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“What expat tax planning measures can protect my estate?”
Statesman Benjamin Franklin quoted, “Nothing in this world is certain but death and taxes”.
Although death is inevitable, paying tax may not be. Non-residents don’t pay Australian tax on foreign sourced income.
What about after someone has passed?
Well, that depends on the following:
Where the beneficiaries are resident
If in and out of Australia, the asset type can determine whether Australian tax is payable. E.g. cash from a Singapore bank received by Australian residents is tax free, whereas cash from a Singapore trust may not be. Another tax-free source of inheritance is life insurance.
Where the executor of the estate is a resident
If Australia, the entire estate is deemed an Australian estate, thereby bringing foreign assets into the Australian system. Having separate wills for assets located offshore has the added benefit of faster access to assets since probate can occur in each country simultaneously.
Where the trustee of testamentary trusts is a resident
If Australia, the trust is deemed to be an Australian trust, thereby bringing foreign assets into the Australian system.
Multiple testamentary trusts allow different assets or amounts to be controlled, managed and distributed under differing terms to different beneficiaries (such as children, grandchildren, marital issues, or children of past relationships).
The assets
Structuring investments for beneficiaries to receive ongoing tax and asset protection benefits e.g. investment-linked life assurance policies.
Charitable donations
The potential for tax deductions for the estate or testamentary trust against Australian sourced income.
How Australian superannuation is distributed
If you are able to, you should nominate binding nominations for your Superannuation to spouses because benefits to non-dependants (including children over 18) may be taxed.
Records for Australian property ownership and use
The beneficiary’s future CGT calculation is reliant on your actions, uses and costs for the property during your lifetime. Specifically documents supporting capital improvements, mortgages, rates and property maintenance. This also includes holiday homes, and not just investment properties.
Written instructions for assets held outside the wills
Trust assets remain in the trust after death. When this occurs, a letter of wishes provides guidance for the future control of the trust (i.e. investment and distribution wishes).
Ilana Kramarov is the Director of Tax for Select Investors Australia, if you would like to discuss tax planning for your estate, please contact Ilana via email ilana@selectinvestorsaustralia.sg
This information has been prepared in good faith, is in the nature of general comment only, and neither purports, nor is intended, to be advice on any particular matter. You should not act or rely upon any matter or information contained in or implied without taking appropriate professional advice which relates specifically to your particular circumstances. Select Investors (Australia) Pty Ltd expressly disclaim all and any liability to any person (whether a reader or not) who acts or fails to act as a consequence of reliance upon the whole or any part of this information.
