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.
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.
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.
- 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.
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.
Australian property tax and expatriate tax expert STEVE DOUGLAS discusses the circumstances under which you may need to lodge an Australian tax return as an Aussie citizen living in the Lion City.
Australian property tax and expatriate tax expert STEVE DOUGLAS shares his professional expertise and opinion on the recently implemented Aussie Capital Gains Tax changes and discusses the repercussions for Australian expats and foreign investors.
On May 14 this year, Australian Federal Treasurer Wayne Swan presented his sixth federal budget in Canberra. The previous year the government had promised a surplus return from efforts to take advantage of the mining boom and share prosperity with all Australians. This, however, did not occur. Instead, the Labour government delivered its sixth consecutive deficit of an estimated A$19.4 billion – a large variance from the expected A$1.5 billion surplus announced 12 months earlier. This follows last year’s A$44.4 billion deficit, which was higher than the original budgeted deficit amount of A$22.6 billion.
Rather than the announced return to surplus, the federal government is now expected to stay in deficit for a few more years, with expected debits of A$18.0 billion in 2013/14 and A$10.9 billion in 2014/15 before an expected small surplus of A$0.8 billion in 2015/16. In the 2012 budget, revenue was expected to grow by 11.7 percent, largely on the back of the new mining and carbon taxes. Although both of these taxes misfired, the government did achieve an impressive 6.2 percent increase in revenues, which perhaps would have been a more realistic level to forecast in the first place.
This revenue uplift does give hope for a potential return to surplus, which is essential to assist in repaying the build-up of government debt since the global financial crisis in 2008. Below is a breakdown and review of actual and budgeted forecasts from 2011-2014.
Expenses are set to rise sharply in 2013 and 2014, increasing by 6.5 percent per year. GDP growth in Australia was in line with forecasts, and, by world standards, unemployment remained low at the forecasted level of 5.5 percent. Inflation was the winner over the year, coming in at 2.5 percent against a budgeted 3.25 percent. This was due to a sluggish domestic economy, with prices kept low, and a high Australian dollar, which made imports cheaper.
- University fees payment discounts of 10 percent upfront and five percent will cease from January 1, 2014.
- A new 10 percent non-final withholding tax will be kept from Australian property sales of over A$2.5 million, pending lodgement of the tax return and calculation of any capital gains tax payable. The extra will be refunded or the shortfall charged.
- Tightening of current thin capitalisation rules that help offshore investors through companies and trusts pay a 10 percent interest withholding tax rather than the higher corporate rate of 30 percent or the personal tax rates from 32.5 percent.
- Improved computer data matching capabilities for the Australian Taxation Office to track property rentals and sales to ensure tax returns are being lodged.
- Additional funding for the Australia Taxation Office to review offshore business holdings where tax avoidance may be taking place.
Australian property tax and expatriate tax expert STEVE DOUGLAS explains negative gearing, a financial investment strategy used when acquiring a rental property, and outlines the benefits this tactic can have on your overall financial performance.
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.
Australian property tax and expatriate tax expert STEVE DOUGLAS discusses the pros and cons of investing in one large property versus buying two smaller apartments.
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:
A rental requires only an initial small deposit, usually four weeks rent, so the burden is very low.
Rental leases are usually six to 12 months in duration, allowing a very flexible environment and the ability
to make a change if required.
Simple fixed cost, with modest increases throughout the study period.
An additional room or rooms can be taken either at the same location or a different place.
Opportunity to recoup outlay
There is no opportunity at all to recover the rent.
There are no tax implications on renting a property for your child. The expense is not allowed as a tax deduction in Australia.
To purchase a property there is a large initial financial outlay. In most cases finance is available for up to 80 percent of the purchase price, which can significantly reduce the initial out-of-pocket outlay. Regardless, a 20 percent deposit plus an allowance for a percent of Government and Transfer fees means a significant up-front commitment.
If you have purchased a property, then ideally you will want your child to stay at that property. If your child wants to stay somewhere else, it would be a fairly unwelcomed decision. It is possible to rent property out to another person should your child insist on an alternative residential venue, so there still is a reasonable level of flexibility.
The weekly cost of owning the property with a mortgage will vary greatly depending on the type and location of the property and the initial value.
Opportunity to recoup outlay
If you have chosen a decent property in a good area, it’s highly likely the value will rise over the period of study, and the gains would be sufficient to cover most of the weekly ownership costs. If you have selected a better area or allow some additional time for the value to improve, then you may not only fully recover the holding expenses but also the cost of the education.
It is possible to gain substantial tax benefits when having your children live in your property. This can offset tax issues you may have on other Australian property you own or build up as a future tax benefit to offset