Welcome to our eighth episode of the #Expatchat podcast where we discuss the latest tax and financial issues affecting Australian expats.


In today’s chat we discuss:

  • Atlas Wealth Management opening an office in Dubai
  • Australian Expat Main Residence Exemption Update
  • Green card considerations for an Australian expat
  • Staying informed with Atlas

Topics, articles and events featured in this podcast:



Expat Chat Ep 8 – Atlas in Dubai, Australian Expat Main Residence Exemption Update & Expat Q&A


James Ridley:                     G’day, expats. Welcome to another episode of Expat Chat. Episode eight, and I’m joined here today with my co-host, Brett Evans, who’s now moved over to Dubai. Welcome, Brett.

Brett Evans:                        G’day, James. Welcome… Good to be back on the airways.

James Ridley:                     That’s right, that’s right. I mean, we’re going to get back to smashing these out now, we’re up and running. Obviously we’ve had a rather busy few months, to be honest, and I mean I think we’re going to talk about that today, as well.

Brett Evans:                        Definitely. I think today we’ll discuss Australian expat’s foray into moving offshore by setting up an office in Dubai, and also covering off some very topical points too, certainly the main residence exemption. You know that’s been a big one for everyone.

James Ridley:                     Huge.

Brett Evans:                        And we’ll cover off on a couple other topics as well, too.

James Ridley:                     Yeah, that’s right. I mean I want to touch base on some recent updates and blogs that we’ve done, just because they are pretty crucial. There’s some important ones there relating to the U.S. You’ve already mentioned the main residence exemption, how they’ve reintroduced this bill again, which I think we’re both pretty annoyed about and angry. And then obviously, lastly, I’ve got two questions I want to throw out to us, I think they’re good questions. It’s always hard trying to get those answers, especially for unique scenarios. So let’s kickstart it. So Dubai, tell us a little bit, Brett, about-

Brett Evans:                        Before we do, we’ve got to do the disclaimer, because those listening to the podcast, again-

James Ridley:                     Of course. I always forget. I always forget.

Brett Evans:                        No, actually, usually it’s me. So just to all the listeners out there, if you’re not watching this on the video, any information in this podcast is general in nature and you should not construe it as personal financial advice.


Atlas Opening An Office In Dubai To Provide Australian Expat Tax & Financial Advice


James Ridley:                     That’s right. Exactly right, Brett. So Brett, tell me, right now, where abouts are you? Where am I speaking to you right now?

Brett Evans:                        Well, I think the big pointy thing in the background there is probably a bit of a give away, with the Burj Khalifa. Back in May of this year, I moved to Dubai. I’ve now… This is my second, actually third time living overseas. U.S. and then Hong Kong before that. Now walking the walk and talking the talk with our clients again, which is great.

Brett Evans:                        So, we’ve been spending a lot of time in Dubai, actually been coming here for work for the last better part of ten years, but to actually relocate here, move my family over here, it’s… We can talk from the first person experience with clients who’ve gone through this process. So there’s a lot of jargon I can throw out there that no one in any other country apart from UAE will understand. If I mention the word “attestation,” “MoFA,” and all these sort of things, people in Dubai will get the hairs on the back of their necks standing up. Issues with bank accounts, setting up phone cards, Emirates IDs, you know, we’ve done it all.

Brett Evans:                        And as you know, we’ve got clients in more than 28 countries, and obviously been servicing that from the Australian office, but now with, obviously, a booming client base, it makes sense to now have an office in this jurisdiction, because it’s more conducive for looking after Australian expats. Essentially from a time zone point of view, from an experience point of view, it’s great now that anyone who’s sort of west of India, I can talk to within a four hour time zone. Which is fantastic. So we’re having realtime conversations, and more so important for those based in the UAE, being able to sit down and have a coffee with them, and talk through issues.

Brett Evans:                        As you know, a lot of the topics we talk about are quite complicated, and yes up until now we’ve always been able to use digital assets like Zoom, and Skype, and FaceTime to have those conversations. It’s still great to be on the ground and sharing those experiences with our clients, but also keeping them informed and up-to-date on everything.


Expat Financial Planning in Dubai


James Ridley:                     That’s right. And I think it’s important that we are over in that jurisdiction, I suppose the GCC area. Because a lot of the financial firms that are over there already, they have these sort of investment bonds, insurance bonds, where unfortunately a lot of Australian expats are victim to them, even though they might only be there for three to five years. They’re sort of locked in these products which can be upwards towards 25 years, to be honest.

James Ridley:                     So it’s important to get over there, get out that message where those aren’t your only options. And I suppose that’s now what you have to be subjected to.

Brett Evans:                        The great thing about being here is, you know, there has been no noise to really fight against when it comes to us competing with other firms because 95% of firms here are commission-based. As you say, selling Isle of Man insurance and savings bonds. Interesting to note, and I haven’t actually told you this yet, but yesterday the insurance authority, which governs a lot of these “advisors,” and I’m putting that in inverted commas, have now started to make some radical changes with respect to how commissions are charged, in that you have to actually amortise the commissions over the life of the plan. You can’t get the big up-front now

James Ridley:                     Because they’re trying to align-

Brett Evans:                        So as you know-

James Ridley:                     I was going to say-

Brett Evans:                        Yep.

James Ridley:                     Oh, no, is that trying to align sort of the interests of the investor or the client with the advisor, in terms of… You know, the advisor’s more incentivized to do a good job with that client over that lifetime of that policy.

Brett Evans:                        100%. Look it’s gone from, in the past and still up until now, it’s… Australian expats are considered targets for these advisors. All they want to do is sign up as many as they can every month. They don’t care what happens in two, five, or 10 years’ time. Whereas if they reduce the amount of commissions being paid up front… And these advisors can be 10, 15, 20 thousand U.S. dollars. Which is ridiculous.

James Ridley:                     Yeah, it is.

Brett Evans:                        So by removing that impetus up front… And we saw this happen when Hong Kong introduced the same sort of legislation. It would have been three or four years ago? And within the first quarter of the legislation being in place, the sale of these type of products dropped by 45% in Hong Kong. In the first quarter.

Brett Evans:                        So, look at this, it’s not good business. You know, the conversations that we’re having with clients on the ground here at the moment, it’s the nature and the virtue of the Gulf region, it is a very… Not unstable, but people are never really settled here, because their jobs are always changing, they’re always moving. And not only do you have the issue of, “I don’t want to sign up to you now, because I don’t know what I’m doing in two years’ time, let alone 10 years’ time,” but a lot our clients, as you know, are satellites. When they move around the world, you imagine if they moved from Dubai to New York, and they hold one of these bonds. You know, the PFIC rules, the IRS would absolutely smash them.

Brett Evans:                        So there’s no foresight as to what’s happening with these Australian expats. All they care about is get them to sign, get them to pay up, and then move onto the next victim, pretty much.

James Ridley:                     Yeah, exactly right. I mean it’s never nice hearing either a client has one of these, or you’re doing an initial consult with someone and they tell you that they’ve been sold on some sort of investment bond or insurance bond that’s Isle of Man. You know, it hasn’t gone anywhere or done anything for the last five years in terms of performance, except for lining the advisor’s or, I’d say, salesperson’s pockets, as well the investment firm that offer them.

James Ridley:                     And, you know, they’re usually promoted as these tax-free vehicles, or tax-free wrappers, and essentially… You can invest back in Australia already, it’s tax free, depending on your residency, as long as you’re a non-resident there’s different ways that you can invest but there’s always ways that you can

Brett Evans:                        This is the thing that makes me laugh, you know. And to me it’s a marketing spin. You know, every week there are seminars being offered here, and the whole thing’s been pitched as, “tax-free investments, tax-free savings.” You live in a country that doesn’t have tax anyway. So to me it’s almost selling on fear, as opposed to necessity or capacity. And as opposed to, “You can invest anywhere in the world, and as a resident of Dubai, you’re not going to pay tax here because there’s no tax.”

Brett Evans:                        So now, what’s the best way to do it? And we talk about accruing wealth in the country, intent to return to or retire to avoid currency risk. Those are all other issues. But you don’t need to buy this thing to get tax-free returns, because you get that anyway.

James Ridley:                     Yeah, exactly right. Exactly right. And I suppose now that you’re in Dubai, where abouts’ is the office located, Brett?

Brett Evans:                        So Dubai’s quite unique where we have, I guess “jurisdictions” is the best way to describe it. So we have what’s called free zones, and each zone will specialise in a certain sector. So you have the Dubai Media City, surprise surprise, that’s where CNN and all those guys are. Dubai Internet City, Dubai… and think of them like suburbs, there’s actually no wall, it’s just a demarcated area. We’re located in what’s called the Dubai International Financial Centre, and what makes the DIFC unique is, we actually have a different law framework that we operate upon here.

Brett Evans:                        So obviously, the UAE is a Muslim country. And by that, sharia law is the governing law. However, in the DIFC, we actually have common law, no different to what’s used in Australia and the U.K. So when it comes to the way we operate, it is no different to how we operate in Australia. So we’re able to virtually pick up Atlas Australia and put it in Dubai and everything the same continues.

Brett Evans:                        Certainly we have other regulators to work with and make sure we’re doing the right job by them, but the benefit for clients is, the Dubai Financial Services Authority, which is the regulator here… So that’s their version of the Australian Securities and Investment Commission, back in Australia. You know, they’re very stringent in terms of rules and regulations and what we can and can’t do. And that provides Australian expats, certainly in Dubai and the UAE and the GCC region, a lot of peace of mind, because they know that we’re always keeping our nose clean, we’re doing the right thing, because we have a regulator standing over our shoulder making sure we’re doing that, like we do back in Australia.

Brett Evans:                        When you go what’s called, “on-shore,” so we’re considered offshore… When you go on-shore, which is virtually stepping outside one of these zones, then you have these different regulators like the SCA, Insurance Authority, and those sort of guys and girls. And they’re the ones who sort of regulate the on-shore advisors or salespeople that we talk about quite often. And they aren’t as developed or advanced as, say, ASIC or the DFSA, when it comes to rules and regulations. So they’re catching up very quickly like we said before, they’re issuing a lot of new rule changes at the moment, and I would expect you to see a swathe cut through advisor numbers in Dubai. Once again, advisors-slash-salespeople. I guess, as the impetus for selling these punitive and pretty crap products sort of goes by the wayside because they’re not being paid these massive up-front commissions.

Brett Evans:                        So to give listeners and watchers an idea as to where we are. Essentially, imagine every major international financial firm in the world is here, in this DIFC zone. So our neighbours are, you know, Citibank, Morgan Stanley, Barclay’s, HSBC… You know, you name it, everyone’s here. So essentially what it is, is like a little mini country for financial services firms.


Australian Expat Setting Up In Dubai


James Ridley:                     Yeah, okay. No, that’s a good analogy to make, then. Now that I suppose you’re in Dubai, I want to I suppose hit you on more of a personal side. Because now you’re an Australian expat, you know, and you’ve moved over there. I suppose, as an example. Getting the girls into school. How was that process, with choosing a school over there, I mean there’s many different international schools for Gabby and Anya, you’re daughters.

Brett Evans:                        Yep. It’s something that… If you take the same approach like we recommend clients take that approach when getting financial advice before you move, and prepare and plan well in advance, it’s actually quite a straightforward process. You know, it’s when things are done at the last minute, or not planned for, that’s when people… You know, the assumption of just landing and then just walking up to a school, you know schools are very competitive here, it’s very hard to get into the good schools. So we were talking to the school that the girls are in right now, back in January of this year. And they didn’t start until September.

Brett Evans:                        So it’s something that, you know… There’s always I guess hurtles and speed bumps that you have navigate when you’re going to a new country, but nothing has been… We could navigate get every problem, I guess you could say. Because you know, the schools are great, there’s a whole system here built to support you. And yes it’s a different system, and you just got to take your Australian hat off and realise you’re in a different country, everything’s different, and then rather than fighting it, just ask yourself, “How do I fix the problem?” or, “How do I get around this problem?”

Brett Evans:                        Certainly, it’s a different process. You know, when you get a lease here, you have what’s called an Ejari, E-J-A-R-I. Which is virtually a registration of your lease. And that’s the government’s record of your… And everything’s connected digitally here, which has been the thing that’s impressed me the most. So you have what’s called an Emirates ID, and the Emirates ID will be your nexus for everything. So when you want to go get a mobile phone, you can’t get a mobile phone unless you have an Emirates ID. When you’re setting up your DEWA, which is the Dubai Electricity and Water Authority, which is utilities, you need an Emirates ID and an Ejari. Because they’re connected. It’s digitally… Everything is connected to these very simple documents.

Brett Evans:                        Where the pain point usually is, is getting those documents to start with. So getting either the husband or the wife, their working visa. Done. That’s usually not too difficult. But then you can’t sponsor your family until you have a lease in your name, which means you have to have an Ejari. So families virtually come into the country, and sometimes they’ll do what’s called visa runs, across to Oman. Because you know, they’ve got 30 days from arrival, with about nine days of buffer on the end, but if their sponsored visa hasn’t come through in that time they’ll have to go Oman and back again to reset those 30 days.

Brett Evans:                        So that’s a very common occurrence. In actual fact there’s buses that depart every day from Dubai Mall and down at Dubai Marina that do runs out to the border every day, that you can pay about, I think it’s about 250, 300 dirhams, to go across… And you virtually walk across the border, and walk straight back again, and get back on the bus and come back to Dubai.

Brett Evans:                        So that’s always a key issue. Bank accounts here, aren’t the quickest thing. You know the banks, I’ve found, are very friendly, but it’s not a quick process. And they are improving that, I believe now you can actually apply for a bank account on your phone. But what will often be the case is, you can’t get a lease in your name until you have a bank account, because the cheque system here is still a very big part of the Dubai ecosystem. So essentially what will happen… And in the past, it was, you pay a year up front. You virtually give them a cheque, and you pay for a year up front. Now, with the cooling of the property market, essentially now landlords are more sympathetic, so they’re sort going to quarterly cheques, so…

Brett Evans:                        When Mel and I took out our lease, we virtually wrote out four cheques. So one for when we moved in, one for three months time, and three months time. And essentially the landlord cashes those cheques on those dates. So they’re post-dated cheques. And the reason that works, is because Dubai is one of the few countries in the world that still has what’s called a debtor prison. So if you default on a cheque, you know, in the past you could be jailed for passing a bum cheque. Now, not so much, they’ve increased the threshold in terms of what the penalties are if you’re passing a cheque. But there’s a good motivation there to make sure you pay your bills.

Brett Evans:                        But you can’t do a lease until you have a bank account. And you can’t sponsor your family to come in until you have an Ejari, and you can’t do an Ejari until you have the… So you can see, everything’s sort of linked in, so one thing that-

James Ridley:                     Is there any… I was just going to say, is there any sort of situation where it’s a bit like the chicken and the egg scenario? You know, “Oh, I need that, but then I need that first,” and sometimes impossible scenarios?

Brett Evans:                        It was, for us setting up the company. Because we actually incorporated inside the DIFC, and to issue an employment visa, you have what’s called an establishment card, and all the employee visas come off that. And when we’re going through that process, they said to me, “What’s your local mobile number? We have to put that on your establishment card.” And I said, “Well I haven’t got a local mobile number, because I haven’t got a visa. I haven’t got a visa, so I haven’t got an Emirates ID, and I can’t get a local number.” So it was a chicken and egg type scenario, in terms of…

Brett Evans:                        And look, you pick up the phone and you talk through the situation, they’re always very sympathetic, and you always find a solution. But, yeah, great example of that. Look, it’s something that has been a fascinating exercise to go through, and I’m actually going to write a relocation guide to Dubai that sort of talks Australian expats through the key things. Get this done first, because when you get this done, then you can get this done, then you get this done, and sort of all dovetails from there. I’ll write it very shortly, before the end of the year, while it’s still fresh in my mind. Look, it’s just a different country, different system. It’s not better or worse, it’s just different. And you just need to understand the process, because people can tie themselves in knots when they get here, trying to do what they did in Australia or another country, here, which doesn’t work.

James Ridley:                     No, no. And would you say, with where you are at the moment, obviously part of the GCC area… Would you say some of the other countries in the area are similar, in that sort of way, that they operate with, you know, an Emirate ID, those sort of things?

Brett Evans:                        It’s usually when a country rolls out a new legislative framework, the others will watch, and then more likely adopt the same process. So they sort of share / pirate content is the best way to describe it, like, “Oh, that’s a great idea, we’ll do that as well.” So I’ve found that Australian expats, when they’re moving inside the GCC region, don’t experience as high a pain point as someone who’s coming into the GCC region for the first time, because they understand the nuances and how you navigate that a little bit, so…

Brett Evans:                        It’s just one of those systems where… You know, Dubai is very moderate when it comes to their cultural approach to the western world versus sort of the Arab world. So you don’t really get brick walls in front of you, you just get speed humps that you just have to get through, and it’s something that’s going to be interesting to watch, as we build up to Expo 2020 next year, which starts in October. Because some ridiculous amount of number of tourists are going to come through, and watching how the UAE copes with that.

Brett Evans:                        I mean, at the moment, I think the numbers that are going through Dubai Airport, there’s about 100 million passengers a year going through the Dubai Airport. So they’ve already got these extraordinary numbers anyway, but in terms of coming to Dubai itself, watch this space, because I think it’ll certainly bring the country and the region up to a new age. Now we have Saudi allowing tourist visas. You know, up until last month, you could not go to Saudi as a tourist.

Brett Evans:                        Yeah, so we’re seeing a detachment of the Gulf region on their reliance of oil, to other sectors like tourism, travel, and all these sort of things. So yeah, look, it’s a fascinating time to be here, during all this change.

James Ridley:                     I mean, that Saudi visa, that’s not a bad option for us, now we can actually get over there and say hello to some clients, so that’s actually quite handy.

Brett Evans:                        Yeah, that’s right. You know, I’m looking forward to that, and it’s funny how when you look at all the different, I guess, geopolitical issues internally inside the GCC region. You know, obviously Qatar is an issue with the rest of the GCC region, so you’ve got to navigate that space. You can’t fly from Dubai to Qatar, you’ve got to fly from Dubai to Oman, and then Qatar. So instead of a 45-minute flight it’s a five-hour flight. And you know, it’s just the eccentricities of the Gulf region.


Australian Expat Main Residence Exemption Update


James Ridley:                     Yeah, of course. So let’s pause on Dubai. I know we’re going to come back to that on another Australian expat Chat, because there’s always going to be plenty of developments to talk about there. Let’s get a bit nitty-gritty about the main residence exemption and how it affects Australian expats. You know, this is a topic which we’ve been following for quite a while now, a good reference point is always our blogs. You’ll note probably us writing more than let’s say eight or nine blogs on this piece over the last two years.

James Ridley:                     And let’s touch base now on… They reintroduced it, they announced it October, they put put it back in, which is quite annoying. They’ve introduced some caveats, you know, what’s… Give me your two cents, Brett, I know you hate this topic.

Brett Evans:                        It’s an olive branch. Yeah, I hate this topic. And it’s an olive branch. You know, they try to appease Australian expats by introducing these life events, and excluded foreign resident. It’s ridiculous to think that there’s no apportionment still, and this is what the crux of the matter is, there’s no apportionment of the time that an Australian expat’s spent in Australia versus the time overseas.

Brett Evans:                        You could be in Australia for 20 years as a principal place of residence, and sell it on day one after… Obviously, by July next year, sell it day one into your time overseas and you’ll be penalised the whole back for 20 years. From a capital gains tax point of view. The ridiculous nature of this legislation, the fact that it’s called the Housing Affordability Bill, no one can explain to me right now how this is going to make housing more affordable.

Brett Evans:                        Australian expats make up such a small percentage of property owners. And yes, it always grabs the headlines when an Australian expat buys a property in Sydney for 15 million. That’s one person. Not the million Australian expats that live overseas. And that’s the bit that frustrates me. It doesn’t-

James Ridley:                     But it’s also that their, or the government’s interpretation of what an Australian expat is. They seem to have this interpretation that they’re all, you know, executives, millionaires, living abroad but they’ve all got these houses in Melbourne, Sydney, Brisbane, that are worth millions of dollars, and it’s going to force a fire sale which is going to cause this revenue raising. But it’s not going to happen. And what really, I suppose, gave me the shits, is that in their reintroduction of this bill is, they haven’t actually updated any of the revenue figures to reflect going forward. You know, 2019 financial year, 2020, 2021… They’re all looking back at 2017, 2018, 2019.

James Ridley:                     And the numbers they’re quoting are incorrect as well. I remember I had a brief catch-up with… I won’t say his name, but he’s a vice president of one of these Southeast Asia AustCham’s. And they actually were going to get some time to sit down at a bit of a round-table event with Scott Morrison, ScoMo, and I was talking to him about… I gave him about five main points that they needed to drill into ScoMo while he was there. Because each table, there’s 10 tables, they’ve all got 10 minutes with him. They’re sort of creditors and brochures who just kept drilling him, and it sounds like he didn’t have too much, I suppose, to offer, after I spoke to Chris about that.

James Ridley:                     But I essentially… They’ve just got no idea what it’s actually going to do. You’re right in terms of housing affordability. What is it going to do here? Is it…

Brett Evans:                        It’s not. Either Australian expats are just going to hold onto their property, so zero change there, or they’re going to sell before 30 June next year. So in terms of making housing affordable in five years time, in three years time, it’s not going to change it at all. And that’s where I question… I agree with you, I question the budget figures as well. Because they’re forecasting greater than $100 million dollars in revenue from these changes. But once everything’s said and done, by 30 June next year, and if we’re doing our job writing, communicating these issues to Australian expats so they’re not caught, guess what? You know, goose egg. Bupkis. The government’s not going to get anything out of this.

James Ridley:                     Yeah, and I mean I think the government… they’ve forgotten to sort of factor in increase in compliance costs as well. Because many people that have bought their main residences, assuming they’re not going to have to pay capital gains tax on that. If they’ve gone abroad they might e renting it out for six years. They’re not going to have this information on the contract of sale. No one’s going to be keeping these records from 10 years ago or 15 years ago, because they were all under the assumption, “I won’t have to pay tax on this, I know I have the main residence exemption, I’ve got myself six years if I rent it out, to do something with it.” And then obviously, again, the piece of legislation, it’s all about at the time of that contract of sale. When you sign that document, if you’re a non-resident, “Okay, these new laws will apply.” If you sign it, you’re a normal Australian taxed resident again. Whatever that means. It means the old rules still apply. It just doesn’t make sense.

Brett Evans:                        It doesn’t, and this whole life events thing, that’s nice to see they’ve acknowledged that’s an issue, because it is. Certainly, if you die, your spouse dies, or a child under the age of 18 dies, yeah, you’ve got to do some pretty drastic things. But why is an Australian citizen worth less at seven years overseas than five? You know this whole six, line in the sand, if you’re anything more than that, you’re excluded.

Brett Evans:                        Why should your wife or child be penalised if you die? Because, you think about it, if you go overseas and you’re on a two-year contract, you do it three times, you’re at six years. And that times goes like that. Look, I mean, I just think it’s an olive branch attempt by the government to do this. And certainly you and I will get quite noisy about this, I mean I’ll probably throw some things at the screens when we watch the Senate estimates hearings because the complete… I’m trying to be polite here. Inadequacy of the treasury officials’ responses in the last attempt, where they couldn’t answer anything, and they deferred everything else to the ATO or this or that. These are the people setting legislation affecting real people. And as you know, this is not going to affect the big cats. The big people. It’s going to affect nurses, teachers, it’s going to affect everyone. It is the “mum and dads” that the government keeps saying “We’re looking after.” They’re not going to look after them.

Brett Evans:                        And the problem is, the government does such a poor job in communicating these changes to Australian Australian expats overseas that more than likely, people are going to get caught in this net without realising they were caught until they get a bill.

James Ridley:                     Yeah. No, that’s right. I suppose you can sort of appreciate to a certain degree the introduction of the caveats. Obviously, you’ve mentioned the death and then the terminal medical condition that occurs within that six year period of the spouse or the child under 18. And then lastly, divorce. So you know, if that happens, which… Sometimes that can be common, actually, in Australian expats. I’d love to know what the statistics are on that, because it can be a case where the partner wants to come home, they miss Australia, they miss family, friends, and maybe the other partner wants to keep going with their career, and obviously that’s when there can then be that divide.

James Ridley:                     So they’ve introduced these things as a way of, I suppose, preserving the capital. Which I guess makes sense. But it’s just, it’s not enough. You’re spot-on in terms of what an Australian expat, an Australian citizen’s assets are worth more at five years compared to that seven year mark. It still just… I don’t know. I’m just shocked, to be honest. It’s come back, it’s resurged.

Brett Evans:                        I’d love to know what the impetus is. I mean, the government’s got a bee in their bonnet about getting this through. But which bright spark came up with the idea of changing the main residence exemption for Australian expats. Certainly if they were going down the route of saying, “Okay, rightio, there’s a lot of Chinese coming in, they’re buying properties, they’re living in it, then moving overseas and not paying tax? Get that.” But it’s very simple.

Brett Evans:                        Like we do with the state taxes, have a carve out for Australian citizens. It’s simple, it’s so simple. If you want to avoid foreign citizens buying up Australian property and then selling them for a gain and not paying tax, just say, “This legislation is exclusive of Australian citizens.” And then we don’t have to rewrite the whole box and dice.

Brett Evans:                        It’s like that great analogy of NASA spending a million dollars to develop a pen that writes in space, and the Russians use a pencil. Why make it any more complicated than it has to be? We could just do a simple carve out amending the main residence exemption, to exclude foreign residents, or foreign citizens. So exclude the whole resident bit, just make it a foreign citizen. If you’re an Australian citizen, you still get the six year MRE rule. I just don’t know, I mean the time, the resources, the money that’s spent in getting us to this point, and it’s still a bad result. It’s ridiculous. And that’s where I’d love to see that sort of, I don’t know, just a bit of common sense from Canberra. It’d just be refreshing to see that.

James Ridley:                     Yeah. And I mean, again, even though it’s… We knew about this in 2017, again it’s a draft stage. We’re coming close to the end of November, they’re giving Australian expats, what, seven months, to choose to sell their property with this uncertainty? Imagine if this piece of legislation doesn’t get enacted until April.

Brett Evans:                        I guarantee it won’t. It won’t be before Christmas, I can guarantee that. Because the Senate committee, they will always be concerned about retrospective legislation, which is what this is in spades. This goes all the way back to the ’80s, if they do changes. So to me, the big issues that I have with all this is, you know, Australian expats really aren’t going to have any clarity until early next year.

James Ridley:                     And then, again, making decision, “Do I sell? Do I not sell? Do I hold down? If I’m going to hold it, I need to probably hold it until I choose to come back to Australia, which could be five, 10, 15, 25 years, who knows?”

Brett Evans:                        And it’s conversations that Australian expats are having right now, who are about to become Australian expats, who are living in Australia, as to whether you hold assets or not. That’s the whole issue, it’s… You went through one the other day with Hayley and Nathan. Hi, Hayley Nathan. Going through a scenario of, do they hold? Do they sell? And they shouldn’t be forced into making a decision. They should sell or hold if that’s the right thing for them. Not based on legislation that may or may not come in, and in what shape or form.

James Ridley:                     Exactly. Exactly right. And there’s plenty of clients which they’re… Yeah I mean, I ring… I get another bunch of clients that are coming on, they’re moving to Hong Kong towards the end of the year, they’re lucky enough to buy a property in Sydney. They’ve owned that property for 15 years, they’re… With this reintroduction, they’re looking at us and going, “What do we do?” Well, it’s at draft stage. There’s not too much you can sort of account for at the moment. You can look at those scenarios, but it’s essentially, if they don’t come back for 10 years and they need access to that capital, they need to choose to sell it, you know, next six months. So it’s very unusual.

Brett Evans:                        The analogy I gave a client yesterday was, It’s like anticipating something around the corner that you don’t know what it is, but you have to be prepared for it. You don’t know what’s around the corner, but you have to act like you do, because if and when that event happens around the corner, your options will become very limited in terms how you’re managing your assets and wealth.


Australian Expat In The US Green Card Consideration Article


James Ridley:                     Yeah, of course. Listen, we’ve talked a fair bit about the main residence exemption. I just want to quickly touch base on some recent articles which we’ve put up. It’s obviously not going to apply to every Australian expat that’s listening, but they are pretty important. Obviously the main residence exemption, that essentially does apply to every Australian expat. A recent blog post that’s gone up as well as another Australian expat Chat was that interview that I conducted with Jeremy Harper, hfinance, about mortgages. That was quite good, I mean it was mainly about the 10 things that Australian expats need to know about getting a mortgage, and that process. I think that was pretty crucial.

James Ridley:                     Obviously, some recent tax determinations which about from the ATO trusts. I think a lot of people need to know about those, because many Australian expats, they still use family trusts, and they need to be, I suppose understanding in terms of how these things can be treated, especially from a taxation point of view.

James Ridley:                     Another recent one, which obviously was announced, you getting nominated as a top 50 influential advisor in Australia with FS 50. So well done on that one. And then, obviously, as I said before, recently… There’s another blog post that went out about when you get a green card, when you’re residing in the U.S., the exit tax and those sort of things… That’s a pretty big one, and not too many people are aware of it. Especially when you think you’ve got eight years but technically it’s only six, you know, calendar years. And that article mainly centres around, you know, triggering the HEART act when you’ve been a lawful permanent resident, long-term tax resident, all those sort of things, so make sure you do refer to those.


Australian Expat Q&A


James Ridley:                     I do have some questions, which I’m going to throw out to us now. Just mainly inquiries that I’ve received recently that I think they’re pretty good talking points. The first question, let me just read it out. “I’ve got carry forward losses in my country where I reside at the moment, U.S., from a sale of shares. If I come back to Australia, is there any way that I can use those losses?”

James Ridley:                     We don’t know too much, I suppose, about the individual’s circumstances, but generally speaking, you can’t transfer tax losses to another country. I think he’s probably trying to get out of some sort of capital gains scenario there, but no. Tax losses are not transferable between countries. So that’s a pretty straightforward one.

James Ridley:                     The other one was actually about a green card scenario, but it was actually an individual, they’ve been in the U.S. for 12 years now, but they’ve only owned… Or been, I should say, on a green card for the last three years. They want to know whether they are going to trigger the exit tax if they come back next year. But that article that I did addresses that. And it’s mainly around, yeah, if you’ve held a green card status or you’ve been a U.S. citizen… In terms of the period in which you’ve been in the U.S., it’s only relevant for the green card status of the U.S. citizen. So even though you’ve been there for 12 years, you’ve really got to just look at that eight year rule on the green card, and then obviously if you work backwards there in terms of you being a lawful permanent resident, because you’ve been on that green card status, and then, you know, there’s obviously the other tests.

Brett Evans:                        I think the important bit to point on the green card one and you highlighted this very well in the article was… And just for those listening on the podcast, we’ll actually put these articles in the show notes as well, so you can look at them later. It’s the in, not the whole calendar period. So you can have started your journey as a green card holder on the 30th of December in a year, and that actually counts as a full year. As opposed to… And then that’s something you got to catch a lot of people at, because people just sort of start down here. And you and I both see the conversations are happening on the Australian expat groups in the U.S. about… I mean it would have to be five a day, at least, in the different groups, about, “I’m going to go and get on the green card route,” and no one talks about these liabilities. Everyone talks about all these other bits, the bells and whistles of being a green card holder, blah blah blah, but no one actually talks about your issue as an Australian expat, “What happens if I move?”

Brett Evans:                        And we all know people move. I would say one in 10 would probably stay there permanently. But the other nine eventually come back, even if they are green card holders. And I think this is where we often talk about educating, educating, educating, because it is a massive component, before you take that next step from an L1 or an E3 into the green card visa route. Understand that the issues… I mean, we try and do as much as we can in these groups, but we can’t provide personal advice. But it’s important that people are aware that this is an issue. This is a ticking time bomb. Because what people don’t realise, and as you eloquently pointed out in the article as well, it is not just your U.S. assets. It’s your worldwide assets. So if you’ve got a property in Australia, you’ve got a super in Australia, let’s say the property’s worth… Let’s be conservative, 750. Let’s say you got 400 thousand in super combined between the two of you. There’s over a mil just there.

Brett Evans:                        You don’t have to have a lot in the U.S. to breach that $2 million mark, even if you are below the $165 thousand income side. So it’s something that I think just… makes me a bit sad in that there’s so many people going down this route who potentially could wind up with quite a large bill. And it’s quite funny, I was looking at some of the comments when we posted that article in the group. People were saying, “Oh, it hasn’t affected me yet.” Well, that’s because you’re still in the U.S. and I think there’s a lot of misinformation out there. So certainly we’ll try and get loud and educate expats, Australian expats, on all these key issues. Because if we don’t, you’re just going to see a swathe of people get caught up in the mess.

James Ridley:                     Yeah, that’s right. And I mean, generally speaking, most employers who have you… You’ve been in the U.S. for a while, they are going to push you towards going the green card path. They’ve got those visas, and it’s easy for them for you to be on a green card. That’s for sure. I want to really elaborate on that in, in. Because you’re right in terms of… Even if you get the green card 31s of December, that’s counted, and it’s not for a full calendar year. So even if you leave in seven years’ time, in the next year, on the first of January, that’s counted as well. And obviously that’s the first test in terms of being a long-term tax resident.

James Ridley:                     And then you’ve got to meet one of the other three tests. I mean obviously the assets test, that’s probably mainly going to be the one that a lot of people will trip over, especially if they’ve been overseas and accumulated a bit of wealth there. But the other one is certifying that form 8854, where people… They’re not sure. They’re not sure if they should tick that box. Because they don’t tick the box, they’ve actually accidentally now just triggered event of them becoming a covered Australian expatriate. And a lot of people aren’t aware of that, and I suppose in the future if they don’t go down the route, use a tax account to get that all sorted, then that’s sort of when they can run into an issue when they’re re-entering the U.S. and maybe getting another visa, and going down that path again. So it’s a big concern.


Staying Informed With Atlas


Brett Evans:                        Yeah. Look, I think it’s something that, as you know we’re spending a lot of time and money in infrastructure in the background to try and communicate better with Australian expats. We’ve obviously done a revamp the website and those sort of things, and good little segue to say to people, we communicate on many channels. If you’re on podcast, you’re listening to us right now, we’ll keep you updated here. On YouTube, and I’ll put these links in the show notes as well. But I think I will say, the other thing as well too is, on our website, you can actually get notified when we do blog updates. So if you go to atlaswealth.com for the first time, it’ll say, “Would you like notifications to be shown?” Hit “Allow,” and then any time we have a blog update come out, guess what? Pops up on your screen. So you don’t miss these things.

Brett Evans:                        You know, I think it’s important that I guess our remit and our job is to ensure that, as long as you have internet access, regardless of any other country you might have. If you’re an Australian expat in the middle of the desert or in the middle of a city, doesn’t matter what country, you need to keep following this information. Because the world is getting very small very quickly, and with the common reporting standard, with FATCA, all these global initiatives, apathy and, “She’ll be right, mate,” won’t cut it anymore.

James Ridley:                     No, no. Exactly right. Stick your head in the sand, I love how you always refer to that as well, now that you’re in the sandpit as well, actually.

Brett Evans:                        I must say, it is cooler where you are right now, it’s hotter than we are right now, which is great. We’re coming into winter and it’s a blessing.

James Ridley:                     Well that’s right, actually. One thing we should mention is all the fires that have been going on here in Australia, I mean, it’s crazy.

Brett Evans:                        It’s a travesty. It is.

James Ridley:                     It is! It is. It’s going to go down in history as one of the worst seasons, and I mean a lot of people-

Brett Evans:                        It’s only just started. Well it technically hasn’t started yet. First of December is summer.

James Ridley:                     No, no you’re right. You’re exactly right.

Brett Evans:                        It’s something that… It is getting a lot of airtime overseas, we’ve seen it on the news here quite a fair bit, and hearts go out to people who’ve lost their houses. Certainly, the firies, just doing us proud. And those guys are absolutely legends. You see what conditions they’re faced with, and these are volunteers. If that’s not Aussie mateship, I don’t know what is.

James Ridley:                     An interesting comparison I think they made, I think it was last week or the week before, was I think last year there was an article that sort of went out which got a lot of media time, which was about the Amazon, and a huge fire there. I think it was 150 thousand acres they lost. And then they compared that to Australia, and Australia had already lost over a million acres to these fires. They’re trying to make that comparison to sort of put it in proportion for the rest of the world to understand that. Because obviously the Amazon, everyone cares about the Amazon. But you’re right, we’re only just getting started.

James Ridley:                     I was telling a client the other day, if I looked out the window, and obviously I can see other sort of high-rises, probably a K away, on Monday I couldn’t actually see that high-rise. That’s how bad the smoke haze was here. I couldn’t see the crane or anything. Obviously a lot of people are getting affected, that have those lung diseases, or asthma, those sort of things. It’s hitting on many fronts, to be honest. And you’re right in terms of, “It’s just getting started. It’s very scary that it’s not even December yet and simple things like those thunderstorms that we commonly get here in Australia, those are the things which are going to ignite these fires again.

Brett Evans:                        It is. And you know, everyone you talk to… Or everyone I’ve talked to over here, anyway, everyone has a friend or family member or someone who’s in the path of danger. You know, Australian expats are feeling the pain of Australia, because they’re watching it on the news, and sometimes actually it’s worse being away, because you don’t get a full perspective, you just see what you see. And when you see walls of flames just going through and taking out houses, it’s sad and scary.

James Ridley:                     Yeah well I mean, give you an example of that. Jessica, our CSO here, when she catches the train back home, she said when she got off the train, halfway to Brisbane, you could see where the fires had actually gotten to. They’re within 20 metres of the train tracks. There was fire crews there, where she was. And I was just like, “Gosh, that’s terrible.” So it’s just an example of it’s scorching, I suppose, in Australia at the moment, and it’s only going to get worse. So keep an eye on it, and obviously reach out to friends and family if you can, as well.

Brett Evans:                        Yeah, and I’ll also put a link in the show notes as well where you can donate to the firies as well. You know, I think they do an amazing job. The death toll, the damage bill, would be 10, a hundred times greater if we didn’t have those guys and girls doing that stuff on the front line. I mean that is… It’s a cliché, not all heroes wear capes, everyone uses that phrase. But those guys and girls, hats off to you guys and girls, it is just an incredible effort to face up to Mother Nature like that and win.

James Ridley:                     Yeah, absolutely. There’s a fair bit going on around the world at the moment, you see that recent news about Hong Kong? The university? Oh my gosh.

Brett Evans:                        Yeah, and I could… Look, Hong Kong’s a big issue for Australian expats right now, we’ve talked to a lot of them, and a lot of them are sort of questioning it. People… my brother lives there, and has lived there for most of his life. Not just adult life, but most of his life. And for the first time, he’s very sad. He calls it his Hong Kong. And he says, “What’s happening to my Hong Kong?” And I think a lot of Australian expats will be going through a similar thought process… Australian expats in Hong Kong, that is, as to, “Is this my long-term home, or do I need to look at moving?”

Brett Evans:                        I mean now you have international universities calling back exchange students, and I think they’re in a stalemate crisis right now, because Beijing can’t be seen to go soft, because that’ll set a precedent for mainland issues, if they are seen to be weak. The protestors in Hong Kong are now almost militant. They’re firing arrows. I mean, what happened to the Yellow Umbrella Brigade a couple years ago? I mean that was peaceful and it worked. Now it’s a sort of… And I really don’t know how this is going to end. Because it’s… Beijing aren’t just going to say, “All right, guys, you win.” But the protestors aren’t going to stop doing this, because now it’s gone beyond… what do you call it? Fundamentals, and it’s now become an emotional thing.

Brett Evans:                        And having grown up in Hong Kong during Tienanmen Square and all these sort of things, it’s not the first time the region’s been caught with this. But I’ll tell you what, it feels different this time.

James Ridley:                     Yeah. Yeah, exactly right. I mean, it’s… Whenever they’re saying on news that Molotov cocktails are being thrown at these massive, I suppose, military vehicles, it’s not a sign of things that are going to be easy any time soon. But you’re right. Some clients have reached out thinking, saying, you know… Mostly, I’ve checked in with quite a few clients that are in Hong Kong, see that they’re okay. But also the fact that, generally a lot of them are humming and arring about whether to come home or whether to go somewhere else.

Brett Evans:                        And look, I think it’s… It highlights how, I wouldn’t say “volatile,” but how uncertain an Australian expat life can be. And we’ve seen this in different regions over the last 20 years, people having to virtually up sticks and move because of a local geopolitical event. And people can be long-term residents and treat it as their home. But certainly when you have events like this it does question your thought process. Especially when you have kids, too.

James Ridley:                     A lot of topic… I always love talking to clients in the U.S. about Trump, and what their thoughts are, and a lot of them were thinking about getting out when he got put in, so. It’s hard to say. I think that’s probably… I suppose we’ll finish up there, Brett. We’ve covered some good topics there. I think it’s a good time to wrap it up. We’ll let you kick on with your day. What time is it over there, actually?

Brett Evans:                        Ten to 11. So just getting started. And you’ll be getting ready to pull up stump soon.

James Ridley:                     Yeah, winding down. Slowly.

Brett Evans:                        Good time. Also, just to ask people… We have seen people start to provide reviews on the podcast. If you love what we’re doing, we’d love a five-star comment as well. To us, that is obviously… It’s not the reason we do it, but it helps us get a gauge as to how effective this is. And feedback as well. The more feedback we get… And people can sort of throw in questions that they want raised at future ones, future Australian expat Chats as well. Certainly on the e-mail, [email protected] Also on Twitter you can tweet us at #expatChat, or on the Facebook page. All these will be in the show notes as well, too, but the more dialogue we get between Australian expats, the more concise we can be in answering everyone’s questions. Because one thing I have found out, now being an Australian expat in Dubai, is there is ridiculous number of urban myths, and it’s nice to go through and start to cull them and cut them out. Because there’s too much misinformation out there.

James Ridley:                     Yeah, absolutely. And I think a lot of Australian expats, they forget that even though… As an Australian residing in the U.S., as another Australian residing in Qatar, they’re probably going to have similar questions about their Australian assets. So it’s good to be having those open conversations.

Brett Evans:                        Well it’s conversations that scale. The bigger conversation we can have, the more informed Australian expats can be. And that’s all we’re about, is just making sure Australian expats do things with the benefit of knowledge in advance as to what ramifications and the changes could allude to. And also, one thing we’ve seen out of all jurisdictions, is the goal posts are moving very quickly? So just because it suits you now, doesn’t mean it’s going to suit you in the next year or two years’ time, as we see different jurisdictions bringing different tax rules.

James Ridley:                     No, that’s right. Exactly right. All right. Well Brett, thanks for your time today. I’m sure we… Actually, I’ll probably speak to you quite soon actually, tomorrow.

Brett Evans:                        Exactly. So thanks very much, guys. And I look forward to seeing you on expat Chat episode nine very shortly.

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