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    TaxKiln Australia
    TaxKilnAustralia tax guidance

    Leaving Australia: Emigration Tax

    CGT event I1 deemed disposal on ceasing residency, the deferral election under s 104-165, taxable Australian property that stays in the net, super preservation, HELP/HECS debt overseas, and practical admin on departure.

    When you cease being an Australian tax resident, CGT event I1 under s 104-160 of the ITAA 1997 treats you as if you disposed of most CGT assets (other than taxable Australian property) at market value on the date residency ceases. You can elect under s 104-165 to defer the deemed disposal, keeping non-TAP assets within the Australian CGT system until actual disposal. Super stays preserved in your fund regardless of where you live, and HELP/HECS debts remain payable with mandatory worldwide income reporting while overseas.

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    Ceasing Australian tax residency

    The ATO uses residency for tax purposes, not visa or citizenship status. You can be an Australian citizen and cease to be a tax resident. Key factors indicating ceased residency include leaving Australia to live overseas indefinitely or for a very long period with no clear intention to return, establishing a usual place of abode overseas (long-term lease or purchased home, moving family, relocating business interests, integrating into the local community), and severing Australian ties (selling or long-term letting your home, closing personal connections, changing postal address overseas). Conversely, remaining in Commonwealth Superannuation Scheme (CSS) or Public Sector Superannuation Scheme (PSS) can keep you resident regardless of where you live. If the position is borderline, the ATO suggests seeking advice and potentially applying for a private binding ruling.

    CGT event I1: deemed disposal on departure

    When you stop being an Australian tax resident, CGT event I1 under s 104-160 of the ITAA 1997 treats you as if you disposed of most CGT assets (other than taxable Australian property) at market value at the time residency ceases. The notional gain or loss is the difference between market value at departure and your cost base. This is reported in your exit-year tax return. The 50% CGT discount can still apply if you held the asset for 12 months or more while resident. Pre-CGT assets (acquired before 20 September 1985) are excluded.

    Assets typically caught by I1

    Listed and unlisted shares, interests in trusts and partnerships, intellectual property, foreign real estate, cryptocurrency, and personal-use or collectible assets above CGT thresholds are all within scope of CGT event I1.

    Taxable Australian property: not deemed disposed

    I1 does not apply to TAP. These assets remain in the Australian CGT net even after you become non-resident. TAP broadly includes Australian real property (residential, commercial, land), assets used in carrying on business through an Australian PE, certain indirect Australian real property interests (10% or more in entities principally attributable to Australian real property), and rights or options over these.

    Superannuation when you leave

    Super stays in your fund and remains subject to Australian super law and tax rules even after you become non-resident. It is not automatically paid out when you emigrate. You can only access super when meeting a condition of release (preservation age plus retirement, or age 65) regardless of where you live. DASP is not available to Australian citizens or permanent residents who later become non-residents. It is available only to certain temporary visa holders whose visa has expired or been cancelled and who have left Australia. If you are a citizen or permanent resident emigrating permanently, your super remains locked until a condition of release is met.

    HELP/HECS debt while overseas

    Leaving Australia does not extinguish or pause a HELP/HECS debt. If you intend to be overseas for 183 days or more in any 12-month period, you must lodge an overseas travel notification and update your contact details with the ATO. Each year overseas, you must report worldwide income to determine compulsory repayment. The repayment threshold for 2025-26 is approximately $67,000. If you do not lodge, the ATO can estimate your income and raise a compulsory repayment based on that estimate. Self-employed individuals overseas must still comply with annual reporting even if they are no longer lodging a standard Australian income tax return for other purposes. Failure to lodge can result in default assessments and treatment of unpaid amounts as a tax debt.

    Australian-sourced investment income as a non-resident

    Once you cease residency, you are taxed in Australia only on Australian-sourced income and CGT on TAP. Interest from Australian sources is subject to final withholding tax, commonly 10% (confirmed or reduced by DTAs). Unfranked dividends attract dividend withholding tax at the domestic rate, reduced by treaties. Fully franked dividends generally attract no further Australian tax because company tax has already been paid through the imputation system. Non-residents usually do not need to lodge a return solely for interest or dividend income where correct withholding has been deducted. You must still lodge if claiming deductions or if you have other taxable income (rental, business).

    Rental property and FRCGW after departure

    Non-residents earning Australian rental income must still lodge returns. Income is taxed on net rental profit (rent less allowable deductions) at non-resident rates. On disposal, the foreign-resident capital gains withholding (FRCGW) regime requires the purchaser to withhold a percentage of the purchase price and remit it to the ATO if the vendor does not provide a valid ATO clearance certificate. The vendor lodges a return to reconcile the actual CGT liability and claims credit for the amount withheld. From 1 January 2025, the FRCGW rate has increased and the dollar threshold has been removed for new contracts. Non-residents who do not qualify for the 50% CGT discount on gains accruing during non-residency (post-8 May 2012 rule) should factor this into their disposal planning.

    Practical admin and risk management on departure

    Before leaving, take the following steps. Notify the ATO (via myGov or tax agent) of your overseas address and lodge an overseas travel notification if you will be gone 183 days or more. Update myGov and ATO online services access for overseas lodging. In your exit year, value all relevant CGT assets and model the immediate I1 tax versus the deferral election, considering foreign tax in your destination country. If residency status is unclear (phased move, split family, strong continuing Australian ties), consider applying for a private binding ruling. Diarise HELP/HECS annual reporting deadlines. If you are no longer carrying on an enterprise in Australia, cancel your ABN to avoid later compliance issues. If you maintain an Australian PE or Australian-source business income, keep the ABN active.

    Statute references

    • ITAA 1997 s 104-160 (CGT event I1, deemed disposal on ceasing residency)
    • ITAA 1997 s 104-165 (election to defer CGT on non-TAP assets)
    • ITAA 1997 Division 855 (taxable Australian property and CGT for non-residents)
    • ITAA 1936 s 6(1) (residency tests)
    • ATO HELP overseas debtor guide (notification and reporting obligations)
    • ATO DASP information (eligibility restrictions for citizens and permanent residents)
    • ATO FRCGW guidance (foreign-resident capital gains withholding on property disposal)

    Frequently asked questions

    I am an Australian citizen moving overseas permanently. Can I access my super through DASP?+
    No. DASP is available only to holders of certain temporary visas whose visa has expired or been cancelled and who have left Australia. Australian citizens and permanent residents who later become non-residents cannot access super via DASP. Super remains preserved in your fund and can only be accessed when you meet a condition of release (preservation age plus retirement, or age 65), regardless of where you live in the world.
    Should I crystallise the I1 gain now or elect to defer?+
    It depends on your circumstances. Crystallising (no deferral) means you pay CGT in your exit year on notional gains, but future gains on those non-TAP assets are outside Australian CGT while you are non-resident. Deferring means no tax now, but the assets remain in the Australian CGT system and are treated as TAP going forward. Deferral suits people who expect asset values to fall, plan to return to Australia, or want to avoid a large exit-year tax bill. Crystallising suits people who expect significant future gains and want them to accrue outside the Australian net. The 50% CGT discount is generally preserved for the proportion of ownership while you were Australian resident.
    What happens to my Australian rental property after I leave?+
    Australian real property is taxable Australian property (TAP) and is not affected by CGT event I1. It stays in the Australian CGT net regardless of your residency status. As a non-resident, rental income is taxed at non-resident rates (no tax-free threshold, 30% from the first dollar up to $135,000). On disposal, the foreign-resident capital gains withholding regime applies: the purchaser must withhold a percentage of the purchase price and remit it to the ATO unless you provide a valid clearance certificate. You lodge an Australian return to reconcile the actual CGT liability.
    Do I still pay the Medicare levy after leaving Australia?+
    No. The 2% Medicare levy applies to residents for tax purposes. Once you cease Australian tax residency, you are generally not liable for the levy on your Australian taxable income. You may need to evidence your departure date and residency change to avoid being assessed for the levy. Practical access to Medicare normally ends when you leave permanently.

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