Background

Many Australian citizens who leave Australia and become non-residents (i.e foreign residents for tax purposes) rent their former main residence while they are living overseas.

Presently these Australian citizens are able to benefit from a CGT main residence exemption under the ‘6 year absence’ concession (Section 118-145 of the ITAA 1997).  In essence the absence rule means that a person can move out of their main residence, rent it out, and then move back into it before the end of 6 years and the property will retain its 100% CGT free status when it is sold.

Further, where a former main residence is not rented out at all – the property can remain exempt from CGT indefinitely (See Section 118-145(3)).

CST has many expat clients who have moved overseas and who are renting out their family homes.

New Budget Announcement

On the 9 May 2017 the Treasurer announced that the Government “would stop foreign and temporary residents from claiming the main residence capital gains tax exemption when they sell property in Australia from Budget night”. The a transitional rule is to be provided so that people who own such property on 9 May 2017 can sell by 30 June 2019 without paying capital gains tax.

However the announcement was included in a series of measures aimed at improving the integrity of Australia’s CGT rules for foreign investors.

Naturally enough, most Australian expats living abroad would not consider themselves to be ‘foreigners’ and the loss of a CGT exemption on their former main residence would be a very bad outcome.

Unfortunately it is not yet clear whether this announcement was actually intended to apply to foreign residents (meaning foreign tax residents, which would include Australian citizens who are non-resident of Australia) or whether the announcement is intended to apply to foreign nationals only.

Given the lack of detail in the announcement we will have to wait until legislation is introduced before being sure of the Governments intentions in this area. If you are an Australian expat living abroad please do not hesitate to contact us to discuss any concerns you may have or if you require advice.

Please see – http://www.budget.gov.au/2017-18/content/glossies/factsheets/html/HA_16.htm

What are the tax consequences of arriving in Singapore and becoming tax resident?

Resident individuals are subject to tax on income accruing in or derived from Singapore or received in Singapore from outside of Singapore.
However, overseas income received in Singapore on or after 1 January 2004 is generally not taxable.

Taxpayers are assessed on a calendar year and tax is computed on a preceding year basis. Taxpayers must file a tax return by 15 April in the following year.

In addition, expatriate individuals can opt for the Not Ordinarily Resident scheme if he spends at least 90 days outside of Singapore for business reasons in respect of his Singapore employment and his total Singapore employment income is at least SGD160,000.

What is the minimum time I can remain in Singapore without being tax resident?

182 days.

Does Singapore tax its residents on a world wide or territorial basis?

Income tax is imposed on the basis of territoriality.

Is foreign income taxable in Singapore e.g. foreign rental income, foreign interest income and foreign dividend income?

All foreign income received by individuals in Singapore is exempt from tax where the tax authority is satisfied that the exemption will be beneficial to them, unless received through a partnership. Foreign dividends, branch profits and service fees received through a partnership may be exempt subject to conditions.

Does Singapore tax on a remittance basis?

No.

Does Singapore have a sales tax or VAT tax on purchases?

Singapore impose a Good and Services Tax of 7%.

Does Singapore have a capital gains tax that taxes me when I sell foreign assets?

There is no tax on capital gains. However, gains from the realization of capital assets can be included in ordinary business income and subjected to income tax if the sales were carried out in the course of a trade carried on by the taxpayer.

Does Singapore have an estate tax or death tax?

No.

What is the top tax rate in Singapore?

Individuals are tax at progressive rates and the top tax rate is 20% for income over SGD320,000.

Does the tax rate vary for different types of income and if so what are the rates?

Royalties received in connection with literary, dramatic, musical or artistic work or from a local or branch of a foreign publisher are taxed at a concessionary rate of 10% of the gross amount.

What are the common tax deductions available in Singapore?

• Self, Spouse and Child reliefs;
• Life Insurance premiums and pension funds contributions

Does Singapore require joint tax returns to be filed for me and my spouse or are separate tax returns required?

Separate tax returns are required.

If I have a foreign company or foreign trust before I arrived in Singapore is the income of that company or trust taxable?

No.

Do children under 18 pay a higher rate of tax on certain types of income?

No.

Is there a gift tax in Singapore?

No.

What are the personal tax exemptions in Singapore e.g. a gift from an overseas relative or a foreign insurance payout?

None.

When I leave the country is a ‘termination payment’ taxed by Singapore before I leave?

Termination payments which are compensation attributable to the loss of employment such as redundancy are not taxable.

If I receive shares as part of my salary is this taxed in Singapore?

Yes. Share options granted by virtue of an employment are a taxable benefit and the gains accrue as income in the year in which the option is exercised. The taxable value is the open market value at the time of the exercise less the amount paid for the share option.

What are other tax consequences of leaving the country?

An individual who leaves Singapore permanently is deemed to have derived a gain from the unexercised or restricted stock option plan, unless his employer is granted approval to keep track of the options. If the subsequent actual gain is less than the taxable gain, the taxpayer can apply for a reassessment of his tax liability.

The employer of an expatriate is required to notify the tax authorities and withhold the salary for the purposes of tax clearance should the expatriate cease employment in Singapore, or leave Singapore for a period of more than 3 months.

Are there any tax consequences of me transferring money from Singapore to my say home country?

None.