Watch out if you are an accidental dual citizen
It is not just Australian politicians who are shocked to discover they are dual citizens. There are plenty of unsuspecting dual citizens finding themselves in hot water. While politicians have been kicked out of parliament, other dual citizens face big bills for taxes they never dreamed they owed.
Depending on your dual citizenship, you could be obliged to pay tax on your income, capital gains tax when you sell your principal property and investment properties, plus tax on the earnings from your self-managed superannuation fund (SMSF). Australians don’t have to pay inheritance tax but other countries aren’t so lenient.
Born in the USA
Martin* was eight when he left the US with his family and moved to Australia. He has been back three times to visit and is now 52. It wasn’t until he was filling out some investment forms for his SMSF that he realised he had a big problem. The global investment bank asked for his renunciation of US citizenship form when it saw on Martin’s passport that he was born in the US. Martin didn’t have one. He had kept his US citizenship even though he was an Australian citizen because his US passport allowed him to access shorter immigration queues at the airport.
As a high-income earner, Martin realised he could be liable for US tax on his income in Australia, as well as his superannuation under the US grantor tax rule. He might also have to pay capital gains tax on Australian property he has sold over the years. A quick internet search revealed that he should have been filing expatriate tax returns with the US government every year, and he was required to submit a return disclosing assets held in his bank accounts.
“I can’t believe it. I had no idea. I don’t know what to do,” says Martin. He was paying tax in Australia and never thought he would be liable for US tax.
Accidental citizens
Esta historia es de la edición August 2019 de Money Magazine Australia.
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Esta historia es de la edición August 2019 de Money Magazine Australia.
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