Specialist Australian tax exit advice for establishing your international base.

An Australian tax resident is generally assessed on worldwide income. Once residency ceases, Australian tax is generally limited to Australian-sourced income and capital gains on taxable Australian property. Tax treaties can provide relief from double taxation and contain tie-breaker rules where two countries treat the same person as resident.

Ceasing residency requires more than physical absence. It depends on the person's full circumstances, including intention, conduct and continuing connections.

A person may spend only a few weeks in Australia and still remain a tax resident. Retaining the family home, leaving a partner or children in Australia, and continuing established economic and social patterns can support ongoing residency. Spending 183 days outside Australia is not a test for ceasing residency.

Under the domicile test, a central question for many departing Australians is whether they have established a permanent place of abode outside Australia. In this context, permanent does not mean forever or require one fixed dwelling. It means living in a particular country in a way that is more than temporary or transitory.

An Australian who takes a long-term home in Malaysia, for example, obtains the right to live there, moves personal belongings and establishes ordinary daily life has stronger facts. Someone rotating between short stays in Bali, Bangkok and Dubai, without settling in any country, may remain an Australian resident despite a lengthy absence.

The nature of the accommodation, expected length of stay, family location, use of any Australian home and the person's conduct are considered together. A lease or visa is useful evidence, but neither decides the outcome on its own.

Tax residency does not cease merely because a date is selected in a tax return or announced in advance. The cessation date arises from the overall facts and can occur part-way through an income year when the person's living arrangements, intention, conduct and connections support the change.

Timing can impact the resident vs non-resident tax treatment of anticipated transactions. For example, assume a founder signs a contract to sell shares on 10 June and their circumstances support ceasing residency on 1 July. The CGT event will generally occur when the contract is signed, even if settlement happens later, so the disposal falls before the residency change.

The timing can also affect foreign earnings, trust distributions, dividends, CGT event I1 and changes to companies or other entities. A sequence of decisions can be as important as a travel date itself.

When an individual or company stops being an Australian tax resident, CGT event I1 happens. Broadly, affected assets other than taxable Australian property are treated as disposed of at market value at that time, which can produce a capital gain or loss even though no sale has occurred and no cash has been received.

For example, a person may cease residency while holding US shares, digital assets and an interest in a foreign private company with substantial unrealised gains. Each eligible asset must be considered at the cessation date, while Australian real property and other taxable Australian property are generally treated differently.

An individual may choose to disregard the immediate I1 gains and losses. The choice applies to all assets covered by I1, not asset by asset, and treats them as taxable Australian property until a later CGT event causes the person to cease owning them or the person becomes an Australian resident again.

Recent tax reforms ending the 50% CGT discount and denying indexation treatment to non-residents are a hot topic for tax planning around this CGT event.

Selling, retaining, transferring or restructuring an asset before or after residency ceases can produce different tax outcomes. The relevant decision may depend on whether an asset remains taxable Australian property, whether CGT event I1 applies and how a later disposal may be treated.

A listed share portfolio may have an observable market price on the cessation date. Private-company shares, intellectual property, an interest in an unlisted business or thinly traded digital assets may require a more detailed valuation using financial information and an appropriate valuation method.

The valuation should be objective, supportable and tied to the correct date. Cost-base records, acquisition documents and evidence of transaction costs are also needed, particularly where the asset may not be sold until years after departure.

Every Australian proprietary company must have at least one director who ordinarily resides in Australia. If the sole director of a one-person company moves overseas and no longer ordinarily resides here, the company will breach this minimum officeholder requirement unless another Australian-resident director is appointed. That appointment carries real legal duties and cannot be treated as a name-only role.

The resident-director requirement is separate from the company's tax residency. An Australian-incorporated company remains an Australian resident company for domestic tax purposes after its owner moves overseas. Conducting its management or business from another country may also create tax residency, permanent establishment or other obligations there.

A foreign-incorporated company can also be resident in Australia if it carries on business here and has its central management and control here. Actual high-level decision-making matters more than the location stated in board paperwork. Formal meetings held offshore will not establish offshore control if the important decisions are really made by someone in Australia.

A beneficiary moving overseas does not automatically move an Australian family trust. A trust will generally be a resident trust for an income year if any trustee was an Australian resident at any time during that year, or its central management and control was in Australia at any time during that year.

If a beneficiary is a non-resident at the end of the income year and is presently entitled to a share of trust income, the trustee is generally assessed on the beneficiary's share of the trust's net income. The result can differ according to whether the amount is Australian-sourced income, foreign income, a capital gain, a franked distribution or another type of trust amount.

If a trust stops being a resident trust for CGT purposes, CGT event I2 happens and can produce gains or losses on relevant assets. Trustee arrangements, control, planned distributions and the timing of resolutions should therefore be considered separately from the beneficiary's personal move.

Once an individual becomes a foreign resident, Australia generally taxes Australian-sourced income rather than worldwide income. The source of income is not determined solely by the customer's address, the currency on the invoice or the bank account into which the payment is made.

For example, an independent consultant may invoice an Australian customer in Australian dollars while performing the engagement from Malaysia. Where the work is performed is an important source factor, but the result depends on the nature of the income and the arrangement as a whole. Work physically performed during return visits to Australia may require separate consideration.

Software, licensing, intellectual property and businesses operating across several countries can be more complex because the income-producing activities may occur in several places. A tax treaty and the existence of a permanent establishment can also affect which country may tax the income.

Having an ABN and issuing invoices does not establish that a person is an independent contractor. Where the relationship is comprehensively recorded in a valid written contract, its character turns mainly on the rights and obligations created by that contract, including control, delegation, remuneration and commercial risk.

For example, someone may move offshore and begin invoicing their former employer while continuing the same hours, reporting lines and duties, with no ability to send another person to perform the work. The arrangement may still have the characteristics of employment despite the new label and invoicing process.

For a genuine contractor working remotely, residency, income source, the place where services are performed and any continuing Australian business presence still require attention. Working online does not make the income location-free or remove the possible obligations of the country where the work is physically performed.

An Australian citizen or permanent resident cannot normally access preserved superannuation simply because they leave Australia or cease tax residency. Departing Australia superannuation payments are generally available to eligible former temporary residents after they have left and their temporary visa has ceased.

Self-managed superannuation funds require particular attention. An extended move overseas can affect whether the fund's central management and control is ordinarily exercised in Australia and whether it satisfies the active-member test, placing its complying status and concessional tax treatment at risk.

Australian investments can also retain Australian tax consequences after the owner becomes a foreign resident. Interest, unfranked dividends, rental income and gains from taxable Australian property may remain taxable or subject to withholding, while the new country may apply its own rules to the same investment.

Crypto assets are generally treated as CGT assets. Different rules can apply where the assets are trading stock or otherwise held on revenue account. Selling, gifting, using crypto to purchase something, exchanging one token for another, and even regular DeFi activities can trigger a tax consequence even when no Australian dollars are received.

CGT event I1 can apply to digital assets held when residency ceases. Someone holding assets across several exchanges and self-custody wallets may need an Australian-dollar market value for each holding at the cessation time. The country of the exchange or physical location of a hardware wallet does not decide the Australian outcome.

Good tax planning relies on up-to-date and complete transaction histories for cost base records, with transfers between a person's own wallets distinguished from disposals. Exchange records, wallet addresses, fees, staking receipts and cost-base information may all be required to calculate both the CGT "exit tax" position and later transactions.

Generally speaking, if the market value cost base of the asset is less for CGT event I1 than the acquisition or purchase value, then there is a loss and no CGT "exit tax". Planning a tax exit during a bear market looks different to a bull market.

Keeping an Australian bank account open does not, by itself, make someone an Australian tax resident. A person may retain an account to collect rent, pay a mortgage or meet existing liabilities after moving overseas. The reason for keeping it and the way it is used affect the weight given to that connection.

Continuing to conduct all everyday spending, borrowing and investment activity through Australia, while establishing little financial life elsewhere, can contribute to a broader picture of continuing Australian residence. Local banking, regular expenditure and financial commitments can help show where ordinary life is now conducted.

Once a person becomes a foreign resident, Australian banks and investment payers should generally be given the overseas address and residency information needed to apply the correct withholding treatment to interest, unfranked dividends and royalties.

The location of a person's partner and children, and the availability of an Australian home, can carry substantial weight in a residency analysis. For example, someone who lives in Singapore alone while their family remains in the Australian home, returns regularly and keeps the home available may continue to have a strong residential connection to Australia.

A different factual position arises where the household relocates, a long-term home is established overseas and the Australian property is sold or leased to an arm's-length tenant without continuing personal access. No single action determines residency, but the arrangements should reflect where family life is genuinely being conducted.

Australian real property remains within the Australian CGT system after residency ceases. A person who is a foreign resident when they later sell a former Australian home is also generally unable to claim the main-residence exemption unless a limited life-events exception applies.

A statement that someone intends to live overseas does not establish the residency result by itself. Conduct before and after departure should demonstrate the change, and contemporaneous records are usually more persuasive than a reconstruction prepared years later.

Useful records can include visas, long-term accommodation, utility accounts, relocation and shipping documents, local banking and expenditure, business arrangements, school or family records, travel history and documents showing how the Australian home was sold, leased or otherwise dealt with.

Records should support both the claimed cessation date and the continuing offshore position. Asset valuations, cost bases, trust resolutions, company decisions and digital-asset histories may need to be retained well beyond the departure year. CGT records are generally retained for at least five years after the relevant CGT event and may need to be kept longer in some circumstances.

These references support the general guidance above. They are general information only and not advice. Current versions are published on the ATO website.

• Taxation Ruling TR 2023/1, residency tests for individuals
• How changing residency affects CGT (ATO)
• Income Tax Assessment Act 1997, section 104-160 (CGT event I1)
• Income Tax Assessment Act 1997, section 104-165 (CGT event I1 choice)
• Market valuation of assets (ATO)
• Taxation Ruling TR 2018/5, company central management and control
• Residency requirements for companies and trusts (ATO)
• Tax on trust distributions to non-resident beneficiaries (ATO)
• Foreign and temporary resident income (ATO)
• Taxation Ruling TR 2023/4, employee and contractor classification
• Departing Australia superannuation payments (ATO)
• Keeping crypto records (ATO)
• Main-residence exemption for foreign residents (ATO)

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