Is the Australian Government Expat Unfriendly?

Is the current Australian Government expat unfriendly?

Over three years ago the current Australian Federal Government decided to withdraw the tax exemption available under section 23AG of the Tax Act in relation to the income earned by Australian residents overseas, if they met certain conditions. It was a monumentally stupid thing to do, and that remains the case.

From our perspective, it has led to an exodus of Australians overseas, reduced our ability to compete in international markets for projects and cost the nation dearly as the best salespeople available - our expats overseas - are not available to generate sales for Australian goods and services. Meanwhile, there is no proof that the changes have generated the projected income and even if it did I don't think it would pass a cost/benefit analysis.

Now the Government, following up on changes announced in last years Budget, have announced details of how they are going to withdraw the 50% CGT exemption, applicable when you have owned an asset for more than 12 months, from foreign residents. Unfortunately, "foreign residents" in this case is defined to include Australian residents and citizens who are currently non-tax resident, as well as temporary residents in Australia and offshore investors.

The current change the CGT rules is clearly another tax change focussed on a group which the government regards as being politically ineffectual - with electoral rules making it difficult for Australian citizens to remain voters. The changes will place (yet) more pressure on the issue of tax residency and make it less attractive for Australians overseas to maintain residential property investments in Australia.

It leads us to ask the question, is this Government expatriate unfriendly? The answer we think is that Australian expatriates will always be at the mercy of short termist governments, of whatever colour, desperately looking to increase revenue without a "voter" backlash. With changes to electoral rules in the short term being very unlikely I think the only alternative is for expatriate organizations overseas to be very much more assertive in the future with visiting Members of Parliament about promoting and making clear their own interests.

In the meantime, we will try and determine whether any of the major parties has a federal member of Parliament whose focus is the Australian expatriate population. Previous attempts have been unsuccessful - but perhaps a forthcoming election might sharpen their minds, as long as they forget that expats can't (currently) vote.