Avoiding Aussie Capital Gains Tax

[David Hardman]

I wonder how many aussie tax residents who have a potentially large CGT liability leave Australia and become tax residents of a country without CGT. Eg New Zealand.
It only take a year or so to swap tax residency.

Have an extended holiday in New Zealand, declare yourself a NZ tax resident, sell your shares, don't pay Aussie CGT. Then move back to the lucky country the following year.

I'm sure the ATO would be all over this if your move was purely for "tax avoidance"... but they would have a huge problem trying to prove that was your sole intention.

[drillfix]

who have a potentially large CGT liability leave Australia and become tax residents of a country without CGT.

David LOL,

Unless you were not actually planning on returning to Australia then I think that would create more of a problem than the original one.

Meaning, jumping back and forth = Tax Evasion which from the last time I heard was a Jail Sentence.

They made an example out of Glenn Wheatley (spelling?) for tax evasion so the ordinary mug who made a Million here or there on the market, I would imagine they wouldnt show him or her any mercy if and when Judgement day came.

I think it would be better to start your own offshore company and Trust funds in the first place should you plan to reduce taxes IMO, but then I am not an expert and do not give such advice. :rolleyes:

[BDLBOM]

I wonder how many aussie tax residents who have a potentially large CGT liability leave Australia and become tax residents of a country without CGT. Eg New Zealand.
It only take a year or so to swap tax residency.

Have an extended holiday in New Zealand, declare yourself a NZ tax resident, sell your shares, don't pay Aussie CGT. Then move back to the lucky country the following year.

I'm sure the ATO would be all over this if your move was purely for "tax avoidance"... but they would have a huge problem trying to prove that was your sole intention.

I think you might find that the Aussie who did that might find himself liable to be taxed on the gain here in NZ.

[BDLBOM]

They (IRD) will come up with all sorts of ways to nail you.
It will be up to the taxpayer(avoider) to satisfy IRD of intentions and they will be calling the gain Revenue.
NZ residents are liable to declare all income from all sources.

[David Hardman]

They (IRD) will come up with all sorts of ways to nail you.
It will be up to the taxpayer(avoider) to satisfy IRD of intentions and they will be calling the gain Revenue.
NZ residents are liable to declare all income from all sources.

Maybe moving temporarily could cause some headaches but I can't see how the "scheme" could be challenged if you ended up staying in NZ.

If you were sitting on a large enough CGT liability the financial benefit could outweigh the pain of having to live in NZ long term ;-P

Have others heard about the four year tax amnesty for new migrants

http://www.ird.govt.nz/yoursituation-ind/earning-income/temp-tax-empt-foreign-inc.html

You don't have to pay any tax on foreign earned income for the first four years in NZ..

Its even available to Kiwis who have been living overseas for 10 years or more.

[small fish]

What happens if you were to go travelling for a year? Was thinking of doing this with a large part spent in Thailand and up through Asia, can't imagine anyone there hasslling you for your taxes.

[POSSUM THE CAT]

BDLBOM you are up for capital gains tax on the market value of shares on the day you leave Australia.

[David Hardman]

BDLBOM you are up for capital gains tax on the market value of shares on the day you leave Australia.

Really.... That is not the opinion of several people (including accountants) that I have spoken to about this issue.

[POSSUM THE CAT]

that is what the Australian tax office says if you are tax resident in Australia so a NZ citizen becoming tax resident in Australia has to value their shares on date of entry for capital gains tax purposes a newspaper share table is considered adequate. The same applies for exit unless you remain tax resident in Australia.An accountant was not used as amount was quite small. Australian tax office will send you the relevant literature.

[catbert]

My understanding, based on conversations some years ago with an international accounting firm, is the same as Possum The Cat's. Namely, that if you plan to relinquish Australian residency, then you will be held liable for capital gains tax on the value of your holdings as of the date that residency is terminated (which is not necessarily the same as the date that you leave Australia).

[Tony S]

that is what the Australian tax office says if you are tax resident in Australia so a NZ citizen becoming tax resident in Australia has to value their shares on date of entry for capital gains tax purposes a newspaper share table is considered adequate. The same applies for exit unless you remain tax resident in Australia.An accountant was not used as amount was quite small. Australian tax office will send you the relevant literature.

Yep, that is what happened to me when I moved to the UK from Australia for a couple of years and the accounting firm that I was provided with was one of the big four.