The most valuable advice for a family moving to Australia is given before they arrive. Once a client becomes an Australian tax resident, their worldwide income and gains come into the Australian tax net, their offshore structures are tested against Australian rules, and Australian family law can reach their global assets. Many problems that are simple to address beforehand are expensive or impossible to fix afterwards.
This checklist sets out the issues we raise with families relocating from Singapore, Malaysia, Indonesia and Hong Kong. Each needs advice specific to the family, and we work with the client’s Australian and overseas tax advisers on the tax points.
1. Visa pathway and timing
Which visa, for which family member, and when each becomes resident. Our Accredited Specialists in Immigration Law advise on the visa itself.
Temporary and permanent visas have different consequences. Many temporary visa holders are taxed in Australia only on Australian-source income; most of their foreign income and gains is not taxed here. That concession ends on becoming a permanent resident, or if married to an Australian citizen or permanent resident.
2. Tax residency
Australian tax residency depends on the facts, not just the visa. Moving with family, establishing a home and spending most of the year here usually makes a person resident.
On becoming resident, most assets that are not Australian land are generally treated for capital gains purposes as acquired at their market value on that date. Obtain valuations at arrival.
Consider timing gains, distributions and dividends before arrival, while still non-resident.
3. Offshore companies
Companies controlled by Australian residents can fall under the controlled foreign company rules, which attribute some passive income to Australian shareholders each year, whether or not it is distributed.
Review which family members will hold shares, directorships and control once in Australia.
4. Offshore trusts
Check whether the trust could become Australian resident if a family member who moves is a trustee, protector or the person who really makes its decisions.
Plan distributions. Accumulated income paid to a resident beneficiary later can be taxed with an interest charge. See our guide on offshore trusts with Australian assets.
Check the deed for powers to add or exclude beneficiaries.
5. Australian property
Once a family member is a permanent resident ordinarily living in Australia, they no longer need foreign investment approval and are outside the foreign buyer ban. Buying in their name, after arrival, may avoid significant surcharges.
Existing holdings in foreign trusts or companies may continue to pay foreign surcharges unless restructured.
6. Wills and powers of attorney
Make an Australian Will that works with the home-country Will.
Make an Australian enduring power of attorney for financial and personal matters.
7. Family law
Australian family courts can divide worldwide property, including interests in family trusts and companies that a spouse controls.
For a child marrying or living with a partner in Australia, a binding financial agreement can be made before or during the relationship. A de facto relationship generally gives rise to property claims after two years. See our guide on family law and family wealth.
Document gifts and loans from parents properly, so their character is clear later.
8. Banking and source of wealth
Australian banks, lawyers and real estate agents now have strict identity and source-of-funds obligations. A well-organised source-of-wealth file from the private bank makes the client’s first year here much smoother.
Refer a matter. For a pre-arrival review, ideally six months or more before the move, contact Justin Chua.
This article is general information only and is not legal, tax or migration advice.
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