Contact UsMy fiance, and soon to be spouse, and I are from two different countries( US and Australia). We are trying to determine the best place to establish our permanent residency. Should we do it in the US or in Australia. Our online services company can be operated from anywhere in the world so we can live anywhere. What is the best long term plan for us from a tax perspective?
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Tax Professional Answers
Fred Rollo
"Mixed marriages" make international tax planning somewhat more complex.
In this case the US partner may prima facie be subject to US tax on their worldwide income regardless of their permanent residency status if they are a US citizen. However, the Australian partner can only be taxed in Australia on their worldwide income if they are determined to be resident in Australia.
If you actually reside in Australia according to the ordinary meaning of the word (the common law test) you are treated as an Australian resident for tax purposes. It is possible to be both resident in Australia and also resident in some other jurisdiction.
A person is a statutory resident if they have an Australian "domicile" or are in Australia for more than 183 days of the tax year, and cannot demonstrate that they have a permanent place of abode outside Australia.
Australian income taxes are by-and-large higher than in the US. The present corporate rate of tax is 30% and personal income tax on every dollar in excess of A$180,000 is levied at the rate of 47.5% (which includes a medicare levy of 1.5%). If the rate of personal tax is a determinative factor, this might disqualify the Australian permanent residency option.
That would leave either the US option, or some other more tax friendly alternative. It may be observed that a number of wealthy Australian business people (including one or more billionaires and a smattering of professional sporting identities) have tax residences in Bermuda. A somewhat pleasant option, approximately 1.5 hours from NY or Boston and 5 hours from London.
The Bermuda (or similar) option would require a judicious utilisation of a trust/corporate structure and probably strategies that would limit the US citizen partner's ability to control the structure.
It is also not an option for those who are not comfortably off. In the proposed marital situation, neither partner would be able to become a Bermudian citizen and non-Bermudians are limited in the housing that they are able to buy (although there are few restrictions on renting apartments or single-family homes).
However, as a base for an online services company and a desirable place to live, Bermuda has much to offer.
Disclosure: I am not resident in Bermuda, nor do I have financial interests there - unfortunately!
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561 weeks ago
In this case the US partner may prima facie be subject to US tax on their worldwide income regardless of their permanent residency status if they are a US citizen. However, the Australian partner can only be taxed in Australia on their worldwide income if they are determined to be resident in Australia.
If you actually reside in Australia according to the ordinary meaning of the word (the common law test) you are treated as an Australian resident for tax purposes. It is possible to be both resident in Australia and also resident in some other jurisdiction.
A person is a statutory resident if they have an Australian "domicile" or are in Australia for more than 183 days of the tax year, and cannot demonstrate that they have a permanent place of abode outside Australia.
Australian income taxes are by-and-large higher than in the US. The present corporate rate of tax is 30% and personal income tax on every dollar in excess of A$180,000 is levied at the rate of 47.5% (which includes a medicare levy of 1.5%). If the rate of personal tax is a determinative factor, this might disqualify the Australian permanent residency option.
That would leave either the US option, or some other more tax friendly alternative. It may be observed that a number of wealthy Australian business people (including one or more billionaires and a smattering of professional sporting identities) have tax residences in Bermuda. A somewhat pleasant option, approximately 1.5 hours from NY or Boston and 5 hours from London.
The Bermuda (or similar) option would require a judicious utilisation of a trust/corporate structure and probably strategies that would limit the US citizen partner's ability to control the structure.
It is also not an option for those who are not comfortably off. In the proposed marital situation, neither partner would be able to become a Bermudian citizen and non-Bermudians are limited in the housing that they are able to buy (although there are few restrictions on renting apartments or single-family homes).
However, as a base for an online services company and a desirable place to live, Bermuda has much to offer.
Disclosure: I am not resident in Bermuda, nor do I have financial interests there - unfortunately!