ETF/Crypto Tax Hack for Temporary Resident?

Lpokemeimfamous on 30/01/2022 - 18:15

Hi everyone,

I recently read in this ATO article about the "foreign income exemption" for Australian residents for tax purposes who hold a temporary migration visa.

It says the following:

If a capital gains tax event occurs while you are a temporary resident, you are not liable to capital gains tax (nor treated as having made a capital loss) unless the asset is 'taxable Australian property'.

It seems like "Australian property" only includes specific things such as real estate and lands.

Does that mean those temporary resident don't have to pay any CGT taxes if they sell other kind of assets such as crypto and ETF, or am I missing something?

Thank you for your clarifications.

Financial

Comments

  • Crow K on 30/01/2022 - 19:16
    +1

    I wouldn't call it a 'hack' but yes, the way the rules are applied a temporary resident wouldn't be taxed on those CGT events [unless they were directly connected to Australian real estate/land e.g. an ETF that managed Australian commercial real estate].

    • Jimothy Wongingtons on 30/01/2022 - 20:42

      Op: googling how to be a temp resident for tax purposes

  • rektrading on 30/01/2022 - 20:54

    Why don't you sell after you travel home?

    • pokemeimfamous on 30/01/2022 - 21:30

      Because I am not planning to travel back home. I wished I could get permanent residency now, but Australia does not make it easy.

      I see myself as a long-term investor but this exemption could also represent a risk for me. When I finally get a Permanent Residency (PR), I will be "taken to have acquired my CGT assets at the same time, for their market value at that time". As a consequence, if I buy high and get my PR after a consequent market crash, my long-term investing will eventually lead me to pay taxes for gains I actually did not make (e.g. I buy for $10, it goes down to $5, I get a PR, it goes back to $10, I will be taxed on those $5). So I seriously consider "selling high" and wait for a PR before getting back to the market, especially if I am not taxed on this CGT event.

      • rektrading on 30/01/2022 - 21:39

        Is your desire to get PR work or family-related?

        I ask because there are countries where people can trade assets like stonks and bitcoin without having to worry about CGT.

  • El-Rhi on 30/01/2022 - 21:25
    +1

    You won’t need to pay CGT in Australia, but you’ll be taxed in your home country. If in doubt speak with an accountant

    • pokemeimfamous on 30/01/2022 - 21:34

      That is what I thought too, but since I am Australian resident for tax purpose, I am not taxed in my home country anymore. I may speak with an accountant indeed, thank you for the advice.

  • plmko on 30/01/2022 - 23:09

    You think this is a loop hole because you are confusing definitions for visa status and tax status.

    In reality the situation is pretty clear. But speak to someone who knows.

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