Australia's "Exit Tax" for Hong Kong Movers: The Deemed Disposal of Shares When Residency Ends
If you stop being an Australian resident for tax purposes, the ATO treats most of your CGT assets as sold at market value on the day you stop, even though you have sold nothing. Real estate in Australia and business assets used in Australia are excluded from this rule. The ATO pages checked on 2026-10-10 also set out a choice to disregard the gains on all your assets, which defers the tax rather than removing it. Residency is decided on the ATO’s facts-and-circumstances tests, so a move overseas does not settle the question on its own.
What is the deemed disposal?
The ATO’s guidance on how changing residency affects CGT says that when you stop being an Australian resident, you are taken to have disposed of your CGT assets for their market value at the time you stopped. The gain or loss arises on that day. No actual sale is needed.
The rule covers CGT assets generally, and the ATO gives listed shares as an example. Units in managed funds are also CGT assets, so the same treatment can apply to them unless they are taxable Australian property.
Which assets are excluded?
Taxable Australian property is not deemed disposed of. The ATO explains that foreign residents stay subject to Australian CGT on this property, so it remains in the Australian net after you leave.
| Asset type | Treatment on ceasing residency (ATO) |
|---|---|
| CGT assets that are not taxable Australian property, such as listed shares | Taken to be disposed of at market value on the day you stop being a resident, unless you make the all-assets choice |
| Taxable Australian property, such as real estate in Australia | Not deemed disposed of; foreign residents remain subject to Australian CGT on it |
| Assets used to carry on a business in Australia | Not deemed disposed of, as taxable Australian property |
The ATO guidance states the excluded category in these terms. It does not give a full list of every asset type, so check specific holdings against the ATO pages or with a registered tax agent.
What is the all-assets choice, and what does it cost later?
An individual can choose to disregard all capital gains and losses when they stop being an Australian resident. The ATO says you do not need to tell it which option you chose, because the way you prepare your tax return is generally enough evidence of the choice.
If you make the choice, the assets are taken to be taxable Australian property until the earlier of two events:
- a CGT event happens to the asset, such as a sale; or
- you become an Australian resident again.
The consequences are:
- Growth after you leave is counted. The increase or decrease in value after you stop being a resident is included when working out the capital gain or loss on those assets.
- The tax is deferred, not removed. The gain stays in the Australian CGT net until one of the events above.
- The discount is restricted. For an asset acquired after 8 May 2012 and sold after you became a foreign resident, the full 50% CGT discount is not available. An apportioned discount may be available for the part of ownership when you were an Australian resident.
Whether the choice suits a particular person depends on their own circumstances. This article does not say which option to choose. A registered tax agent in Australia can help you compare them for your situation.
How does the ATO example work?
The ATO uses the example of Jemima and Maurice. They have always lived in Australia. They move permanently to Italy on 15 January 2026. They keep and rent out a jointly owned apartment, and they own listed shares.
The ATO’s treatment, as stated in its guidance, has three parts:
- The shares are taken to be disposed of at market value on 15 January 2026.
- On that deemed disposal they can claim the full 50% CGT discount.
- The apartment is taxable Australian property, so there is no deemed disposal. When they sell it, they cannot claim the full 50% discount, but they may claim an apportioned discount.
The example uses no dollar amounts, so it does not show a worked tax figure.
What about temporary residents?
The ATO guidance says a person who is a temporary resident when they stop being an Australian resident is not taken to have disposed of any assets. It also says that anyone who has been an Australian resident (not a temporary resident) after 6 April 2006 cannot later become a temporary resident, even if they later hold a temporary visa. Whether a particular person is a temporary resident is a matter for the ATO tests, so it is worth checking this with a registered tax agent before you rely on the exception.
What happens if you return to Australia?
When you become an Australian resident again, and are not a temporary resident, the ATO says you are taken to have acquired your CGT assets at market value on that day. This deemed acquisition does not apply to assets acquired before 20 September 1985 or to taxable Australian property.
What does Hong Kong tax?
The IRD pages checked list no capital gains tax on individuals’ investment gains. Hong Kong salaries tax applies to income from an office, employment or pension. Whether a comprehensive Australia–Hong Kong tax agreement applies to your situation is not stated on the official page checked. For your own position, speak to a qualified Hong Kong tax adviser.
Sources
- How changing residency affects CGT (ATO), checked 2026-10-10
- Your residency status and CGT (ATO), checked 2026-10-10
Frequently asked questions
Do I pay tax as soon as I leave Australia?
Not necessarily. The ATO treats most CGT assets as disposed of on the day you stop being a resident, and a gain can arise on that day. Taxable Australian property is excluded from this rule. Whether you have a liability depends on your facts, so speak to a registered tax agent in Australia.
Does the all-assets choice remove the tax?
The ATO guidance says the tax is deferred, not removed. Growth after you leave is counted when a CGT event happens or when you become an Australian resident again. The choice does not say which option is better for you.
Does owning Australian real estate change the treatment?
Yes. The ATO guidance says taxable Australian property is not deemed disposed of, and foreign residents remain subject to Australian CGT on it. The full 50% discount may not be available when you later sell it.
Does a Hong Kong visa make me a non-resident in Australia?
No. The ATO decides residency on facts and circumstances, and holding a Hong Kong visa or spending a fixed number of days abroad does not automatically make someone a non-resident. Individual cases need a registered tax agent in Australia.
Is there Hong Kong capital gains tax on my shares?
The IRD pages checked list no capital gains tax on individuals’ investment gains. For your own position, consult a qualified Hong Kong tax adviser.