A vibrant, well-run country with a stable political environment.
Welcome also to Business Opportunity but also a sometimes-challenging Business and Tax environment. Australia is a first-world country blessed with a developed economy and deserves its tag as the “Lucky Country” for many reasons. The first world economy is supported by various“social services.”However, a complex and expensive Tax System finances the services and infrastructure.
The first principle that must be understood is that there are many Tax levels. For example, the Federal Government collects Income Tax, Capital Gains Tax and GST (a VAT-style tax). In contrast, the individual State Governments collect Stamp Duty (Transfer Duties), Land Tax and Payroll Tax.
It is generally true that most migrants moving to Australia do not spend enough time thinking about the Tax System before the move since they have major family and other financial decisions to ponder, which generates enough stress without the complication of considering Tax. Yet it is also abundantly clear that a little Tax Planning implemented before migration will yield significant benefits for all. I cannot over-emphasise the importance of consulting a suitably qualified professional to seek advice as early as possible.
In my experience, we all rely on two critical factors during the migration process:
Since our Financial Health relies heavily on our Tax Exposure, it is essential to do legitimate planning to minimise Taxes.
It is not practical in a presentation of this nature to adequately address the Australian Tax system in detail, nor does the writer provide any specific advice (Please see the attached disclaimer). Accordingly, our comments outlined below should be regarded as General Information only, and no action should be taken without seeking suitable advice relevant to your specific needs.
Think about the following ideas when doing Tax Planning:
- Australia has a “Worldwide” Tax system, meaning you have both Income Tax andCapital Gains Tax obligations in Australia on worldwide assets once you become Tax Resident. Most people do not realise that your choice of Migration Visa plays an essential role in this process. Depending on circumstances, some Visa categories do not initially provide for worldwide Tax reporting.
- Ask about the Double Tax Agreement between Australia and your country of origin. Most agreements provide a Tax Credit in Australia for tax paid in your country of origin to avoid double taxation.
- Create and Implement a Corporate structure for both Business and Investments that is Flexible,Tax Efficient and Protects Assets.
- Always separate ownership of Business assets from Investment Assets.
- Ownership of the Family Home should be carefully balanced between the need for access to Capital Gains Tax exemptions and Asset Protection.
- Planning for Retirement has become a “tax-friendly and attractive” Tax strategy, particularly for those over 55.
- Structure Borrowings in a manner that the Interest is Tax deductible. Interest on Loans whose purpose was to finance the family home purchase is not Tax Deductible.
- Structure the Ownership of Life Insurance in a Tax-Efficient manner.
- Structure the Ownership of Investment Properties and Shares to take advantage of significant Tax Concessions. You will hear the term “negative gearing”, which refers to the principle of borrowing to invest in either Real Estate or Shares.
In summary, the Oz Tax System is more complex than even that in the US or similar countries elsewhere.
Fortunately, many legitimate Tax Strategies can be Employed to take advantage of Tax Concessions, thus achieving great benefits, but only if you act BEFORE making “the big move”.
Wishing you a “hassle-free” move.
Andy Mizarollis, 20/06/24
B Com, CA (SA), FCA
For Corp-Plan Consultants Pty Ltd
ABN 24 087 157 579
Chartered Accountants & Financial Advisors
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