When you move from Hong Kong to Australia and become an Australian tax resident, Australia generally taxes your worldwide income and gains, including rent from a flat you keep in Hong Kong, unless you qualify as a temporary resident. The day you become resident matters: for most overseas assets it resets your Australian cost base to market value, and it starts the six-month window for taking your MPF without Australian tax on the earnings. Australia and Hong Kong have no comprehensive double tax agreement, so the order in which you do things matters more than it would between two treaty countries.
This article explains how the Australian rules apply to the flat, the MPF, Hong Kong companies and trusts, and Wills in both places, and ends with a timing checklist.
When you become an Australian tax resident
Australia decides residence for individuals under several tests: whether you “reside” here in the ordinary sense, whether your domicile is in Australia, and whether you are present here for more than half the income year. Someone who arrives with a permanent visa, a home and a job here is usually resident from arrival, and a part-year resident for the income year (1 July to 30 June) in which they arrive.
Hong Kong taxes on a territorial basis. Salaries tax, profits tax and property tax apply to Hong Kong-source income, and Hong Kong does not tax capital gains or most dividends and interest, so double taxation is less common than with mainland China. But because there is no treaty, there is no tie-breaker rule, no treaty limit on either side’s taxing rights and no mutual agreement procedure. Relief, where available, comes only from Australia’s domestic foreign income tax offset (FITO).
Temporary residents: who qualifies for the foreign-income exemption
Many people from Hong Kong arrive on a temporary skilled or graduate visa. A temporary resident is someone who:
- holds a temporary visa under the Migration Act 1958;
- is not an Australian resident for Social Security Act 1991 purposes (broadly, not an Australian citizen, permanent resident or protected special category visa holder); and
- does not have a spouse who is an Australian resident for Social Security Act purposes.
A temporary resident who is an Australian tax resident is still generally exempt from Australian tax on foreign-source income, such as Hong Kong rent, dividends and interest. The main exception is income from employment or services performed while a temporary resident. Capital gains on assets that are not “taxable Australian property” are also disregarded, so the Hong Kong flat falls outside Australian CGT during this period.
The spouse condition is often overlooked. Consider a typical situation: one spouse moved to Australia some years ago and is now a citizen, and the other arrives on a temporary partner or skilled visa. The arriving spouse is not a temporary resident, even though their own visa is temporary, so their Hong Kong income is taxable in Australia from the day they become tax resident. Also, once a person has been an Australian resident without a temporary visa (or with a spouse who meets the Social Security Act test), they cannot later become a temporary resident again.
Keeping your Hong Kong flat
Rental income
Once you are a resident (and not a temporary resident), net rent from the Hong Kong flat must be included in your Australian return, converted to Australian dollars. Deductions follow Australian rules, not Hong Kong ones. They include interest on a loan used to buy the flat, management fees, Government rates and rent, repairs and depreciation where available. Under current law, a net loss on a foreign rental property can generally be offset against other Australian income.
Hong Kong property tax is charged at the standard rate of 15% on the net assessable value. That is the rent less rates paid by the owner, less a flat 20% statutory allowance for repairs and outgoings. As a Hong Kong tax on income, property tax should generally count toward a FITO, but the offset cannot exceed the Australian tax on that income, and because Hong Kong uses the flat allowance while Australia deducts actual expenses including interest, the two rarely match. Where the flat carries a mortgage in Hong Kong dollars, foreign currency gains or losses can also arise for Australian tax purposes, for example when the loan is repaid. Keep Hong Kong property tax assessments and receipts, because you need them to claim the offset.
Selling the flat later: Australian capital gains tax
Hong Kong does not tax a capital gain on selling the flat, so any Australian CGT is not offset by Hong Kong tax. Three rules shape the Australian result:
- Cost base reset on becoming resident. Under section 855-45 of the Income Tax Assessment Act 1997, when an individual becomes an Australian resident, each CGT asset that is not taxable Australian property (and was not acquired before 20 September 1985) is treated as acquired on that day for its market value. In practice, Australia generally taxes only the growth after you arrive. This rule does not apply if you become a temporary resident on the same day.
- Reset when temporary residence ends. If you were a temporary resident first, a similar market-value reset applies on the day you stop being a temporary resident while remaining an Australian resident. That is usually the day your permanent visa is granted.
- The discount and evidence. An Australian resident individual may be entitled to the 50% CGT discount on an asset held for at least 12 months. Because the asset is treated as acquired on the reset date, the holding period is generally measured from that date. A valuation by a Hong Kong surveyor at the reset date is the best evidence of your cost base.
Main residence exemption. The Australian main residence exemption can apply to a dwelling outside Australia, but it rarely covers a Hong Kong flat fully once you live here. Generally only one dwelling can be your main residence at a time, so a home bought in Australia competes with the flat. The “absence rule”, which lets a former home keep its status (for up to six years if it is rented out), depends on, among other things, the flat actually having been your main residence during the ownership period Australia recognises, which begins at the reset date, and on you not treating another home as your main residence. If you later leave Australia and sell while a foreign resident, the exemption is generally unavailable unless a narrow “life events” exception applies. This is one of the most fact-specific parts of the move, and advice should be obtained before you sell or buy a home here.
Your MPF
Withdrawing on permanent departure from Hong Kong
MPF benefits are generally preserved until age 65. One of the limited grounds for early withdrawal is permanent departure from Hong Kong. You must make a statutory declaration that you have left or will leave Hong Kong to live elsewhere with no intention of returning to work or to resettle as a permanent resident. You must also give the trustee documents it accepts as showing that you are permitted to live outside Hong Kong. Claims are made through the eMPF Platform. A member can withdraw on this ground only once, and a false declaration is an offence. The MPFA has stated that BN(O) passports and associated visas are not accepted as evidence for this purpose, and that trustees review each application on its facts. Voluntary contributions may be governed by different rules under the scheme’s terms.
If a member dies, the MPF forms part of their estate and is claimed by the personal representative. That differs from Australian super, as we explain in Your Superannuation Is Not Automatically Part of Your Estate.
How Australia taxes an MPF lump sum
Australia treats a lump sum from a foreign superannuation fund under special rules. A Hong Kong MPF scheme will generally be treated as a foreign superannuation fund, but the scheme’s terms should be checked.
| When you receive it | Australian tax treatment (broadly) |
|---|
| Within six months of becoming an Australian resident | Tax-free, provided it relates only to a period of non-residence (or the period from becoming resident to payment) and does not exceed the amount vested in you |
| More than six months after becoming resident | The “applicable fund earnings”, broadly the growth after you became resident (calculated under section 305-75), are assessable at your marginal rate; the rest is not assessable |
| Transferred directly into a complying Australian super fund after six months | You may choose to have all or part of the applicable fund earnings taxed in the fund at 15% instead of personally |
Different considerations may apply while you are a temporary resident.
Moving MPF money into Australian super
Australian super funds can accept transfers from foreign super funds, but the transfer is treated as a member contribution. The amount vested in you counts toward your non-concessional contributions cap. Applicable fund earnings also count toward that cap unless you elect to have them taxed in the fund, in which case they count toward neither cap but still increase your total super balance. The caps and the related total super balance limits are set by legislation and change over time; exceeding them can lead to extra tax.
The fund-tax election is available only if the whole interest is transferred directly to the Australian fund. MPF benefits are usually paid to the member on withdrawal, so ask the trustee early whether a direct payment to an Australian fund is possible. If you receive the money personally and later contribute it, it is generally treated as an ordinary personal contribution, and any applicable fund earnings are taxed to you.
Hong Kong companies and trusts after you move
A Hong Kong company or trust can come within the Australian tax net when its controller moves here.
- Company residence. A Hong Kong company can become an Australian resident, taxable here on its worldwide income, if its central management and control is exercised in Australia, for example because the directors who make the real decisions live here.
- Controlled foreign company (CFC) rules. If the company stays non-resident but is controlled by Australian residents, certain passive or “tainted” income can be attributed to Australian shareholders each year, whether or not distributed. Hong Kong is not a listed comparable-tax country.
- Trust residence and distributions. A trust becomes a resident trust if a trustee is an Australian resident or its central management and control is here. Distributions from a non-resident trust to Australian beneficiaries, including distributions of accumulated income or gains, can be taxed under section 99B of the Income Tax Assessment Act 1936, sometimes with an interest charge.
- Transferor trust rules. If you transferred property or services to a non-resident trust, its income can be attributed to you. Transfers made before you became resident are generally excluded only if you are not in a position to control the trust, or if the trust is a non-resident family trust.
Restructuring is much simpler before arrival than after. We cover these rules in more detail in Foreign Trusts and Offshore Companies: How Australia Taxes Its Residents and Before Becoming an Australian Tax Resident.
Hong Kong Wills and Australian Wills
Hong Kong abolished estate duty for deaths from 11 February 2006, and Australia has no inheritance tax. The questions are therefore about succession, not death taxes. A Hong Kong Will can be recognised in Australia if it was validly made, but proving it here means an Australian grant of probate (or resealing of a Hong Kong grant) with certified documents.
Many families keep two Wills, a Hong Kong Will for Hong Kong assets prepared with Hong Kong lawyers and an Australian Will for everything else, each drafted so that it does not revoke the other. Moving here also changes your domicile over time. That can bring your movable assets worldwide within Australian succession law and, in Victoria, within the reach of family provision claims. The MPF and Hong Kong bank accounts fall into your estate, while Australian super does not. Enduring powers of attorney should also be made under the law of the Australian state where you live. See Assets in Australia and Overseas: Do You Need More Than One Will?.
Visa pathways, in brief
Since 2020 Australia has offered specific visa arrangements for Hong Kong SAR and BN(O) passport holders, including longer temporary visas and pathways to permanent residence. Because the visa and its timing decide whether you are a temporary resident, immigration and tax planning should be considered together. Our immigration team, which includes two Accredited Specialists in Immigration Law, advises on visa options.
A timing checklist
| When | What to consider |
|---|
| Before you leave Hong Kong | Review who controls Hong Kong companies and trusts and where decisions are made. Decide whether to keep or sell the flat. Arrange valuations as at your expected residency date. Gather MPF statements. Brief Hong Kong and Australian tax advisers together. |
| On arrival | Record your residency date and visa type. Confirm whether you or your spouse are temporary residents. Note the six-month MPF window. Update tax residence self-certifications with Hong Kong banks. |
| First income year | Lodge a part-year resident return. Declare Hong Kong rent and claim the FITO for property tax. Make Australian Wills and enduring powers of attorney, and review the Hong Kong Will. |
| Ongoing | Diarise when temporary residence ends (a second valuation date). Keep Hong Kong property tax records. Review structures if directors or trustees move. |
Common mistakes
- Assuming no tax is due in Australia on Hong Kong rent because Hong Kong property tax has already been paid.
- Not obtaining a market valuation of the Hong Kong flat at the residency or permanent-visa date.
- Withdrawing MPF more than six months after arrival without realising the earnings are taxable in Australia.
- Continuing to run a Hong Kong company from Melbourne without considering where it is now resident.
- Making an Australian Will that accidentally revokes the Hong Kong one.
How we can assist
We advise on the Australian legal side of a move from Hong Kong: Australian Wills and enduring powers of attorney coordinated with Hong Kong Wills, trusts and family structures, property and succession, and the documents needed to deal with assets in both places. On Hong Kong law and tax we work alongside lawyers and tax advisers in Hong Kong, and we work with Australian accountants on the tax position.
Related reading
Chua Tan Associates acts for families and their professional advisers on Australian legal matters with a cross-border dimension, working alongside lawyers and tax advisers in mainland China, Taiwan and Hong Kong. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice.
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