Australian Tax Residency During Covid-19 Lockdown
With over 1.7 million cases and over 100,000 deaths, there is no doubt that Covid-19 is taking its toll on our global economy. There are very few countries not impacted already by the virus, and expectations are that this will continue at least into 2021 before a vaccine is found and widely available. With many being impacted in terms of their travel bans, and in a lot of cases, unable to return to their home base, a key question is what impact this has on an Australia expat’s tax residency.
Travel bans have been increasing, and many borders remain closed. There are also very few flights available for Australian expats to get back to their home base. This week we’re exploring what impact this could have on an Australian expat’s tax residence if they’re currently stuck in Australia.
Thankfully, the Australian Tax Office (ATO) has provided pragmatic guidance for Australian expats, which can put our mind at ease. Firstly, they have advised that an Australian expat who is currently stuck in Australia due to Covid-19 will not be considered an Australian tax resident providing that they meet the following criteria:
1. They usually reside overseas permanently.
2. They intend to return to their home base, in our case, Singapore, as soon as they are able to and the travel restrictions are lifted.
Therefore, based on the above interpretation, there should be no changes for Australian expats. Income that is generated from a foreign source, such as your employment income from Singapore, would remain non-taxable in Australia, and your taxable Australian income, such as rental from an investment property, would remain taxable in Australia at your non-resident rates.
The ATO has advised that an Australian expat who is working remotely (i.e. in Australia) for their offshore-based employer for up to 3 months would not be deemed as an Australian tax resident. There will be further guidance provided by the ATO on this as the weeks pass by depending on how long travel restrictions remain in force.
It’s important for both companies and individual Australian expats to pay close attention to any further changes here. For any companies whereby their employees are treated as Australian tax residents, this could raise obligations for income tax to be withheld and superannuation to be paid.
We will be providing regular updates here to any further changes that impact Australian expats. We hope that anyone who is currently stuck in Australia or elsewhere is able to return home safely in the not too distant future.
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd - No: 200305462G | MAS License No: FA100035-3
Australian Expatriate Group is a division of Global Financial Consultants in Singapore providing specialist advice to Australians living abroad.
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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.
*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.
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