Looming tax bills for expatriates

Clarke McEwan Accountants



Australians who work or retire abroad face higher – and possibly retrospective – tax bills if they sell their Australian homes. Accountants may need to warn clients.

Is it still worth taking a foreign posting? Australian employers wanting to send staffers abroad are already getting push-back following proposed measures to retrospectively tax expatriates who sell their home in Australia.

A measure intended to improve local housing affordability runs the risk of penalising Australians taking postings abroad and migrants who return to their countries of origin, by stripping from them the main residence exemption (MRE) from capital gains tax (CGT).

A bill before the Senate seeks to retrospectively remove the main residence exemption from CGT for non-residents from the time the property became the taxpayer's main residence, instead of from the time they became a non-resident.

Expatriates caught in housing affordability net

The Senate is still considering Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No.2) Bill 2018.

"The government's position is that if you're from overseas and you buy property in Australia, but you remain a non-resident for tax purposes, you won't get the CGT MRE," says Robyn Jacobson FCPA, senior tax trainer at TaxBanter. "They're trying to make it less attractive for foreigners to buy houses here, trying to make more houses available to Australians, and trying to improve housing affordability.

"I get that. But as the proposed legislation stands, it also applies to Australian expatriates who have taken a job posting overseas and are non-residents for tax purposes, as well as Australian citizens who have chosen to retire overseas," says Jacobson.

If someone from either of these groups sells the dwelling that was their home for many years, and they happen to be a non-resident at the time of the CGT event – that is, when they sign a contract to sell the property – they will not be entitled to the MRE for the entire period they owned the home.

Retrospective laws on expat homes

Moreover, the loss of the MRE for these groups is retrospective, says Jacobson.

"When you change tax policy, it should start from the date it is announced or a future date. But as this proposed amendment currently stands, the loss of the MRE potentially goes all the way back to the date from which CGT has applied, which is 20 September 1985," she says.

Jacobsen believes the retrospectivity is unfair.

People were not to know when they bought their home that when they sold it, as a non-resident, they would have a taxable capital gain going back to when they bought it.

The proposed measures do not allow for any pro-rating of the period during which the person was a tax resident and lived in the home.

They cannot use the market value of the home on the date they became a non-resident, and confine the taxable capital gain to that which arose since that date, nor can they apply the six-year absence rule.

Tax laws currently allow people to maintain the CGT exemption on their main residence if they have a temporary absence of up to six years, as long as they are not claiming another property as their main residence at the same time."

Thousands of expats affected by tax on homes

Inadvertently or not, the Bill affects "hundreds of thousands of Australians living and working offshore," says Jacinta Reddan, chief executive of the Australian Chamber of Commerce in Hong Kong and Macau.

"This simply has not been thought through. Firstly, we're living in an increasingly globalised world, and the expatriate diaspora is both an enormous benefit to the Australian economy, because people return bringing with them increased skills, and to the nation's engagement with the world."

Secondly, she says, being an expatriate does not mean immunity from unexpected life events such as divorce or loss of a job, illness or death.

"These can hit us all regardless of where we live, and we often don't have a choice about when to sell our homes. Making all of the gains from a property sale taxable just because the person is a non-resident at the time of disposal is penalising Australians for living and working offshore, which is manifestly unfair," says Reddan.

The Chamber is seeing a backlash from corporate members who report resistance from staff offered critical offshore postings.

New tax rules hit estate administration

Ian Raspin FCPA, director at estate taxation advice specialist BNR Partners, says the amendment "opens up Pandora's box" in terms of estate administration.

"It certainly can catch a property that's been left in a will to adult children, if they inherit it from a non-tax resident. It's bad legislation, not only because it's retrospective, but because it becomes highly subjective as to whether a person is a tax resident or not. There is a lot of case law in Australia whereby it's just not clear," he says.

While various groups continue to lobby the government against the Bill, Jacobson says there are two strategies available to people who believe they might be affected by the new measures.

"First, the rules start for property sales after 9 May 2017. But a transitional rule says that if you held the property at that date and you sell it before 1 July 2019 – in other words, sell it by 30 June next year – the new rules don't apply to you. You would have had to have held the property in May last year, and you have to enter into a contract to sell it, by 30 June."

Expat homes for sale

Jacobson expects such selling to intensify over 2018 and 2019.

"It might not be the best time to sell the property but if they're going to save millions of dollars in tax, in some cases, they may want to. These will be people who are overseas and have no intention of coming back."

Another strategy may suit non-residents who don't want to sell before 30 June 2019. "They would need to genuinely re-establish their tax residency back in Australia, before they sell," she says.

This is where Raspin's concerns on subjectivity come into play. "We're concerned that this could potentially bring Part IVA (of the Income Tax Assessment Act) into consideration, where it is at least open to the Tax Commissioner to say that a person, in trying to re-establish tax residency in Australia, only moved back here to try to avoid income tax," he says."

If you are presently working abroad and you think you may need your current situation reviewed, get in touch with us.

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By Clarke McEwan • October 21, 2026
Superannuation law requires trustees of SMSFs to formulate, regularly review and give effect to an investment strategy that has regard to the whole of the circumstances of the fund. Although there is nothing in the law stating a timeframe that may define ‘review regularly’, it is commonly accepted that this would be at least annually. This aligns with comments on the ATO’s website where they expect reviews to occur at least annually. Some trustees will undertake an annual review leading up to, or at the beginning of a new financial year, while others will undertake the review as part of reviewing the completed financial accounts from the previous financial year. Neither is the right or wrong option, and you must consider what is best for your situation. Either way, you will need to be able to show your fund’s auditor that you have reviewed the investment strategy and documented any decisions made, whether it be recording changes deemed necessary or determined the existing strategy remains appropriate. There may be other times that it is appropriate to review the investment strategy. These may include when: There is a market correction; A member joins or leaves the fund; A member starts a pension in the fund. An investment policy will generally be comprised of two parts: 1. Investment objective – this part outlines the fund’s objectives and expected outcomes. For example, an objective may be to achieve a certain level of return over a certain period. This would generally take into account the age of the members, their retirement needs and investment risk profile. 2. Investment strategy – this part outlines how the fund will achieve the stated objectives. For example, it may include investment asset ranges or specific assets that will be held. When reviewing your fund’s investment strategy, consideration must be given to: The risk of holding particular investments and their returns, with regards to the fund’s objectives and expected cashflow requirements; Composition of investments and the risk of inadequate diversification; Liquidity of investments, with regards to expected cashflow requirements; Ability to discharge existing and prospective liabilities; and Whether insurance cover for one or more members should be held by the fund. Although these points need to be considered, it is up to the trustees to determine how they are applied, based on the circumstances of the fund. As an example, you must consider the diversification of the fund’s assets, but that does not mean you are required to have a diversified investment strategy. Many funds hold just a property and a bank account, and this may be appropriate for those funds. However, the trustees should document what consideration they gave to diversification, why the lack of diversification is appropriate and why they have chosen these particular assets. Likewise, there is no legal requirement to hold insurance cover for the members, but you do need to document that it has been considered. As noted above, a member starting a pension may be reason to review the fund’s investment strategy. This is due to the fact that this is likely to change the liquidity considerations and investment profile of the fund. When members are all in the pre-retirement growth phase, expenses are usually more predictable and there isn’t a need for many funds to hold large cash reserves. Once members reach the point they are accessing their benefits, as either pension or lump sum payments (or both), cashflow, liquidity and a potential cash buffer become a more important consideration. It is not uncommon that leading up to the end of any given financial year we will field enquiries and concerns from trustees that do not have the cash to satisfy even the minimum pension requirements for the year. While there may be several reasons for this, it should raise questions about the appropriateness of the fund’s current investment strategy and considerations as to whether a review of the asset holdings is warranted. If we revisit the one property and one bank account funds mentioned early, this may have been a reasonable strategy during the growth phase, but does it remain so during the drawdown phase? Although many people are comfortable with property and Australian investors in general have an affinity for the old bricks and mortar, this does not mean it is an appropriate investment in all circumstances. If the rental income from the property cannot support your retirement needs and minimum pension withdrawal requirements, something needs to change. This will hold true for any other investment that may not be easily sold, such as holdings in unlisted companies and trusts. Reviewing your fund’s investment strategy and giving consideration to the needs of the members and the asset holdings of the fund should not be seen as just a tick-a-box legal requirement. You’ve worked hard to build you retirement wealth and when the time comes, you want to be able to enjoy it. Having an appropriate investment strategy that will allow this is an important element of running an SMSF. Have you reviewed your strategy lately?
By Clarke McEwan • October 21, 2026
Federal Parliament has closed an unintended loophole in the recent negative gearing and capital gains tax reforms that became widely known as the “widow tax”. At the same time, the Government also fixed a technical issue that could have affected people who first use a main residence to generate rental income after Budget night on 12 May 2026. What the problem was As you might be aware, the tax rules have recently been changed to ensure that losses generated from residential rental properties from 1 July 2027 can be ‘quarantined’. This means that they can only be offset against income or capital gains generated from other residential rental properties. However, the changes won’t generally apply to properties that were purchased by the relevant taxpayer before 12 May 2026. However, a problem could arise when an ownership interest in a property passes to someone as a result of the death of the original owner or because of a relationship breakdown and this occurs after 12 May 2026. Under the original version of the new rules, that transfer could be treated as a new acquisition. This could have meant that a surviving spouse or former partner risked losing the protected negative gearing treatment that had applied to the property in the hands of the previous owner. How it was fixed The Government moved quickly once the issue was identified. Some new rules now specifically protect people who acquire a residential property interest from a spouse because of death or relationship breakdown. The rules can also potentially protect someone who inherits an additional ownership interest in a rental property from a co-owner who isn’t their spouse. Case study 1 – the widow tax fix Sarah and David bought a rental unit in 2019 as equal joint owners. The property has always been negatively geared, with annual rental losses of around $8,000 offset against their other income each year. Under the original May 2026 reforms, the property was protected because it was acquired well before Budget night. However, if David had died and the property transferred fully into Sarah’s name, the additional 50% interest that Sarah inherited from David’s estate risked being treated as a new acquisition. Sarah could have lost the ability to claim the losses generated from this interest in the property against her other income. With the updated rules now in place, that outcome is avoided. Because the transfer occurs due to the death of a spouse, Sarah keeps the original protected treatment and can continue offsetting the rental losses in the same way as before. Former main residences A related technical issue also needed fixing. Under the original rules there was a risk that an existing main residence purchased before 12 May 2026 could lose its protected status if it was later first used to generate taxable rental income after that date. This was because of the interaction with a long-standing tax rule that can treat someone as if they had reacquired a former main residence when it is first used to produce income. The Government has now passed legislation to correct this. The new rules specifically disregard that “first use to produce income” rule when determining the acquisition date for negative gearing purposes. Case study 2 – renting out a former home James bought his home in 2018 and has lived in it as his main residence ever since. In 2027 he decides to move in with his partner and rent the property out for the first time. Under the original drafting of the 2026 reforms, first renting the property after 12 May 2026 risked resetting its acquisition date. That could have caused the property to be treated as a post-Budget night acquisition and subjected to the tighter negative gearing limits. With the new rules now in place, that reset is disregarded for negative gearing purposes. Because James originally acquired the property before 7:30 pm on 12 May 2026, it keeps its original acquisition date. He can continue to offset any rental losses in the same way as if the property had always been an investment property acquired before Budget night. Why these fixes matter Both changes remove sources of unexpected cash-flow disruption. The “widow tax” fix protects people at a difficult personal time. The main residence clarification gives homeowners greater flexibility if their circumstances change and they later decide to rent out a property they already own. What you should do now If you own a jointly held investment property acquired before 12 May 2026, the “widow tax” fix provides reassurance that a future transfer on death or separation should not remove negative gearing rights, but the rules are still complex and it is always best to have the position checked. If you own a main residence bought before 12 May 2026 and are considering renting it out in future, the new rule means the property should keep its original acquisition date for negative gearing purposes, but there could still be some complex CGT implications. Keep clear records of the original purchase date and ownership history. If either situation applies to you and you would like confirmation of how the amended rules work in your circumstances, contact us.
By Clarke McEwan • October 21, 2026
More than $21 billion in lost and unclaimed superannuation is currently sitting idle across Australia, according to the latest ATO figures. The average lost account holds around $41,000. Last year alone the ATO reunited more than $1.1 billion with members. That is real money that could be working harder for your retirement. Tax time is the natural moment to check whether any of it belongs to you. How super becomes “lost” Super generally becomes lost when an account becomes inactive and the fund can no longer contact the member. Common triggers include: Changing jobs and leaving an old account behind Moving house or updating your phone number without telling the fund Changing your name When the fund cannot reach you, the account may be classified as lost. In some cases, the balance is eventually transferred to the ATO to hold until the rightful owner claims it. The money does not disappear; it simply sits waiting to be reunited with its owner. A five-minute health check Finding lost super is straightforward and free. The quickest way is through ATO online services via myGov: 1. Log in to myGov and open the ATO section. 2. Select Super, then Fund details. 3. You will see any active accounts plus any lost or ATO-held super linked to your tax file number. You can also use the ATO app or call the automated lost super search line on 13 28 65. A paper form is available if you prefer. Many people are surprised by what turns up from old accounts from early jobs, small balances that have grown over time, or larger amounts they had completely forgotten about.  Especially valuable if you are approaching retirement For clients still decades from retirement, finding lost super is useful. For those at or approaching retirement age it can be particularly meaningful. An extra $20,000 or $40,000 (or more) can make a noticeable difference to the size of the nest egg available to draw on. Even smaller amounts compound further once consolidated into a single active account that continues to earn returns and attract any future contributions. One important practical warning before you consolidate If you decide to roll multiple accounts into one preferred fund, check the insurance cover attached to each account first. Death, total and permanent disability, or income-protection cover that comes with a super account can sometimes end when the balance is rolled over. Losing that cover without realising it can leave a gap in your protection at the exact time you may need it most. Speak with your fund or adviser before consolidating so you understand exactly what will transfer and what will not. The commercial upside is simple Every dollar sitting in a lost or low-balance account is potentially earning less than it could, or incurring unnecessary fees. Bringing the money into one active account usually reduces fees, improves investment choice, and makes it easier to keep track of your overall position. The ATO’s reunification figures show that when people do the search, meaningful amounts are regularly returned. The process takes only a few minutes and costs nothing. Given that more than $21 billion is currently waiting to be claimed, the odds that some of it belongs to you are higher than many people expect. You can start the free search here: https://www.ato.gov.au/forms-and-instructions/superannuation-searching-for-lost-superannuation If you would like help interpreting what you find, or advice on whether consolidation makes sense in your circumstances (including the insurance check), just get in touch. A short conversation now can put money back into your retirement savings that might otherwise stay forgotten.
By Clarke McEwan • October 21, 2026
Travel records under the ATO microscope
By Clarke McEwan • October 7, 2026
Owning your business premises can build long-term wealth and eliminate rent increases. Leasing can offer greater flexibility and preserve cash flow. Every business is different. Let us help you analyse the costs and benefits so you can make the right decision. 📞 Get in touch today.
By Clarke McEwan • September 18, 2026
There are certain items of equipment, machinery and hardware that are essential to the operation of your business – whether it’s the delivery van you use to run your client deliveries, diagnostic equipment in your medical practice or the high-end digital printer to run your print business. But when a critical business asset is required, should you buy this item outright, or should you lease the item and pay for it in handy monthly instalments? To buy or to lease? That is the question Buying new pieces of business equipment, plant, machinery or vehicles can be an expensive investment. So, depending on your financial situation, it’s important to weigh up the pros and cons of buying, or opting for a leasing option. First of all, let’s look at why you might decide to buy the item… Buying: the pros and cons: - Pro: It’s a tangible asset – when you buy an item, you own the item outright and it will appear on your balance sheet as one your business assets. As such, by owning these assets outright you increase the perceived capital and value of your business. You can also claim the cost of the asset against your capital allowance for tax purposes. - Pro: It’s yours for the life of the asset – once you own the item, you have full use of the equipment for the duration of the life of the asset. Your use of the asset isn’t reliant on you being able to keep up regular lease payments, and if your financial circumstances change then you can sell the asset to free up the capital. - Con: It’s an expensive outlay – paying for the item up-front is a large outlay for the business and will require you having the cash to cover this cost. Spending a large lump sum in this way may take cash away from other areas of the business, so you need to be 100% sure that this purchase is the right decision and a sound investment. - Con: You may require extra funding – if you don’t have the liquid cash available to buy the item outright, you may need to take out a loan. Asset finance is available from funding providers, but does tie you into a loan agreement that will add to your liabilities as a business – reducing your worth on the balance sheet. Leasing: the pros and cons: - Pro: Leasing has a cheaper entry point – if the item you need to purchase has a large price tag, leasing allows you to make use of the asset without the cost of buying it in full. For start-ups and smaller businesses with minimal capital behind them, this can make leasing a very attractive option. You may not own the asset, but you can make use of it – and this may be the difference between the success or failure of your business. - Pro: You can spread the cost – there is still an associated cost of leasing, but you can spread the cost over a longer period, making it easier to find the necessary liquid cash to meet your lease payments. With this money saved, you can then invest in other areas of the business, helping you to expand, grow and bring in more customers and revenue. - Con: You don’t own the asset – there are different types of leasing agreement. Under a capital lease, you do own the asset (once you’ve paid if off). But if you opt for an operating lease, this is a more short-term lease and you won’t own the asset at the end of the contract. Ownership does have its advantages (including being able to sell off the asset if required) so it’s important to consider what kind of leasing agreement you’re entering into and what the advantages/disadvantages may be. - Con: You may pay more in the long run – most leasing agreements will attract additional costs and interest on your agreement, so you may well end up paying more than the market price for your asset in the long term. If you can cope with the higher cost, this is fine, but bear in mind that buying outright may have offered greater value. - Con: You may lose the use of the asset – if you can’t keep up your lease payments (due to poor cashflow for example) then the owner of the lease agreement may recall the asset. If this item is crucial to your business model, losing this key asset can have a profound impact on your ability to operate. In this respect, leasing is a more risky prospect, but also an easier option for businesses with less cash to splash.Talk to us about whether buying or leasing is the best way forward. Whether you opt to buy or lease your equipment isn’t always a straightforward decision to make – so it’s a good idea to consult with your accountant early on in the decision-making process. We’ll help you review your current financial position, assess your available cashflow and look at your regular cost base to decide whether buying or leasing is the right thing for your business.
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