Leaving Australia for Dubai: the choice you only get to make once
Australia deems you to sell everything except Australian property when you stop being a resident. There is an election that defers the bill, and it is not a deferral at all. It is a permanent tie to the Australian tax system with no expiry date.
Australia taxes you on the way out. CGT event I1, in section 104-160 of the Income Tax Assessment Act 1997, happens the moment you stop being an Australian resident. The legislation is blunt about it:
“CGT event I1 happens if you stop being an Australian resident. The time of the event is when you stop being one.”
You then work out a capital gain or loss for every CGT asset you owned just before that moment, except taxable Australian property. Assets acquired before 20 September 1985 are outside it. There is no threshold, no reporting floor, nothing comparable to Canada’s 25,000 dollar list.
What makes Australia different from every other country in this series is not the charge itself. It is the alternative on offer, which looks like mercy and functions as a life sentence.
What is caught, and what is not
The exclusion is taxable Australian property, defined in section 855-15 as five categories: taxable Australian real property, indirect Australian real property interests, assets used in carrying on a business through an Australian permanent establishment, options or rights over those, and assets covered by subsection 104-165(3).
The result is the reverse of what most people expect:
| Asset | CGT event I1 on departure |
|---|---|
| Australian house or apartment | not caught |
| Listed shares and ETFs | caught |
| Crypto | caught |
| Private company interests | caught |
| Assets acquired before 20 September 1985 | excluded |
So the property stays out of the exit charge and gets its own, worse treatment later. The portfolio is what triggers the bill on the way out, taxed at your normal marginal rates as part of the departure year’s income.
The election that never ends
Section 104-165(2) lets an individual choose to disregard the gain or loss from all assets caught by CGT event I1. Subsection (3) explains what you are agreeing to:
“If you do so choose, each of those assets is taken to be taxable Australian property until the earlier of: (a) a CGT event happening in relation to the asset, if the CGT event involves you ceasing to own the asset; (b) you again becoming an Australian resident.”
That is not a deferral. It is a swap. Instead of paying now, every affected asset stays permanently inside the Australian tax net. The choice applies to all of them together, not asset by asset, and there is no expiry. Sell the Australian share portfolio from Dubai in twenty years and Australian CGT applies to the whole gain.
It also costs you the discount. Section 115-105 denies the 50 percent CGT discount to the extent a gain accrued while you were a foreign or temporary resident, where the relevant period ends after 8 May 2012, apportioned under section 115-115. The longer you stay abroad, the smaller the share of the eventual gain that qualifies.
Both roads cost something. Pay now and you need liquidity in the departure year, but the portfolio is then free of Australia forever. Elect under 104-165 and you pay nothing today, in exchange for indefinite Australian taxing rights and a shrinking discount. The decision cannot be revisited later.
The main residence exemption disappears, and it reaches backwards
This is the rule that catches people who thought their house was the safe part.
Section 118-110(3) and (4):
“However, this section does not apply if, at the time the CGT event happens, you are an excluded foreign resident … You are an excluded foreign resident, at a particular time, if you are a foreign resident at that time, and the continuous period ending at that time for which you have been a foreign resident is more than 6 years.”
The life events test is the only way out, and it covers serious illness, the death of a spouse or child, and separation, within those first six years.
The change came in through the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Act 2019, assented to on 12 December 2019. The transitional protection only covered CGT events up to 30 June 2020 for properties held continuously since 9 May 2017. From 1 July 2020 the exemption is simply gone for foreign residents.
And it does not apply pro rata. The whole gain since acquisition becomes taxable, including the years you lived in the house yourself. A home bought in 2005, lived in for fifteen years, then held while you are in Dubai for seven, is taxed on the entire gain from 2005.
Keeping Australian property is expensive in three ways
Rent. Foreign residents get no tax-free threshold. Under Schedule 7 Part II of the Income Tax Rates Act 1986, from the 2024-25 income year:
| Taxable income | Rate |
|---|---|
| up to 135,000 AUD | 30 percent |
| 135,001 to 190,000 AUD | 37 percent |
| above 190,000 AUD | 45 percent |
Thirty percent from the first dollar, where a resident pays nothing up to 18,200 AUD.
Sale. Foreign resident capital gains withholding under section 14-200 of Schedule 1 to the Taxation Administration Act 1953 requires the purchaser to pay the Commissioner 15 percent of the first element of the asset’s cost base, on or before the day they become the owner. The former exclusion for properties under 750,000 AUD has been removed from the current compilation, so there is no de minimis left. A clearance certificate or a variation under sections 14-220 and 14-235 avoids or reduces it, but only if applied for before settlement.
Main residence. See above. It is gone after six years, retrospectively.
No treaty, and a residency test with no arbiter
Australia and the UAE have no double taxation agreement. The Australian Treasury list of income tax treaties covers 47 partners and does not include the United Arab Emirates, as at the page state of 24 March 2026.
That absence matters more than it sounds. There is no tie-breaker article to settle a dual residency dispute, no reduction of withholding rates, and no mutual agreement procedure. If the ATO takes a different view of your residency under the domicile test, there is nobody to appeal to outside Australia.
Residency itself is decided under section 6(1) of the Income Tax Assessment Act 1936 through four tests: the resides test, the domicile test, the 183 day test and the superannuation test. That last one is a trap for former federal public servants: membership of the CSS or PSS schemes makes you an Australian resident by operation of law, whatever your actual centre of life. Spouses and children under 16 are covered too.
There is one clean saving. Foreign residents pay no Medicare levy. Section 251U(1)(d) of the ITAA 1936 makes someone who was a non-resident for the whole period a prescribed person, and a mid-year departure is apportioned by day under section 9 of the Medicare Levy Act 1986. That is 2 percent of taxable income, and it stops immediately.
Superannuation stays where it is
Nothing happens to your super on departure. No deemed disposal, no access. The balance sits in the fund until a condition of release is met.
The departing Australia superannuation payment is not a route out for citizens. Regulation 6.20A(1) of the SIS Regulations 1994 requires that the member was a temporary resident and is not an Australian citizen, New Zealand citizen or permanent resident, and that their visa has ceased. For a citizen or permanent resident moving to Dubai, DASP is not available. For the temporary residents it does cover, the rates under the 2007 Act are 35 percent on the taxed element, 45 percent on the untaxed element and 65 percent on working holiday maker contributions from 1 July 2017.
What this means in practice
Australia asks you a real question and gives you no way back from your answer. Unlike the UK, where the cost sits in inheritance tax and pensions, the Australian cost is decided in a single election in your departure year.
The order that works:
- Value the whole portfolio at your departure date. There is no threshold, so every asset outside taxable Australian property is in scope.
- Model both paths properly. Pay now against elect and hold, over your realistic horizon, with the apportioned loss of the 50 percent discount built in.
- Look hard at the house separately. If a sale within six years of leaving is plausible, that timing is worth more than most of the rest of this list.
- Check the superannuation test before assuming your residency ends at all, especially if you have ever been in a CSS or PSS scheme.
- Apply for a clearance certificate before settlement on any Australian property sale, because 15 percent of the cost base comes off with no minimum.
- Accept there is no treaty. Document your departure as if the residency question will be argued, because there is no external forum if it is.
The Dubai side is the easy half. A company, a residence visa, an Emirates ID and a corporate tax registration, all with published fees and known deadlines, and you can build the number yourself in our company cost calculator.
We handle the UAE half, the accounting, the tax registrations and the deadlines here. The Australian half belongs with an Australian adviser who works with CGT event I1 and the 104-165 election regularly, and it belongs there before you stop being a resident, because afterwards the choice has already been made.
This article is part of a series comparing what leaving costs across fifteen countries. The overview, with a table of every exit charge and how long each tail runs, is in what leaving costs, by country.
Frequently asked questions
Does Australia have an exit tax?
Yes, in the form of CGT event I1 under section 104-160 of the Income Tax Assessment Act 1997. It happens when you stop being an Australian resident, and you work out a capital gain or loss for every CGT asset you owned just before that moment, except taxable Australian property. Assets acquired before 20 September 1985 are excluded. There is no threshold and no reporting minimum.
Which assets are caught by CGT event I1?
Everything except taxable Australian property. Australian real estate is therefore outside the exit charge, while shares, ETFs, crypto and private company interests are inside it. Taxable Australian property is defined in section 855-15 and covers Australian real property, indirect real property interests, assets of an Australian permanent establishment, options over those, and assets covered by subsection 104-165(3).
Is the section 104-165 election a deferral?
No, and calling it one is the most expensive misunderstanding in Australian emigration. You can choose to disregard the gain or loss on all assets caught by CGT event I1, but each of those assets is then treated as taxable Australian property until you sell it or become an Australian resident again. There is no time limit. Sell the portfolio in Dubai twenty years later and Australian CGT still applies.
What does the election cost me beyond staying in the system?
The 50 percent CGT discount is denied for the period you were a foreign resident. Section 115-105 removes the discount to the extent a gain accrued while you were a foreign or temporary resident, where the relevant period ends after 8 May 2012, apportioned under section 115-115. The longer you stay away, the more of the discount you lose on an eventual sale.
Can I still claim the main residence exemption on my Australian home?
Not as a foreign resident who has been away for more than six years. Section 118-110(3) and (4) deny the exemption to an excluded foreign resident, defined as someone who has been a foreign resident for a continuous period of more than six years at the time of the CGT event. The life events test is the only exception and it covers serious illness, death of a spouse or child, and separation, within the first six years.
Is there a tax treaty between Australia and the UAE?
No. The Australian Treasury list of income tax treaties runs to 47 partners from Argentina to Vietnam, and the United Arab Emirates is not among them, as at the page state of 24 March 2026. That means no tie-breaker article if the ATO disputes your residency, no reduction of withholding rates, and no mutual agreement procedure to appeal to.