Most people moving overseas think about visas, removalists and schools. The tax questions get less attention until the first return after departure, when it turns out the move triggered a capital gain on their share portfolio, or the plan to sell the family home "in a few years" will cost them the main residence exemption.
This guide explains how Australian tax residency works when you leave, how to work out whether you'll stop being a resident, what happens to your assets, your home and your super, and what to do before you go. It reflects the law as at 18 October 2026, including the status of the proposed new residency rules. It's general information; residency turns on your own facts, so get advice on your situation before you act.
Do you stop being an Australian tax resident when you move overseas?
Not automatically. You're an Australian resident for tax purposes if you satisfy any one of four tests in the tax law. You become a foreign resident only when none of them applies.
| Test | The question | What it usually means when you leave |
|---|---|---|
| Resides test | Do you "reside" in Australia in the ordinary sense? | The ATO looks at your physical presence, intentions, family, work, assets and social ties. A short or temporary absence doesn't stop you residing here |
| Domicile test | Is Australia your domicile, and if so, is your permanent place of abode outside Australia? | Australians who leave are usually still domiciled here. You stop being a resident under this test only if you've set up a permanent home overseas |
| 183-day test | Have you been in Australia for more than half the income year? | Mainly relevant to people coming to Australia. It doesn't apply if your usual home is overseas and you don't intend to live here |
| Commonwealth super test | Are you a member of certain closed Commonwealth public sector super schemes, or their spouse or young child? | Applies to a narrow, shrinking group |
The ATO's view of these tests is set out in its public ruling TR 2023/1, and its online tax residency tool works through them.
The domicile test is the one that matters most
For Australians who move overseas, the domicile test usually decides it. If you were born here or have made Australia your permanent home, your domicile is Australia, and you stay a resident unless your permanent place of abode is overseas.
"Permanent" doesn't mean forever, but it means more than temporary. Things that point to a permanent place of abode overseas include:
- a long-term or indefinite move, rather than a set posting with a return date;
- living in a home overseas that you've bought or leased long-term, as opposed to serviced or temporary accommodation;
- your partner and children moving with you;
- giving up your Australian home, or renting it out long-term rather than keeping it ready for your return;
- closing or reducing your ties here: clubs, memberships, vehicles, employment.
Things that point the other way include keeping your Australian home available, leaving family here, returning regularly, or going on a fixed two-year contract with a job to come back to. No single factor decides it. The courts weigh all of them.
Key point: You can't just choose to be a foreign resident. It's a conclusion drawn from facts. Keep evidence of your move: lease or purchase documents overseas, your employment contract, school enrolments, and records showing which Australian ties you closed.
Are the residency rules changing?
Not yet. A new, simpler residency test, built around a 183-day "bright line" with secondary tests for people present for 45 days or more, was proposed by the Board of Taxation and announced in the 2021–22 Budget. Treasury consulted on it in 2023. As at 18 October 2026 it is not law. There's no bill, and current law is still the four tests above. If a bill is introduced, we'll update this guide.
What happens when you become a foreign resident?
| Australian resident | Foreign resident | |
|---|---|---|
| Income taxed in Australia | Worldwide income | Australian-source income only |
| Tax-free threshold | Yes | No |
| Tax rates | Resident rates | Foreign resident rates. For 2025–26 these started at 30% from the first dollar. Check the ATO's current table |
| Medicare levy | Yes | No |
| Interest and dividends from Australia | Taxed in your return | Non-resident withholding tax deducted by the payer |
| Rental income from Australian property | Taxed in your return | Still taxed in your return, at foreign resident rates |
| Capital gains | On all assets | Only on taxable Australian property, such as Australian real estate |
| Main residence exemption | Available | Generally not available when you sell (see below) |
Your departure year
In the year you leave, you're usually a resident for part of the year and a foreign resident for the rest. Your tax-free threshold is reduced: the ATO's formula is $13,464 plus $4,736 for every month you were a resident (counting the month you left) divided by 12. Leave six months into the year and your threshold is about $15,800 rather than $18,200.
Tell the people who pay you
Tell your banks, share registries and managed funds that you're now a foreign resident, with your overseas address. They'll then deduct non-resident withholding tax from interest and unfranked dividends, which is often a final tax for that income, at rates that can be reduced under a tax treaty. If you don't tell them, you may have to sort it out in a return later.
What is CGT event I1 when you leave Australia?
When you stop being an Australian resident, CGT event I1 happens. You're treated as if you sold, at market value on the day you became a foreign resident, every CGT asset you own except taxable Australian property. In practice:
| Caught by CGT event I1 | Not caught (stays in the Australian tax net anyway) |
|---|---|
| Shares in listed companies, ETFs and managed funds | Australian real estate, including your home and rental properties |
| Cryptocurrency | Assets of an Australian business you carry on through a permanent establishment |
| Foreign shares and foreign property | Options or rights over those |
Assets you acquired before 20 September 1985 are excluded.
The choice: pay now or defer
As an individual, you can choose to disregard CGT event I1. The choice is all or nothing: it covers every asset, and you can't pick only the ones with losses. You make it simply by how you prepare your departure-year return.
| Pay on departure | Choose to defer | |
|---|---|---|
| Tax now | CGT on the deemed gain in your departure-year return | None |
| What happens to the assets | Treated as reacquired at market value; future growth is outside Australian tax, unless the asset is taxable Australian property | Treated as taxable Australian property until you sell them or become a resident again |
| On a later sale while overseas | No Australian CGT on post-departure growth | Australia taxes the whole gain since you bought the asset |
| CGT discount | Available for assets held over 12 months while a resident | Reduced or lost for the period you're a foreign resident |
| Losses | Crystallise on departure | Stay with the assets |
| Best when | You expect strong growth overseas, or you'll be away a long time | You expect to come back, or the cash to pay the tax now isn't there |
The CGT rules are also changing. Under legislation passed in 2026, the 50% CGT discount for individuals is being replaced by indexation for gains from 1 July 2027. How that interacts with the rules for foreign residents isn't yet settled, and it makes the defer-or-pay decision harder to model for anyone leaving around that date. Our guide to the CGT discount changes from 2027 explains the new rules.
Worked example
Hypothetical, rounded figures.
Say Priya moves permanently to Singapore in January 2027. She owns an ASX share portfolio that cost $100,000 years ago and is worth $160,000 the day she leaves, plus $20,000 of crypto that cost $30,000. She's been a resident the whole time she's owned them.
If she pays on departure: her shares have a $60,000 gain and her crypto a $10,000 loss. Net gain $50,000, and with the 50% discount, $25,000 is added to her 2026–27 Australian return. Her portfolio is then outside Australian CGT.
If she chooses to defer: nothing is taxed in 2026–27. But if she sells in 2030 for $250,000 while still a foreign resident, Australia taxes the whole $150,000 gain on the shares. The discount on that gain will be reduced or unavailable for her years as a foreign resident, and under the 2027 changes may not be available at all for the post-July 2027 part. Singapore may tax it too, depending on its rules.
For Priya, paying on departure is probably cheaper unless she plans to come back. For someone on a two-year posting, deferring could be the better call. It depends entirely on the numbers and the plans.
What happens to your home if you move overseas?
This is the expensive trap. If you're a foreign resident when you sign the contract to sell your Australian home, you generally lose the entire main residence exemption, even for the years you lived in it. There's no apportionment. The rule has applied in full since 1 July 2020.
There's a narrow life events exception. It applies only if you've been a foreign resident for a continuous period of six years or less at the time of the sale, and during that period one of these happened: you, your spouse or your child under 18 had a terminal medical condition; your spouse or your child under 18 died; or your marriage or relationship broke down and the property is dealt with as part of the separation.
Your options for the home
| Option | Tax result | Watch out for |
|---|---|---|
| Sell before you leave, while still a resident | Main residence exemption available under the usual rules | Timing pressure. The contract date is what counts, not settlement |
| Keep it and rent it out, sell after you come back and are a resident again | Exemption can be available, with the 6-year absence rule covering the rental years | Your plans may change. If you end up selling while overseas, the exemption is lost |
| Keep it and sell while still a foreign resident | No main residence exemption. The whole gain is taxable, and you're taxed at foreign resident rates | Usually the worst outcome |
When you sell any Australian property, the buyer must withhold 15% of the price and pay it to the ATO unless you give them a clearance certificate. Only Australian residents can get a clearance certificate, and since 1 January 2025 this applies whatever the price. As a foreign resident you can apply for a variation if 15% is more than your likely tax.
Our guide to the main residence exemption covers the 6-year rule and partial exemptions in detail. If the home is rented out while you're away, our guide to rental property tax deductions explains what you can claim.
What happens to your super if you move overseas?
Your super stays in Australia. Australian citizens and permanent residents can't withdraw it just because they've left. It stays invested until you meet a normal condition of release, such as reaching preservation age and retiring. Temporary visa holders who leave permanently may be able to claim a departing Australia superannuation payment, which is taxed at special rates.
Three things to check before you go:
- Contributions. Your Australian employer stops paying super guarantee once you stop working for them. You can usually still make contributions, but tax deductions for personal contributions depend on having taxable income here.
- Insurance inside super. Check whether your death, TPD and income protection cover continues while you live overseas. This is a question for your fund or a licensed financial adviser.
- SMSFs. If you're a trustee of a self managed super fund, moving overseas can stop the fund being an "Australian super fund", for example if control of the fund is exercised from overseas. A fund that fails the test can be taxed at the top marginal rate on its assets. This needs planning before you leave, and decisions about whether to keep, change or wind up the fund need a licensed financial adviser. Our SMSF guide explains the basics, and our SMSF incapacity and succession guide covers handing over control.
Checklist: what to do before you move overseas
- Work out your likely residency status for the year you leave and the years after, using the tests above. Get advice if it's borderline.
- Decide what to do with your home before you go: sell, keep and rent, or keep empty. Model the tax on each.
- List your assets and their market values on your departure date: shares, ETFs, crypto, foreign assets. You'll need these for CGT event I1 either way.
- Model pay-now versus defer for CGT event I1.
- Review your SMSF, if you have one, with your accountant and a licensed financial adviser.
- Tell your banks, share registries and funds your new status and address.
- Check your HELP debt obligations if you have one.
- Plan your departure-year return: part-year threshold, foreign income, any CGT.
- Check the tax treaty between Australia and your destination, and get advice in that country. We advise on the Australian side; a local adviser should cover the foreign tax.
- Keep records of your move and your remaining Australian ties.
Mistakes we see when people move overseas
- Assuming they've stopped being a resident because they're working overseas, while keeping the family home ready and their family here.
- Selling the family home a year or two after leaving, and losing the whole main residence exemption.
- Forgetting CGT event I1 entirely, so the departure-year return is wrong.
- Choosing to defer without modelling it, then facing Australian tax on a much bigger gain later.
- Not telling the bank, so withholding is wrong for years.
- Running an SMSF from overseas without checking the residency tests.
- Not lodging the departure-year return, or lodging it as a full-year resident.
How BPAG helps people moving overseas
We look at the whole picture before you leave: residency, your home, your investments, your super and your departure-year return. Our tax residency agent works through the residency tests and the cross-border rules for people leaving Australia, our capital gains tax agent calculates the gain on departure for both the pay-now and defer options, and our historical property value agent gives an indicative market value at your departure date where you need one. A qualified accountant reviews every draft and gives you the advice.
See our capital gains tax advice service, or our individual tax returns service for your departure-year and later returns. If you hold several investment properties, our page for property investors explains how we help.
Frequently asked questions
Do I need to tell the ATO I'm leaving Australia?
There's no separate form to declare yourself a foreign resident. You show your residency status in your tax return each year, starting with the year you leave. You should, however, update your address, and tell your banks, share registries and super fund your new residency status so the right withholding applies.
Do I still need to lodge an Australian tax return once I'm overseas?
If you have Australian-source income, such as rent, Australian employment income or a capital gain on Australian property, generally yes. If your only Australian income is interest, unfranked dividends or royalties that have had non-resident withholding tax deducted, you may not need to lodge for that income. Your departure year's return is needed in almost every case.
Can I keep my Australian bank account and Medicare card?
Yes, you can keep bank accounts, and having them doesn't on its own make you a resident, though it's one of many factors weighed. Medicare eligibility is a separate question decided by Services Australia, not the ATO. Foreign residents don't pay the Medicare levy.
What if I'm a tax resident of two countries?
It happens, because each country applies its own rules. If Australia has a tax treaty with the other country, the treaty usually contains tie-breaker rules that decide which country gets primary taxing rights, looking at things like where you have a permanent home and where your personal and economic ties are closer. Where there's no treaty, you may need to rely on foreign income tax offsets to avoid double tax.
Does the 6-year rule protect my home if I'm overseas?
The 6-year absence rule lets you treat your former home as your main residence while it's rented out, for up to six years at a time. But if you're a foreign resident on the day you sign the contract to sell, the main residence exemption is denied entirely, unless a narrow life events exception applies. The 6-year rule doesn't override that.
What happens to my HELP debt if I move overseas?
It doesn't go away. If you move overseas for 183 days or more in a 12-month period, you must update your contact details with the ATO and report your worldwide income each year, and you may have to make repayments based on that income. The ATO's overseas repayments page explains the obligations.
Official sources
General information only, current as at 18 October 2026. It is not personal tax, legal or financial product advice and doesn't take your circumstances into account. Talk to us before you act. Where a recommendation needs a licensed financial adviser or a solicitor, we work alongside them.