Financial Planning in Australia: A Guide for Expats and International Investors

Overview

Australia is one of the most popular destinations globally for British emigrants — sharing a language, a common law legal system, and many cultural similarities, while offering a dramatically different climate, exceptional natural environment, and a growing economy with strong long-term fundamentals. For HNW individuals, Australia presents both genuine financial advantages (no inheritance tax, a well-structured superannuation pension system, no gift tax) and material complexities (worldwide income tax from the day residency is established, significant CGT on most asset classes, strict foreign investment rules for real property).

Australia is not a tax-haven destination, but its financial planning environment is sophisticated and, with proper advance structuring, can be very efficient for those who arrive with their affairs in order. This guide is intended for UK nationals considering relocation to Australia. It is not a substitute for advice from a qualified Australian tax adviser (CPA or tax agent) and a UK-qualified financial planner.

Tax Residency Rules

Australia uses a common law residency test rather than a purely day-count based test, though 183 days is used as a secondary indicator. The primary test is whether an individual has established a place of abode in Australia and intends to remain. In practice, a UK national who purchases or rents accommodation in Australia and begins living there becomes an Australian tax resident promptly — typically from the date of arrival with the intention to reside.

From the moment of becoming an Australian tax resident, an individual is subject to Australian income tax on worldwide income. There is no grace period for new residents (unlike the UAE, Singapore, or Italy), and no territorial exemption for foreign-source income. Pre-arrival planning is therefore critical — ideally addressing foreign asset realisations, trust restructuring, and pension arrangements before arrival.

Income Tax

Australian income tax is levied at progressive rates. For 2025–2026 (reflecting the Stage 3 cuts in force from 1 July 2024): 0% on income up to A$18,200; 16% on A$18,201–45,000; 30% on A$45,001–135,000; 37% on A$135,001–190,000; 45% above A$190,000. The Medicare levy (2% of taxable income, with a surcharge for higher earners without private health insurance) adds to the effective rate. A top marginal rate of 47% (45% + 2% Medicare) applies.

For residents, worldwide income — Australian and foreign — is included in the assessable income base. Foreign income already taxed in another country attracts a foreign income tax offset (FITO) to prevent double taxation, subject to limits.

Capital Gains Tax

Australia applies CGT as part of the income tax system (not as a separate tax). Gains on disposal of assets are included in assessable income at the full amount (for assets held less than 12 months) or at 50% of the gain (for assets held 12 months or more by residents — the CGT discount). The net gain is then taxed at marginal rates, giving an effective maximum rate on long-held assets of approximately 23.5% (47% × 50%).

The CGT discount applies to Australian residents only. It does not apply to non-residents, who pay CGT on the full gain on taxable Australian property at flat rates.

Foreign assets held by Australian residents are subject to Australian CGT on gain accrual. However, assets owned before becoming an Australian resident benefit from a cost base reset to market value at the date of commencement of Australian residency (the market value substitution rule) — meaning pre-arrival appreciation is not taxed in Australia. This reset is one of the most powerful arguments for arriving with unrealised gains intact rather than crystallising them before arrival.

Inheritance and Gift Tax

Australia has no federal inheritance tax and no gift tax. These were abolished at the federal level in 1979, and no state-level equivalents operate. Wealth can pass on death between family members without Australian succession tax, which is a significant advantage for estate planning compared with the UK, France, or Germany.

UK inheritance tax moved to a residence-based system from 6 April 2025 (replacing the old domicile-based rules): a "long-term UK resident" — broadly someone UK-resident for at least 10 of the previous 20 tax years — remains within the scope of UK IHT on worldwide assets, even after relocating to Australia, until they have been non-UK-resident for long enough to fall outside the test. The UK–Australia convention on estates provides for credit relief to prevent double taxation, but UK IHT at 40% above the nil-rate band (£325,000 + residence nil-rate band where applicable) remains a serious planning consideration.

Residency and Visa for HNW Individuals

Important: Australia's dedicated investor visa routes have closed. The Business Innovation and Investment Program (BIIP) — which included the Business Innovation and Investor streams and the flagship Significant Investor Visa (SIV) under the Subclass 188 — closed to new applications on 31 July 2024. The Premium Investor Visa (subclass 132) closed earlier, in 2021. As of 2026 there is no replacement passive-investment visa; the government has redirected migration policy towards the skills-based National Innovation visa (subclass 858) for high-calibre individuals with exceptional track records in priority sectors, which is a talent route rather than a capital-investment route.

For historical context, the SIV had required A$5 million in a complying investment framework (with minimum allocations to venture capital/private equity and emerging companies) held for four years before a permanent residence (subclass 888) application. Existing 188 visa holders may still progress to the 888 visa, but new HNW applicants can no longer buy residency through a passive investment.

HNW individuals considering Australia should therefore plan around the skilled, employer-sponsored, or talent routes, and take current immigration advice — the policy settings in this area have changed materially and continue to evolve.

Superannuation

Australia's superannuation (super) system is one of the world's best-designed compulsory pension frameworks. Employers are required to contribute 12% of ordinary time earnings to an employee's super fund (the Superannuation Guarantee, which reached its legislated maximum of 12% on 1 July 2025). Employee voluntary concessional contributions (pre-tax) are capped at A$30,000 per year; non-concessional (after-tax) contributions at A$120,000 per year (or A$360,000 under the three-year bring-forward rule).

Concessional contributions are taxed within the super fund at 15% (or 30% for higher earners above A$250,000 of income). Fund earnings are taxed at 15% in accumulation phase. On retirement, super fund earnings in the pension phase are tax-free up to the Transfer Balance Cap, which is A$2.0 million for 2025–26 (indexed).

For UK expats arriving with UK pension assets, the interaction between UK pension transfers and Australian super is complex. Transfers from UK schemes to Australian super funds can trigger significant Australian tax charges (the foreign fund transfer rules classify incoming foreign pension funds as income). This area requires specific advice from a dual-UK/Australian pension specialist before any transfer is initiated.

Departing Australia permanently: UK expats who accumulate super and then leave Australia permanently can apply for a Departing Australia Superannuation Payment (DASP), which is paid on departure but subject to a withholding tax of 35% on taxable components. This is an important planning consideration for those who do not intend to remain permanently.

Property Ownership

Foreign nationals require Foreign Investment Review Board (FIRB) approval to purchase residential property in Australia. The rules:

• Temporary residents: Can purchase one established dwelling as a primary residence (not for investment). Must sell on departure.
• Non-residents: Can purchase new dwellings only; no established resale properties. Application fees and FIRB approval required.
• Permanent residents and citizens: No FIRB restriction.

FIRB application fees are substantial for higher-value properties. Non-residents who breach FIRB rules face forced divestment orders and penalties.

Australian residential property has been one of the strongest performing asset classes globally over 30 years. Sydney and Melbourne prices are among the most expensive globally; Brisbane, Perth, and Adelaide have grown significantly. The rental market is tight, with vacancy rates at historically low levels through 2024–2026.

UK–Australia Double Tax Treaty

The UK–Australia DTA is comprehensive and well-established. Key provisions: employment income taxed where work is performed; pension income — UK-source pension paid to Australian residents is generally taxable in Australia (not the UK) under the treaty, making Australian income tax at marginal rates (up to 47%) the applicable rate; dividends — Australia withholds at 15% for portfolio and 5% for substantial holdings; interest — 10% withholding; capital gains on property taxed in country of situation.

The pension article is important: UK private pension income (SIPP, workplace drawdown) paid to Australian residents is primarily taxed in Australia, not the UK. This means UK PAYE withholding should be removed (via NT code application) and Australian income tax paid instead — which at marginal rates can be significant. For those with large UK pension pots, the combination of super tax efficiency and UK pension Australian marginal taxation requires careful modelling.

Practical Expat Community Observations

Australia's British expatriate community is the largest single foreign-born group in the country. Communities are concentrated in Sydney (Bondi, Manly, the northern beaches), Melbourne (St Kilda, Hawthorn, South Yarra), Brisbane, Perth, and the Gold Coast. The social and professional infrastructure for British migrants is well developed — British clubs, cricket associations, and professional networks are active in major cities.

Healthcare under Medicare (the Australian public health system) is good; private health insurance is strongly recommended, particularly for ancillary services and to avoid the Medicare surcharge. The private hospital network (Ramsay Health Care, Healthscope, Cabrini) is of high quality.

The weather, outdoor lifestyle, and cost of living in regional Australia compare very favourably with the UK. Sydney and Melbourne are expensive cities, but the east coast regional areas (Blue Mountains, Hunter Valley, Mornington Peninsula) offer excellent lifestyle at lower cost. Perth on the west coast is more affordable than Sydney and has a strong mining and resource-sector professional community.

How Global Investments can help

Global Investments works with UK nationals at every stage of the Australian relocation journey — from pre-departure tax planning and UK pension strategy to Australian investment structuring and cross-border estate planning. We can help you manage the CGT cost base reset on arrival, design pension arrangements that work efficiently under both UK and Australian rules, review FIRB implications of property investment, and ensure your UK IHT exposure is properly managed through your Australian career. Our team includes advisers with direct experience of dual UK/Australian financial planning. Contact us to arrange a consultation.