Living In Vanuatu

I was just wondering what implications there are for living in Vanuatu (tax haven) and owning/buying shares and properties in Australia?

Basically I earn my income from websites I manage, and I figured that if I can do my work from almost anywhere in the world and exotic island in the pacific, not to far from my home town Brisbane, that is also has no income tax or capital gains tax then I should at least be considering it.

Does anyone have any investment advice when it comes to living abroad?

 

Don't get too attached to your beloved Brisbane if you don't want to pay Australian income tax.

Aussies overseas will remain residents for tax purposes unless they can show they have a "permanent place of abode" overseas.

The Commissioner will look at the location of family and assets and the frequency & duration of visits, as well as business ties.

Even then, he might have a go at the geographic source of the business if any contracts are negotiated or paid here.

Don't look to a double tax treaty to help with residency & source for Vanuatu !!

International taxation advice is very specialised (i.e. expensive) but usually very profitable.

Cheers,

Rob

 

Get your own tax advice but broadly speaking you will pay Australian income tax on your Australian sourced income if you are a non-resident. The marginal tax rates for non-residents are different.

Cheers
N.

 

I planned on buying a nice block of land in Vanuatu and building on it (which from my understand should be enough to earn residency in Vanuatu). Then I'd probably aim to live there at least 6 months of the year, though I was also considering living in Bali (another one of my beloved surf destinations) for a a significant chunk of the year - plus Bali has the added benefit of being really inexpensive to buy/build property and reality low living costs, unlike Vanuatu.

I think I read somewhere that if I file that I'm a resident of Vanuatu that doesn't necessarily mean I have to live in Vanuatu for the majority of the year, Vanuatu just needs to be considered my PPOR.

I'm 23 so I don't really have many assets of business ties, nor family (wife and kids kind).

At this stage this is a "possibility" more than me formulating a game plan, but I think it is good to other informed individuals about ideas like these.

I don't suppose anyone knows if there are good investment opportunities and good growth in the Vanuatu property markets?

Does anyone have any general advice or tips for moving abroad into a tax haven like Vanuatu?

 

Just building and owning a house in Vanuatu does not make it your "permanent plave of abode".

Your whole living arrangement and activities will be considered.

e.g. 6 months in Bali and 6 months in Vanuatu may make neither your permanent place, in which case by default you might still be considered a globe-trotting Aussie (tax) resident

There is a huge amount of tax & legal issues to consider in planning these activities. Its also more than just what you do, timing is crucial.

Cheers,

Rob

 

If you are a non resident of Australia for tax purposes there are both advantages and disadvantages to owning shares and property in Australia.

The biggest advantage is that you do not need to pay GCT on profits made from shares. Great if you are a successful trader/investor and the country you live in does not tax you on these profits either.

Of cause if you're like me and have made some spectacular loses, you don't get to carry these forward either to offset against CG made on property.

CGs on property are treated the same way whether you live in or out of Australia. If you hold for 12 months you get the 50% discount and just add the rest to your taxable income for that year.

Fully franked dividends are not added to your taxable income which means a win if your MTR is over 30%. You do not get to use the tax credits.

Unfranked dividend are taxed at 15% withholding tax.
Interest on money in the bank is taxed at 10% withholding tax.

Again you need to consider how the country you live in taxes these incomes as most/all countries expect you to declare your world income if you are a resident. I don't know about Vanuatu.

A big minus is that non residents are taxed at 29% from $1 - $30K.
After that the catagories are the same as for residents. See link below.

This has an impact on your profits from rental income if you have positively geared property. I don't know how long losses ( on negetively geared property) can be carried forward if you have no other Australian income to offset them against or if they can be used to offset CGs at some point.

You are very young so you probably aren't concerned about super yet but there are problems setting up a SMSF as a non resident though there are some managed super funds who do accept non residents.


Elka


Individual income tax rates

 

[Hi Chris,
I was just reading your email about Vanuatu and your intentions. I have been living in Port Vila for quite some time and travelling around the world. I can answert probably alot of questions Feel free to send me an email and III do my best to help you
[email protected]

regards

Mark

 

The definition of resident in the Australian Tax Acts is a little broader than just being physically resident. For example if you have ever been part of Aust govt super fund you are a tax resident for life!
That said, it is NOT the case that you necessarily remain a resident unless you have a permanent place of abode outside Australia. That clause only applies to people domiciled in Australia. If you plan to remain indefinitely somewhere outside Australia, then you are not domiciled in Australia and not an Australian resident unless you actually live in Australia (no matter how many family you may have there) or are part of commonwealth super.

If your income is from "copyrights" or IP on websites then even your Australian income would only be subject to a small withholding tax.

Its wise to get legal advice from a tax agent or lawyer and pay a little to get a written advice. Such advice is routine and not necessarily expensive, but you need someone who knows what they are talking about.
Greg Finlayson

 

Island Paradise- Vanuatu

Vanuatu is truly a tropical paradise with some serious tax advantages for residents.

Right now is an incredibly opportune time to invest in Vanuatu as some areas of the country are really starting to move forward better than the rest of the world so if you are interested in your own special piece of heaven, contact me and we shall see what might suit your particular situation.