Financial Planning for Expats Returning to Australia: What You Must Do Before and After Landing

Whether you are an Australian tax resident determines which income is assessable in Australia, which tax offsets you access, and how your return filing works. Residency is a factual question - not a choice - and is determined from the moment you arrive.

• Australian tax residency tests: The ATO uses four tests: the resides test (your ordinary place of abode - most important for returning expats), the domicile test (Australia is your domicile unless a permanent place of abode exists overseas), the 183-day test (present in Australia for more than half the income year), and the superannuation test (for Commonwealth government employees). For returning expats, the domicile and resides tests are typically most relevant.
• From the date of return: Most returning expats become Australian tax residents from the date they land in Australia with the intention to reside here. All worldwide income from that date is assessable in Australia. You are not a resident for the period you were overseas (unless you were continuously an Australian tax resident during your time abroad - a separate determination).
• Foreign tax credits: Income earned and taxed overseas before your return date is generally not assessable in Australia. Income earned overseas after you become a resident may be assessable - with a credit for foreign tax paid (under the foreign income tax offset rules), preventing double taxation.
• Notify your Australian employer and bank: Once you return, update your tax residency status with your employer for correct PAYG withholding, and notify your bank and broker that you are now an Australian resident. Foreign resident withholding rates applied during non-residency no longer apply.
• File a return for the year of return: Your return for the year you return will cover a period as a non-resident and a period as a resident. Taxable income is calculated separately for each period. A tax agent experienced in returning expat matters is strongly recommended for your first return.

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Superannuation doesn't disappear while you're overseas - it continues to earn returns (and fees). Depending on your departure circumstances, you may have withdrawn super via DASP, left it growing, or had insurance cancelled. Assess your position immediately on return.

• If you withdrew via DASP: Temporary residents who leave Australia permanently can apply for Departure Authorisation Super Payment (DASP), withdrawing their accumulated super (taxed at 35% for taxed elements). If you did this, you have no super balance to return to - you'll start fresh with the SG from your first job back.
• If you left super in your fund: Your super continued earning investment returns (and paying fees and insurance premiums). Check: (1) Is the fund still active or was it transferred to the ATO as unclaimed super? Search at ATO online services. (2) Did the Protecting Your Super (PYS) rules cancel your insurance due to 16 months without contributions? Check with your fund.
• Reclaim ATO-held unclaimed super: Super held by the ATO as unclaimed money earns the CPI rate, not investment returns. If your super was transferred to the ATO while you were away, reclaim it via myGov immediately and rollover to a fund of your choice to restore market exposure.
• Consider consolidating if you have multiple funds: If you had Australian employment before leaving and a fund from that period plus any employer contributions from subsequent Australian employment, consolidate into one account. Use the YourSuper comparison tool to select the best fund.
• Re-establish insurance inside super: If PYS cancelled your insurance, re-applying typically requires new medical underwriting. If your health has changed during your time abroad, apply quickly. Some funds allow reinstatement within 60 days of returning to work in Australia with limited underwriting.

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Many expats return from the UK, US, Canada, or other countries with accumulated foreign pension or retirement savings. How these are taxed in Australia depends on the relevant double tax agreement (DTA) and the type of fund.

• UK pension (including NHS pension): Australia and the UK have a DTA. UK pension income paid to Australian residents is generally taxable in Australia (with credit for UK tax withheld). UK-sourced pension lump sums may be taxed differently depending on whether the pension has a tax-free component and the applicable DTA article. The ATO ruling TR 2013/5 addresses UK pension transfers to Australian super.
• US 401(k) and IRA: The Australia-US DTA is complex. Distributions from a 401(k) or Traditional IRA to an Australian resident are generally assessable in Australia (with US withholding tax creditable against Australian tax). A Roth IRA presents particular complexity - the ATO does not recognise Roth tax-free treatment for Australian residents, potentially making Roth earnings taxable in Australia.
• QROPS/ROPS transfers to Australia: Qualifying Recognised Overseas Pension Scheme (QROPS/ROPS) arrangements allow UK pension funds to transfer to Australian super funds that meet HMRC qualifying criteria. This can consolidate retirement savings. UK Pension Lifetime Allowance changes in 2024 affect the planning context - verify current rules before initiating any transfer.
• Foreign pension and the Australian income test: Foreign pension income is assessable in Australia (subject to DTA). If you're receiving any Centrelink payment (unlikely immediately on return but relevant in retirement), foreign pension income is also included in Centrelink income tests.
• Get specialist advice: Foreign pension and retirement savings tax is highly technical, jurisdiction-specific, and DTA-dependent. Engaging a tax adviser with international tax expertise for your return year (and potentially subsequent years while drawing foreign pensions) is strongly advisable.

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Many Australians maintain an Australian property while abroad. Returning creates specific CGT, main residence, and land tax considerations depending on how the property was used during your absence.

• Main residence exemption and the 6-year rule: If you rented out your Australian home while overseas, the 6-year absence rule allows you to treat it as your main residence for CGT purposes for up to 6 years of absence - provided you don't establish another main residence elsewhere. If you were abroad for less than 6 years, your return and reoccupation restores the full CGT exemption.
• Beyond 6 years: If you were abroad for more than 6 years while renting your property, the CGT exemption is partially or fully lost for the period exceeding 6 years. The gain is calculated proportionally based on the period of CGT exposure versus total ownership period.
• Foreign resident CGT withholding: If you sold an Australian property while a non-resident, the foreign resident CGT withholding regime (12.5% of purchase price withheld by the buyer and remitted to the ATO) may have applied. This is a withholding - not a final tax - and is reconciled in your Australian tax return.
• Buying on return: If you sold your Australian property before leaving and are buying again on return, you're re-entering the Australian property market as a resident. Standard stamp duty, First Home Buyer concessions (if eligible - check if you previously received FHOG or owner-occupier stamp duty concessions, as these may affect future eligibility), and LMI considerations apply.
• Foreign income and borrowing capacity: Lenders assess income for mortgage applications conservatively. Foreign employment income (even if substantial) may be shaded (reduced by 20–40%) by Australian lenders unless it's in AUD or from a very stable source. Returning employees paid in AUD are treated normally. Allow time to re-establish Australian income history if self-employed or in a contract role.

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Australian government services require specific actions on return. Re-establishing entitlements promptly prevents gaps and penalties.

• Medicare re-enrolment: Australian citizens and permanent residents can re-enrol in Medicare from their return date. Visit a Services Australia office or use myGov to re-activate your Medicare card. If you were overseas for more than 12 months, your Medicare coverage lapsed - you need to re-enrol before accessing subsidised healthcare.
• Private health insurance LHC loading: The Lifetime Health Cover loading adds 2% to private hospital insurance premiums for every year over age 31 that you don't hold hospital cover, up to 70%. Australians are typically given a 12-month amnesty after age 31. If you were overseas without equivalent hospital cover, LHC loading may have accrued. Some overseas health insurance may count as equivalent - check with the fund.
• Centrelink waiting periods: Most Centrelink payments (JobSeeker, FTB, parenting payments) have waiting periods for people returning from overseas. The Newly Arrived Resident's Waiting Period (NARWP) of up to 4 years applies to some payments even for citizens who have been absent. Age pension has specific Australian residence period requirements.
• Bank accounts and credit file: If you maintained Australian bank accounts while abroad, reactivate them. If not, open new accounts immediately. Your Australian credit file may have limited activity - establish credit history by using a credit card (paid in full monthly) to rebuild the file for future borrowing.
• Australian driver's licence: If your Australian licence lapsed, renewal requirements vary by state. Some states require a knowledge test after extended absence. Check your state's roads authority for specific requirements.

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