offs on the construction costs and internal fittings of a property, ensuring no annual income tax is payable. Investing in property has remained popular for other reasons, including the following:
• By nature ‘bricks and mortar’ have been considered a safer investment choice than other investment forms. This is especially true for Australian property, which has shown long-term, modest and sensible increases with few negative growth periods.
• Banks are happy to lend 80 percent of a property value, which can make the entry cost into property a lot easier, while at the same time improving your tax position and enhancing the overall returns.
• While living overseas, the ability to rent the property out during your absence makes it very affordable to hold a property. The net ownership cost (rent minus expenses and interest) can be less than one percent per annum of the purchase price, which means that a A$1 million property costs less than A$1,000 to own. As long as the property appreciates more than this, then you are financially better off. And for the more desirable areas in Australia, the growth has consistently outpaced this holding cost, making the decision to buy a smart one.
From a negative perspective, there are a few issues you need to consider. The initial entry price of property can be both scary and significant. The first property you buy will usually need a 20 percent deposit plus up to 5 percent for purchase costs, which means you will need to commit a fair sum to enter the market. Secondly, property by nature is a long-term investment, which is especially true for Australian property as the safe market results in modest growth that in turn needs as long as possible to perform at its peak. Also, a quick exit from the property market can be difficult – it can take between two to eight months from decision to sell and receive the proceeds.
The decision as to which investment choice is best for you usually starts with how much you have to invest. If you want to buy a property, you need a substantial deposit of 25 percent or equity in another property. So if you are short of that amount, you will have to wait on the sidelines.
As such, it’s best to consider accumulating your regular savings in shares along the way, and when you see the right property for you in your budget range, cash in your shares and grab the property. Then, launch your share accumulation all over again for your next property. As an Australian, regardless of which option you choose, you will have a tax-advantaged investment option and will be able to build wealth along the way to improve your financial future.
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Posted by smats Wed, 02 Apr 2014 03:27:00 GMT

Buying property in Asia vs Australia

Are you an Aussie citizen looking to acquire property in Asia? Australian property tax and expatriate tax expert STEVE DOUGLAS highlights differences to consider when renting or buying in Asia versus Australia.

For an expatriate living abroad, finding suitable long-term accommodation at a reasonable price can be quite frustrating. Landlords can prey upon an expat tenant, knowing that they may have a larger disposable income than someone in the general market. If you intend to be in one overseas location for many years, it may well be worth it to consider purchasing, rather than renting, a property to live in. As you consider this option, it’s important to take note of some relevant factors to better protect yourself over the long term.
Understand the local market Australia has the good fortune of a strong legal system and a stable, modestly growing property market. Most Australian expatriates are accustomed to this and take it for granted, often believing that the rest of the world is equally safe. Sadly, this is not the case, so before considering any property purchase, you should ‘localise’ your thinking to the country you are looking to buy in. This is true whether you intend to occupy the property or are purchasing it for an investment.
Legal issues Although most countries have clear and defined ownership laws when it comes to property, you need to investigate to ensure that you are legally allowed to own the property. It is very common to find restrictions for foreigners on certain types of property, a stronger tendency to leasehold property than freehold, and a significant variance in buying methods from country to country. You should seek independent legal advice prior to signing for any purchase or making a deposit on a property. In many cases, if the deposit is made and the sale does not proceed, you are likely to forfeit your deposit entirely – an expensive mistake that could have been averted by some preliminary advice prior to committing.
Affordability Unless you are fortunate enough to be paying cash for the property, it is essential to arrange for your finance in advance of searching for a house. Lending practices in Australia are very simple, and 80 percent of the purchase price is readily available through banks. When buying overseas as an expatriate, though, getting a loan is not easy. It’s best to have your approvals in place to confirm access and amount of any loan so you can quickly assess your budget. In addition, many markets will require shorter loan terms, often driven by age restrictions. As a result, even when interest rates are low, the actual monthly repayment could be significantly more than your rental amount. 
Growth and risk prospects The Australian property market has proved itself to have stable growth, and even in times of crisis, only a modest decline is observed. Asian markets, however, tend to have a long history of boom and bust rather than stable price points. This is why you need to be confident that you are buying into your particular market at a ‘safer’ than an ‘unsteady’ time. If you buy at the right time you could be incredibly happy, whilst getting in near a peak could spell a financial wipeout.
Rent replacement When you are already committing significant funds to paying rent, swapping over to ownership is genuinely worth considering. It’s safer than just ‘investing,’ as even if the property doesn’t grow much in value, it is still better than paying rent, which you never get back. It can also be re-assuring that you control your destiny, and no landlord can ask you to move out or drastically increase your rent amount. The longer you intend to be overseas, the more appealing the concept of ownership over rental becomes, all aspects considered.
Tax issues on return to Australia Don’t feel concerned about keeping the property if you decide to return to Australia. Fortunately, the decision can be made solely on the property’s financial merit rather than for fear of tax consequences. If you hang on to it and rent it out, the property is taxable in the same way an Australian property would be, with full deductions for interest and ownership costs (including building allowances if it was constructed after 1985). For capital gains tax, only profits after your return to Australia are subject to tax, so you will need a sworn valuation of the property when you repatriate.
All in all, if you are fortunate enough to have the financial capacity to acquire a property in your country of posting, then it is definitely worth considering, provided you properly review the risks and financial aspects relevant to the market at that time.
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Posted by smats Fri, 21 Mar 2014 09:24:00 GMT

Aussie land tax

Are you liable for paying land tax on your Australian property? Australian property tax and expatriate tax expert STEVE DOUGLAS answers this question and discusses the circumstances under which one could qualify for land tax exemption in Australia.

In Australia the federal government is entitled to receive income tax and capital gains tax, which is managed when taxpayers lodge an annual income tax return. Under the Australian Constitution, state governments are not entitled to charge any tax against income or capital receipts; they are, however, allowed to raise levies or duties on activities within their state. One of the major levies for each state is land tax.
 Land tax is similar to local council rates, which are based upon the unimproved value of the land and charged regardless of whether or not the property generates revenue (the surplus after costs). Many residents who live in Australia are usually exempt from land tax, as it is not charged on the family home in any of the states. Land tax is usually charged on vacant land, rental property or commercial property.
To qualify for the family home exemption, residents must have been actually living in the property on the date of determination (different for each state), which can be problematic if you are living overseas. However, some states allow tax exemption of the family home even if the family is based abroad, but this will usually require that the property not be rented out during the period the family is based overseas. If rent is collected, land tax is likely to be imposed. Fortunately, each state has a tax-free allowance – no land tax is collected if the unimproved value of the property is less than a certain threshold amount. The table below offers a guide of the current rates in place across Australia.
The value used to assess land tax bears no resemblance to the actual property value; it’s merely a figure nominated by each government as to the value of just the land. Land tax is calculated on the cumulative value of all of the property owned by a person in the state where the property is located, so the more property you own in each state the higher the land tax rate. Another important issue to remember is that land tax on an apartment will be substantially less than that of a house, as the value of the unimproved land is shared over the many owners and creates a lower individual value for tax purposes. This can be helpful in determining what type of property you may wish to purchase. 
Each state’s revenue department is usually quite active in seeking out non-payers and recouping any land tax arrears. You should be receiving an Annual Assessment from the state government where your property is located, seeking clarification on the use of the property and confirming the tax value. If you think you may have a potential land tax liability you will need to contact your property manager or the state revenue office as soon as possible to determine whether you are over the relevant threshold for your state. If they find you first, the penalties can be quite high, and state governments tend to be less willing to reduce penalties, even if you were unaware of your obligation.


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Posted by smats Wed, 29 Jan 2014 02:02:00 GMT

Housing framework

Looking to buy a property in Australia and wondering if you should do so under your personal or company name? Australian property tax and expatriate tax expert STEVE DOUGLAS offers his professional expertise on the matter.

For most people looking to acquire a property in Australia, buying in their personal name has usually been the best option. Changes announced back in the May 2012 Australian Federal Budget by the Labour Government changed the choices available to foreign investors. Prior to May 2012 any capital gains made on Australian property enjoyed a 50 percent tax-free allowance. In addition, the personal tax rate for non-residents started at 29 percent, which was lower than the company tax rate of 30 percent. This changed in July 2012, when the minimum non-resident rate rose to 32.5 percent, making it higher than the corporate rate.
Apart from income tax rates, the taxation treatment is the same regardless of which entity you elect to use to purchase property. Income tax will always be levied on net taxable income, which is calculated as rent minus ownership costs, less interest and expenses, and then full reduction of any depreciation allowances available on the property. With the potential higher tax rate on individuals as the purchaser, it is now appropriate to consider the use of a structure when acquiring an Australian property. Some of the various structures and their pros and cons are listed below.

The use of structures is not for everyone, and the complexity of a structure may not be warranted for a simple property investment. Seek professional advice prior to any decision about a structure. Not only can it affect future tax considerations, but it may have an adverse effect on your finance options as well.

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Posted by smats Mon, 30 Dec 2013 06:46:00 GMT

Aussie money transfers

Are you looking to send funds to family back home in Australia but worried about being taxed for it? Australian property tax and expatriate tax expert STEVE DOUGLAS offers his professional expertise on the matter to clear up any doubts you may have.

For both Australian expatriates and foreign nationals, the movement of capital between countries will attract no taxation consequence in Australia. This is true for transfers during expatriate assignments as well as remission of savings accumulated while living outside of Australia. The only time the Australian government will consider taxing foreign income of an Australian expatriate is when the expatriate is working abroad on a short-term assignment (usually less than two years), and thus still considered to be living in or connected to Australia. In this case, you are treated as a Tax Resident and taxed on any income you receive worldwide.
If you have moved overseas on a long-term basis, the Australian government will not tax you on any income from a non-Australian source, so you can send any amount of money home without any tax consequences whatsoever. Even if you send money back to family members, they will not have to pay tax as long as the money is not for services rendered. Simply gifting them or loaning them money is not a taxable activity. If you’re staying put in the Lion City this holiday season and looking to send money home, here are a few options to consider:
• TRADITIONAL BANKS You can use your current bank to convert your foreign currency and then transfer it to your Australian account. This is often very expensive as the banks apply a hefty margin against the prevailing exchange rate, usually about one to three percent of the amount being sent. It is relatively quick and easy, though, and you should definitely ask for a better margin if you are sending a large sum.
• FOREIGN EXCHANGE BOOTHS You will find booths to accept your cash and swap it for your desired currency at every airport and scattered around popular tourist centres in Singapore. You will notice that these booths offer a very poor conversion, applying a margin of more than four to five percent to the prevailing rate. The margin, however, is somewhat justified due to the convenient retail locations of these booths.
• ONLINE FX SERVICE In the modern financial world there are now many options to establish an FX account with online providers such as the SMATS FX, which can establish an account to verify your identity and then allow you to regularly transfer funds from one currency to another. The process is simple. You ask your bank to transfer the foreign currency to the FX service account. Your bank then converts the funds to Australian dollars and forwards them to your nominated account. By transferring funds this way, you can save a considerable sum as the margin applied can range between just 0.5 to 1.5 percent. The ability to apply a lower margin is due to the lower operating costs of an online service and the large volume of exchanges brought on by the very competitive pricing of the service.
Many mistake the need to declare cash taken to Australia with some sort of taxation consequence. The Cash Transactions Reporting rules require anyone leaving or entering Australia with more than the equivalent of A$10,000 in cash to declare it at the airport. This rule is in place as an anti-terrorism measure rather than to combat tax evasion. In fact, you can legally bring in much more cash than the declaration amount, as long as you can show a legitimate source for the money.
If the amount is electronically transferred to Australia rather than sent in cash, then there is no restriction on the amount sent, as anti-terrorism measures have already been taken by the sending bank or institution to verify your identity in accordance with international convention. In recent times, the Australian Taxation Office has been accessing the records of funds sent back to Australia and using them to question the authenticity of the sender’s residency. A letter is usually sent to the address on record, seeking verification that you are indeed living overseas on a permanent basis and are therefore not taxable for the funds transferred.
If you do receive one of these letters, it is essential you respond appropriately and confirm your tax status. It is strongly recommended you seek professional assistance for this. It could be especially complicated if you are sending funds home regularly for your spouse or children who may have returned to Australia before you. And if you complete your offshore period and return to Australia, you are legally entitled to leave funds abroad and transfer them gradually at your discretion. You will be required, however, to report any interest or earnings on your offshore capital each year if you are living in Australia as a resident for tax purposes. This would apply to you, regardless of whether you brought the income into Australia or left it overseas.
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Posted by smats Tue, 26 Nov 2013 02:39:00 GMT

Low Aussie interest rates announced 2013

Australian property tax and expatriate tax expert STEVE DOUGLAS discusses why the current low interest rates in Australia attract foreign investors eager to enter the Aussie property market and just waiting for the low.

Q:I heard news of how Australia’s fixed interest rates are now at an all-time low. Should I consider fixing my interest rate now or wait for rates to drop even further?
A: When the Reserve Bank of Australia (RBA) reduced the Official Interest Rate in August 2013, it pushed Aussie interest rates down to their lowest in 50 years – thus creating an advantageous opportunity for investors and owner occupiers to fix their interest rates at a reduced level for a long term. Australian lenders currently allow fixing rates for periods of up to five years, and most banks now offer an attractive three-year fixed rate of five percent per annum.
The occurrence of these changes are owed to the RBA’s decision to lower the official interest rate to provide economic stimulus to a sluggish Australian economy that started weakening in the beginning of 2013. The lower rates bring about a great opportunity for potential investors, as the best time to fix rates is when they are declining and before the next upward trend begins. The RBA has felt comfortable with their decision so far due to the low levels of inflation currently being experienced in Australia. This was a similar pattern to what occurred in 2008 when the RBA reduced interest rates to protect Australia from the global financial crisis.
The following graph reflects how interest rate reduction in Australia quickened in response to the severity of economic conditions at the time. You will also notice how the interest rate rose soon after fears of a recession abated. This led to a series of rate increases from October 2009 to November 2010, which slowed the general economy and led to the recent decreases, the last being August 2013.
Those keen on investing are advised to make a quick move. The latest rate cut could be the last for a long time to come, as the recent federal election may serve as a stimulus to the Australian economy and hence diminish the need for further rate reductions. The Consumer Price Index (CPI) is another key indicator, which points to how the interest rate movement may not drop any lower. The RBA is strongly focused on keeping inflationary pressure in Australia to a minimum and has always used interest rates to manage the CPI to stay in an acceptable target range.
The sluggish Australian economy, assisted by a strong Australian dollar keeping the cost of imports low, has kept inflation in check. The recent rate cuts triggered a correction in the Aussie dollar, which is welcomed by exporters but unwelcomed by consumers because imported goods will now be more expensive, leading in turn to a lift in inflation in this sector. In the short term, this has been offset by the lower interest rates, which has a deflationary effect because of lower housing costs due to cheaper interest on housing loans. Combined, these factors have a nullifying effect to soften the overall inflation number.
In the near future, inflation may be harder to control as housing prices begin to lift due to an interest rate-led rally in the market. A recent increase in the Aussie dollar will soften this impact in the short term. In the long term, however, there is more likely to be a lift in inflation, which in turn will encourage the RBA to consider increasing interest rates to moderate the economy and keep things in balance. This would appear more likely than a reduction, but hopefully we can all enjoy the current low interest rate environment for at least a few more months.
In any case, you should be mindful that fixed rates will move before the RBA takes any action because the rates are more linked to market expectations than the actual rate the RBA announces, which directly impacts the variable lending rates the banks offer. In addition, as lending activity increases, there will be fewer low-cost funds available, and banks will be required to offer higher deposit rates to attract lending capital. This in turn will push fixed rates up for borrowers.
As such, it would be wise for anyone with an Australian property loan to watch the interest rates very closely and check with their banks about the current fixed rates. If you would like assistance to review your current loan, email Australasian Taxation Services at for a free review of your lending options.
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Posted by smats Thu, 31 Oct 2013 08:20:00 GMT

The 2013 Australian Elections

Australian property tax and expatriate tax expert STEVE DOUGLAS shares his professional wisdom and thorough review of the recent Australian elections and discusses the repercussions for Australian expat and foreign investors.

On Saturday, September 7, the Australian public had the opportunity to vote in the Federal elections to either return Prime Minister Kevin Rudd or replace him with the Liberal Party candidate, Tony Abbott. When the last few votes were counted late on Election Day, it was clear that Australia had handed Mr Abbott a clear and decisive victory. His party achieved success, gaining almost 90 out of 150 seats in the Lower House, which controls government business, up from the 73 votes they held after the 2010 election. This is an important result for Australia, as it brings to an end four years of uncertainty that began when the Labour Party replaced Kevin Rudd, their Prime Minister elected in 2007, with Julia Gillard, who then led them to the 2010 election.
In 2010 the Labour Party won fewer seats than the Liberals. However, a last minute deal with the Greens Party and two key independents allowed the Labour Party to form a minority government. This time was heralded as a new age of co-operation, but sadly the dream did not play out in reality, and Australia has had three years that most would like to forget, eventually culminating in a public ‘divorce’ between the Labour and Greens early in 2013.
The Labour Party tried their best to bring in major change initiatives such as the Mining Tax, Carbon Tax, National Disability and generous improvements to health and education, but somehow they were not able to make the numbers work. Over the past three years, they missed their financial budget predictions by A$20 billion a year, blowing out the budget and leaving Australia with a large government debt burden that is now over A$300 billion, a significant sum considering Australia was debt free when the Labour Party came to power in 2007.
The ongoing problems with border protection and refugee intake added further fuel to the fire. With poor results in the opinion polls, the Labour Party once more changed leadership, replacing Gillard with Rudd in a last attempt at damage control. The result of this effort was an underperforming Australia. In the end an entirely new political change was something that everyone seemed to recognise as a necessity to steer Australia’s financial situation back on track.
The Liberals, though, should not be too overconfident with their victory in these last elections, as the electorate did not flock overwhelmingly towards them. The Liberal National Coalition increased their primary vote by just two percent from the 2007 result. The Labour Party’s vote reduced by 4.2 percent, and the Greens also lost ground with a fall of 3.4 percent. However, this leadership changeover brings relief as it may mark an end to the era of financial uncertainty in Australia.
    From the perspective of Australian expatriates and foreign nationals investing in Australia, the last six years under the Labour Party have been challenging, especially on the taxation front. Poor leadership under the Labour Party has led to a sluggish property market, suppressing gains in most areas. Some key changes implemented by the Rudd and Gillard Governments that affect expatriate and foreign investors include:
  • Changes to the Exempt Income Rules in July 2009 to capture as taxable income any earnings by Australians working abroad temporarily.
  • A more aggressive interpretation of residency rules by the Australian Taxation Office.
  • Removal of the Foreign Buyers Restrictions, thereby lifting maximum sales restrictions of the previous 50 percent of apartments and allowing 100 percent sales to foreigners in any project.
  • Removal of the 50 percent tax free concession on capital gains for foreign investors and expatriates from May 2012.
    As a result, it is fair to say that expatriate and foreign investors have been harshly dealt with by the outgoing government. Leading up to the election, Australasian Taxation Services (ATS) lobbied both the Labour and Liberal Parties to fix some of these issues, especially the removal of the capital gains tax concession. The Liberal Party has been pragmatic and open to review this situation, so ATS remains confident that the change of government may indeed lead to positive outcomes for many expatriate and foreign investors. If you’d like to join ATS’ cause to have the Capital Gains Tax Concession returned, visit the online petition at

     Overall, the Liberal Party regaining power has had an immediate effect, with business and consumer confidence indicators already rising this early in the changeover. This is because in the last two years in particular there has been a tendency for buyers to procrastinate under the uncertainty of the political situation. As such, we may see a strong surge of activity in a low supply market that will put prices under upward pressure. If the Liberal Party can restore trust, confidence and stability, then the natural strengths of the Australian economy will shine through to enhance the nation as a desirable and investment-safe country.

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Posted by smats Mon, 07 Oct 2013 09:55:00 GMT

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Australian Tax & Property Advice

With Steve Douglas, specialising in taxation & migration planning



Steve Douglas is the co-founder and Managing Director of Australasian Taxation Services (ATS), established in Singapore in 1995. ATS provides specialist taxation services to people of any nationality investing in Australian property, as well as Australian expatriates living overseas. Areas of specialisation include the Australian taxation aspects of property investment, as well as expatriate and migration planning.

Contact Info

Australasian Taxation
Services Pty Ltd

10 Jalan Besar
#17-01 Sim Lim Tower

Singapore 208787


Tel: 6293 3858 

Fax: 6293 4332