---
title: Nika Widanage on Why Cross-Border Tax Starts Before the Return
description: Nika Widanage, FCPA, of AIMS Australia on why Australian tax residency, CGT and foreign trust outcomes are fixed long before the return is lodged.
author: Darie Nani (Editor-in-Chief)
updated: 2026-08-27T13:48:04.483Z
canonical: https://www.sovereignmagazine.com/article/nika-widanage-aims-australia-cross-border-tax
image: https://cdn.nanimediahouse.com/nika-widanage-aims-australia-featured.webp
categories: Finance
content_type: Spotlight
region: Melbourne
publication: Sovereign Magazine
about:
  - type: Organization
    name: AIMS Australia Tax Accountants
    description: "AIMS Australia Pty Ltd, trading as AIMS Australia Tax Accountants, is a specialist CPA public practice established in Melbourne in 2012.\n\nLed by Managing Partner Nika Widanage, FCPA, the firm operates a selective, high-touch private-client practice focused on complex Australian cross-border tax matters. Its clients include expatriates, foreign residents, internationally mobile executives and professionals, and high-net-worth individuals whose tax affairs may involve substantial investment portfolios, Australian and overseas property, foreign income, employee equity, family wealth and multiple jurisdictions.\n\nRather than operating as a high-volume tax-return practice, AIMS Australia focuses on engagements requiring detailed factual analysis, specialist technical expertise and senior professional oversight. Complex matters are carefully scoped and considered in light of the client's particular circumstances, supporting evidence, applicable Australian tax law and, where relevant, Australia's Double Tax Agreements.\n\nThe firm's work includes Australian tax residency and residency transitions, Double Tax Agreement analysis, foreign income and investments, capital gains tax, Australian property, employee share schemes, foreign trust matters and other complex Australian tax issues arising from international mobility and cross-border wealth.\n\nWhere appropriate and within the agreed engagement scope, AIMS Australia works alongside clients' lawyers, foreign tax advisers and appropriately licensed financial advisers where Australian tax considerations form part of a broader cross-border matter.\n\nRegistered Tax Agent No. 24859230. Liability limited by a scheme approved under Professional Standards Legislation."
    url: https://www.aimsaustralia.com.au
    foundingDate: 2012-01-01T00:00:00.000Z
    industry: Accounting
---

Someone who signs a contract to sell their Australian home while a foreign resident for tax purposes will generally be unable to use the main residence exemption on the disposal, including for the years they lived in it, unless a narrow statutory life-events test applies, and the result is fixed on the day of the contract, months or years before any tax return exists.

The rule has applied since 1 July 2020, and it is one of several Australian provisions under which timing can materially affect the tax outcome: the date residency ceases, the date a disposal contract is entered into, and the income year in which trust property is paid or applied. AIMS Australia Tax Accountants, a CPA public practice and registered tax agent established in Melbourne in 2012, has spent much of its 14 years on these questions. The firm is led by Managing Partner Nika Widanage, a Fellow of CPA Australia with bachelor's and master's degrees from Monash University, and its work is concentrated on Australian tax matters that become more complex when clients live, work, invest or hold assets across jurisdictions: tax residency and residency transitions, Double Tax Agreement analysis, foreign income and investments, capital gains tax, Australian property held by internationally mobile clients, and employee share schemes. Its clients are expatriates, foreign residents, internationally mobile executives and professionals, and high-net-worth private clients.

## Australian Tax Residency and the Four Statutory Tests

Australian tax residency for individuals still rests on four tests in the Income Tax Assessment Act 1936: the resides test, based on ordinary concepts; the domicile test, under which a person domiciled in Australia remains resident unless the Commissioner is satisfied that their permanent place of abode is outside the country; the 183-day test, which captures a person present in Australia for more than half the income year unless the Commissioner is satisfied both that their usual place of abode is outside Australia and that they do not intend to take up residence in Australia; and the Commonwealth superannuation test, which applies to certain members of specified Commonwealth superannuation schemes and to specified spouses and children under 16. Meeting any one of them makes a person an Australian tax resident. The ATO consolidated its position in Taxation Ruling TR 2023/1, issued in June 2023, which confirms that residency is decided on the full facts and circumstances of each case, with no single factor determinative.

The Board of Taxation proposed a modernised model in 2019 with a bright-line rule at its centre, under which 183 days of physical presence would make a person resident, and the measure was announced in the 2021-22 Budget. Treasury consulted on the proposed framework in 2023, and its consultation paper said in terms that the framework had not received government approval and was not law. As at August 2026, the existing statutory residency tests continue to apply, and for anyone moving in or out of the country the date on which residency starts or ends is a judgement made on their particular facts.

Widanage made the point in a [February 2026 analysis for Accountants Daily](https://www.accountantsdaily.com.au/tax-compliance/22114-cross-border-tax-risk-five-ato-pressure-points-to-watch-in-2026): individual residency turns on the full picture, no single factor decides it, and contemporaneous documentary evidence is often decisive in residency and trust matters. Where a person's home and family were on a given date, what the travel records show, how long a posting was intended to last: these are the facts the ATO weighs, and records kept at the time carry far more weight than reconstructions attempted years later.

## Deemed Disposal and the Main Residence Exemption for Foreign Residents

[CGT event I1](https://aimsaustralia.com.au/cgt-event-i1-ceasing-australian-tax-residency/) happens when an individual stops being an Australian resident. Broadly, capital gains and losses must then be considered for relevant CGT assets owned immediately before that time, subject to specific exclusions and special rules. For assets brought into the event, the calculation generally uses market value at the time residency ceases. A gain or loss on a pre-CGT asset is disregarded, and separate rules apply to temporary residents. An individual may elect to disregard all gains and losses arising under CGT event I1. The election applies to all affected assets rather than being made asset by asset. If the choice is made, each affected asset is treated as taxable Australian property until the earlier of a later CGT event involving the individual ceasing to own the asset or the individual becoming an Australian resident again. The election therefore changes the future Australian CGT treatment of the affected assets rather than simply removing a departure-year liability; whether it is appropriate depends on the assets, the destination country and the individual's plans.

> "In cross-border tax matters, timing can be important. Internationally mobile clients can often benefit from understanding the Australian tax consequences early — ideally before leaving or returning to Australia, selling an asset, or making another significant financial decision — because the timing and individual circumstances can materially affect the tax treatment."
> — Nika Widanage, FCPA

For CGT events after 30 June 2020, an individual who is a foreign resident for Australian tax purposes at the time of the event generally cannot access the [main residence exemption](https://aimsaustralia.com.au/main-residence-exemption-after-becoming-foreign-resident/) for that disposal, including for periods during which they lived in the property as an Australian resident. For an ordinary sale under contract, CGT event A1 generally happens when the contract is entered into, not at settlement, so residency on the contract date can be critical. A limited statutory life-events exception may apply where the individual has been a foreign resident for a continuous period of six years or less and a prescribed event occurs during that period, including a specified terminal medical condition affecting the individual, their spouse or a child under 18; the death of a spouse or child under 18; or certain CGT events under a formal agreement following the breakdown of a marriage or relationship. The ordinary main residence requirements still have to be met. If the owner has become an Australian resident again before the CGT event, the foreign-resident restriction does not apply. Foreign and temporary residents can also lose some or all of the 50 per cent CGT discount for gains accruing after 8 May 2012; the calculation depends on the acquisition date and the person's residency history, and in some cases it involves a market-value method. Separately, the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 changes the broader CGT regime for gains accruing from 1 July 2027, including new indexation and minimum-tax rules subject to specific residency requirements. Treasury has indicated that remaining aspects of the reforms affecting foreign, mixed and temporary residents will be addressed in later legislative tranches.

## Foreign Resident Capital Gains Withholding from January 2025

For contracts entered into on or after 1 January 2025, [foreign resident capital gains withholding](https://aimsaustralia.com.au/foreign-resident-capital-gains-withholding-15-percent/) applies at 15 per cent and the $750,000 threshold has been removed. Under the previous regime, in place from July 2017 to the end of 2024, the rate was 12.5 per cent and it applied only to properties of $750,000 or more. The regime covers taxable Australian real property, certain indirect Australian real property interests, and options or rights over them. For taxable Australian real property, an Australian-resident vendor generally provides the purchaser with a valid ATO clearance certificate to prevent withholding. For certain other covered interests, relevant vendor declarations may apply. A foreign-resident vendor may be eligible to apply to the ATO for a variation of the amount required to be withheld. Where the relevant certificate, declaration or variation is not available, the purchaser may have a withholding obligation. The withholding is a collection mechanism rather than the final tax: the vendor generally claims the amount withheld as a credit in the return for the year, when the final position is worked out.

## Double Tax Agreements and the Foreign Income Tax Offset

Where a person is resident under the domestic law of both Australia and another country, the tie-breaker article in the relevant Double Tax Agreement settles which country treats them as resident for the purposes of that treaty. It does not change their residency under Australian domestic law. The wording is treaty-specific: depending on the agreement, the analysis can turn on a permanent home, personal and economic relations (the centre of vital interests), habitual abode, nationality and, in some treaties, a determination by the two countries' competent authorities, and the answer once again depends on where a person's home and family actually were during the period in question. Once treaty residence is settled, the treaty's other articles decide how taxing rights over particular income or gains are allocated between the two countries or limited. A foreign income tax offset may be available where the statutory requirements are satisfied, subject to the offset limit. As Widanage noted in the same analysis, where only part of a gain is assessable in Australia, for instance after the CGT discount is applied, only a corresponding part of the foreign tax may be creditable. Neither a treaty nor the offset guarantees that every instance of double taxation is removed.

The ATO receives offshore financial-account information through international information-exchange arrangements, including the Common Reporting Standard and FATCA, and uses third-party data in its compliance activities. Taxpayer Alert TA 2021/2 also addresses arrangements involving undeclared foreign income presented as gifts or loans from related overseas parties.

## Employee Share Schemes and Foreign Trust Distributions

For employment ceasing on or after 1 July 2022, ceasing employment is no longer a deferred taxing point for tax-deferred employee share scheme interests. The taxing point now depends on the type of interest. For tax-deferred shares, the question is whether there is still a real risk of forfeiture or a genuine restriction on disposal; for rights, it is also whether the right has been exercised and whether the resulting share is still at real risk of forfeiture or restricted from disposal. For ESS interests acquired on or after 1 July 2015, the maximum deferral period is 15 years; earlier interests may be subject to the former seven-year maximum. Where an ESS interest is disposed of within 30 days after what would otherwise be the deferred taxing point, the statutory 30-day rule can instead make the disposal time the deferred taxing point. For an executive who changes country between grant and vesting, service periods, the source of the employment income, residency in the relevant periods and any applicable treaty all bear on the outcome, and a vesting date alone does not settle it.

Section 99B of the 1936 Act applies where trust property is paid to, or applied for the benefit of, a beneficiary who was an Australian resident at any time during the income year, subject to limited exceptions. A payment made before a person becomes a resident is therefore not automatically outside the section: if they become resident later in the same Australian income year, it may still be caught. The reductions in subsection 99B(2) depend on what the payment represents and on the source and character of the trust property. The ATO finalised its guidance in TD 2024/9 and PCG 2024/3 on 27 November 2024, addressing aspects of the section 99B analysis and the Commissioner's compliance approach. For a long-established overseas family trust, depending on the circumstances, records such as the trust deed, trustee resolutions, financial statements, ledgers, bank records and evidence tracing trust property may be required to substantiate the Australian tax position.

## Chronology and Evidence in Expat Tax Engagements

Complex engagements at AIMS Australia are scoped before they are accepted: the firm establishes what is being asked, whether it sits within its expertise and exactly what work is required, with exclusions and the professional fee agreed at the outset. The analysis itself starts with the client's chronology. Widanage says the small facts decide these matters: when someone left or returned to Australia, where their home and family were located, how an asset was held, when a transaction occurred, what happened in another jurisdiction. The firm places its emphasis on establishing and documenting those facts, and the evidence behind them, before reaching any conclusion, and senior oversight is applied according to the technical complexity and professional risk of each engagement.

The model is deliberately selective: Widanage says she would rather the firm took on the right matters, defined the scope properly and gave each engagement the technical attention it requires than operate as a high-volume tax-return practice. She describes the firm's point of difference as the combination of specialist cross-border experience, careful factual analysis, senior professional oversight and a selective approach to the engagements it accepts. For high-net-worth and internationally mobile clients, whose affairs can take in investment portfolios, Australian and overseas property, equity compensation, foreign trusts and family wealth spanning jurisdictions, the firm's role is Australian tax. Within the agreed scope of an engagement it works alongside the client's lawyers, foreign tax advisers and licensed financial advisers, and legal, migration, foreign-tax and financial-product advice stay with those advisers. Referrals from lawyers and financial planners have been a sustained source of its work over the firm's 14 years. The practice operates from Collins Street in the Melbourne CBD.

## Recognition Across the Australian Accounting Profession

Widanage was named Financial Controller of the Year at the Corporate Accountant Awards 2025, presented in Sydney. AIMS Australia won two categories at the 2021 Client Choice Awards, Best Tax Firm < $30 million and Best Accounting & Consulting Services Firm < $30 million. The firm has been a Firm of the Year finalist at the Australian Accounting Awards in 2022, 2024, 2025 and 2026, and Widanage was a Partner of the Year (Boutique Firm) finalist in 2024, 2025 and 2026.

![Nika Widanage at the Top 100 Elite Multicultural Innovation Business Leaders Victoria 2025 event](https://cdn.nanimediahouse.com/nika-widanage-top-100-elite-victoria-2025.webp)
*Nika Widanage at the Top 100 Elite Multicultural Innovation Business Leaders Victoria 2025 event. — Photo: Enchanting Image Photo & Cinema*

Accounting Times interviewed Widanage in November 2025 about her cross-border specialisation and the development of the practice, and in February 2026 Accountants Daily published her analysis of the ATO pressure points discussed above, from residency evidence to foreign trusts and the limits of the foreign income tax offset.

## FAQ

**Q: What happens to CGT when I leave Australia?**
Ceasing Australian tax residency triggers CGT event I1. Broadly, capital gains and losses then need to be considered for relevant CGT assets owned immediately before residency ends, subject to specific exclusions and special rules. A gain or loss on a pre-CGT asset is disregarded, and separate rules apply to temporary residents. You can elect to disregard the gains and losses arising under CGT event I1, but the election applies to all affected assets rather than being made asset by asset. Those assets are then treated as taxable Australian property until the earlier of a later CGT event involving you ceasing to own the asset or you becoming an Australian resident again.

**Q: What is the 183 day rule in Australia?**
The 183-day test makes a person present in Australia for more than half the income year a tax resident, unless the Commissioner is satisfied on both counts that their usual place of abode is outside Australia and that they do not intend to take up residence in Australia. It is one of four tests, and meeting any of them, including the resides and domicile tests, makes you a resident. Treasury consulted on a proposed bright-line framework in 2023, but as at August 2026 it has not been legislated.

**Q: Am I still an Australian resident if I live abroad?**
Possibly. Under the domicile test a person domiciled in Australia remains a resident unless the Commissioner is satisfied that their permanent place of abode is outside the country, and the resides test looks at the whole picture: home, family, assets, ties and the intended length of the stay overseas. TR 2023/1 confirms no single factor decides it, which is why departure dates, travel records and evidence of where home and family were carry the weight they do.

**Q: How do you avoid double taxation in Australia?**
Relief can arise through two mechanisms covered in the article. The tie-breaker article in the relevant Double Tax Agreement settles which country treats you as resident for the purposes of that treaty when both have a claim under their domestic law; it does not change your residency under Australian domestic law, and the treaty's other articles then decide how taxing rights over particular income or gains are divided. A foreign income tax offset may be available where the statutory requirements are satisfied, subject to the offset limit, and can be limited where only part of a gain is assessable in Australia. Neither mechanism guarantees that every instance of double taxation is removed.

**About AIMS Australia Tax Accountants**

AIMS Australia Pty Ltd, trading as AIMS Australia Tax Accountants, is a specialist CPA public practice established in Melbourne in 2012.

Led by Managing Partner Nika Widanage, FCPA, the firm operates a selective, high-touch private-client practice focused on complex Australian cross-border tax matters. Its clients include expatriates, foreign residents, internationally mobile executives and professionals, and high-net-worth individuals whose tax affairs may involve substantial investment portfolios, Australian and overseas property, foreign income, employee equity, family wealth and multiple jurisdictions.

Rather than operating as a high-volume tax-return practice, AIMS Australia focuses on engagements requiring detailed factual analysis, specialist technical expertise and senior professional oversight. Complex matters are carefully scoped and considered in light of the client's particular circumstances, supporting evidence, applicable Australian tax law and, where relevant, Australia's Double Tax Agreements.

The firm's work includes Australian tax residency and residency transitions, Double Tax Agreement analysis, foreign income and investments, capital gains tax, Australian property, employee share schemes, foreign trust matters and other complex Australian tax issues arising from international mobility and cross-border wealth.

Where appropriate and within the agreed engagement scope, AIMS Australia works alongside clients' lawyers, foreign tax advisers and appropriately licensed financial advisers where Australian tax considerations form part of a broader cross-border matter.

Registered Tax Agent No. 24859230. Liability limited by a scheme approved under Professional Standards Legislation.

[Website](https://www.aimsaustralia.com.au)