Living in PP off interest b/w tax avoidance

[crw]

Hey

We are a 30ish Australian couple toying with the idea of moving to Cambodia or a couple of other spots for a year or so.

We are looking at living off term deposit interest.

We will lose a chunk each time it compounds as taxable income if we leave our money in Australia.

Is there anyway around this? Even if we deposit in Cambodia, the interest will be considered income and the ATO will want a cut. I think?

Obviously I should be asking my accountant this but just wanted to see if anyone here has any experience or ideas.

Anyway, any replies however withering appreciated.

[scoffer]

Nothing for you here as far as the ATO goes.
But you could have a fun 12-18 months.

[Goodoldkenny]

You will remain a resident of Australia for tax purposes.
So ALL money earned whether in Oz or abroad is taxable in Oz UNLESS you can prove you were already taxed abroad.
You will however lose your Medicare if you are out of the country for more than 3 years.

KennyF

[Bitteeinbit]

3 years?!?! Where I'm from it's 6 months.

[digiboy]

@KennyF

I'm an Australian, and I DO NOT pay tax here (Korea) or in Australia...

[epidemiks]

You will however lose your Medicare if you are out of the country for more than 3 years.

I remember reading it was 5 years or more, when did it change to 3 years?
Seems easy enough to get it back once you move back too.

[Devo]

When you leave you declare you are not returning. Non resident Australians do not pay tax in Australia.

Of course you don't get medicare, or any of that, and you aren't supposed to have bank accounts, etc.

You really need to speak to an accountant who specialises in this.

[robboat]

You will remain a resident of Australia for tax purposes.
So ALL money earned whether in Oz or abroad is taxable in Oz UNLESS you can prove you were already taxed abroad.
You will however lose your Medicare if you are out of the country for more than 3 years.
KennyF

The laws changed in 2009 about tax on Australian sourced income if you are located overseas.
As Kenny said, we are now liable for tax on money earned worldwide - if you are an "Australian resident for tax purposes".

Using income from a TD in Australia you will be liable to taxation.

There is a complicated method of being "non resident for tax purposes" and receiving money using "Personal Services Income" from your company located in Australia.
It is not easy or straightforward....and getting deductions for investments and depreciation is very hard from Cambodia....simply because you have to use the same standards as Australia and they do not exist.
I now think it is easier to set up a completely different company separate from the Australian parent company....just take the money out of Australia as a "capital investment".

I am not aware of the Medicare issue....I understand if your are an Australian Citizen (and you qualify by means testing) then you are entitled no matter what time you spend outside the country.

In the end just try to reduce your tax legally....read, ask questions, get a good accountant (rare ones understand personal foreign income situations) - or ask the ATO for a ruling if you are not sure.
Plenty of information on the ATO website.

Good luck and you will have fun in Cambodia anyway.....

[crw]

Thanks for the replies, yep ultimately I need to speak to my accountant. The above is especially helpful though and I will explore these possibilities with my accountant.

[mrfusion]

I normally live in Cambodia, I still have to pay tax in Australia because I got some share and a investment property. But my accountant said I don't have to declare any of my income in Cambodia. (it isn't much anyway)

There is a rule that if you live offshore for more then 183 days in that tax year, you do not have to declare your oversea income, at all. There might be some other conditions.