Departure Tax on Australian Shares and ETFs When Leaving Australia

The Part of Your Wealth That Leaving Touches Most

When Australians plan a move to the UAE, the share portfolio is often the asset that gets the least attention. The thinking tends to run:

• Shares are easy to hold from anywhere, so nothing needs to change
• The portfolio can be left exactly as it is and reviewed later
• The real decisions are about the house and the job
• Investments can be sorted out from Dubai

That is the wrong way round. Of all your assets, a portfolio of listed shares, exchange traded funds and managed investments is the one the act of leaving touches most directly.

The reason is technical but important. The departure tax, the capital gains tax event triggered when you cease residency, applies to assets that are not taxable Australian property. Your house is taxable Australian property and is dealt with under different rules. Your share and ETF portfolio is not, which is precisely why it sits squarely in the path of the departure tax.

That does not mean leaving is a disaster for your portfolio. It means the portfolio deserves a deliberate review before you go, not after. A portfolio that was perfectly sensible for an Australian resident is not automatically the right portfolio for an Australian non-resident, and the departure tax means decisions made now have consequences that are difficult to revisit later.

This article sets out what actually happens to shares, ETFs and franked dividends when you leave, and how to approach the pre-departure portfolio review so the move works in your favour rather than against it.

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Your Portfolio Is the Asset Most Exposed to Leaving

It is worth being precise about why the portfolio is so exposed, because the precision is what makes the review worth doing.

Australia generally taxes residents on gains across their worldwide assets. Once you become a non-resident, many of those assets fall outside the Australian capital gains net. To stop the growth that accrued while you were a resident from simply escaping untaxed, the system applies CGT event I1, the departure tax, when you cease residency.

The departure tax does not apply to taxable Australian property, which broadly means Australian real estate and similar interests. Those stay in the Australian net regardless. It applies instead to the assets that would otherwise leave the net, and for most expats that means:

• Listed Australian shares
• Listed international shares held through an Australian broker
• Exchange traded funds
• Managed funds and similar pooled investments

In other words, the everyday building blocks of a typical Australian investment portfolio are exactly the assets the departure tax is built to catch.

The practical consequence is that the act of leaving Australia is, for your portfolio, a tax event in its own right. You can hold a portfolio for years, never sell a single parcel, and still face a tax position on it simply because you moved. Understanding this is the starting point, and it connects directly to the way the departure tax works and the trigger-or-defer decision it forces, which every departing investor should understand.

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The Deemed Disposal Lands on Shares and ETFs

When CGT event I1 is triggered, you are treated as having disposed of your affected assets, and immediately reacquired them, at their market value on the day you cease residency.

For your share and ETF portfolio, that means a gain or loss is calculated on each holding as though you had sold it on your departure date, even though you have not. That calculated result feeds into the tax return for the income year in which you cease residency, unless you make an election.

The election is the key choice. You can:

• Accept the deemed disposal, crystallising the gain or loss on your departure-year return
• Elect to disregard the deemed disposal and defer it, in which case the affected assets remain connected to Australian capital gains tax until you actually sell them or become a resident again

The choice applies to all affected assets together, not holding by holding, and it is effectively permanent in its consequences. For a portfolio with a large unrealised gain, the difference between the two paths can be substantial, both in the timing of any tax and in the cashflow required.

A short illustration makes it concrete. Suppose you hold a portfolio of Australian and international shares and ETFs, accumulated over a decade, bought for a total of 250,000 dollars and now worth 400,000 dollars. On the day you cease residency, the departure tax treats you as having sold the lot at 400,000 dollars. That is a deemed gain of 150,000 dollars, sitting in your departure-year return, with no sale and no cash behind it, unless you elect to defer. If instead the portfolio sat near its cost base, or carried losses, accepting the deemed disposal would cost little. Same rule, very different consequences, depending entirely on what the portfolio actually holds.

This is the central reason the portfolio needs a pre-departure review. The departure tax is not a vague background risk. It is a specific calculation, applied on a specific date, to specific holdings, with a specific choice attached. An investor who understands their portfolio's unrealised position before they leave can make that choice deliberately. An investor who does not will have the choice made by default, on a tax return prepared long after the moment to influence it has passed.

Franked Dividends: What Changes When You Leave

Alongside the departure tax, the other major change for a departing Australian investor concerns franked dividends, and it surprises almost everyone.

While you were an Australian resident, franked dividends came with franking credits that could reduce your tax bill, and in some cases generate a refund. For many Australian investors, particularly those holding Australian shares for income, that franking benefit was a meaningful part of the return.

As a non-resident, franking works differently. The main points are:

• A fully franked dividend paid to a non-resident is generally not subject to further Australian dividend withholding tax, which is a form of relief
• However, the refundable benefit of franking credits that residents enjoy does not flow through to non-residents in the same way
• The unfranked portion of a dividend paid to a non-resident is commonly subject to dividend withholding tax
• Interest income paid to a non-resident is commonly subject to withholding tax at 10 percent

The practical effect is that the income profile of an Australian share portfolio can change once you are a non-resident. A portfolio that was deliberately built around fully franked Australian dividends, and the franking refunds that came with them, may simply not deliver the same after-tax income to a non-resident.

This is not a reason to abandon Australian shares. It is a reason to look honestly at why each income-focused holding is in the portfolio. If a holding was chosen substantially for a franking benefit that a non-resident does not receive in the same way, that holding deserves a fresh look before you go.

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The Pre-Departure Portfolio Review

All of this points to a single recommended action: a deliberate pre-departure review of the whole portfolio. This is not an optional refinement. It is the core of getting the portfolio right for the move.

A thorough pre-departure review covers several things:

• The unrealised gain or loss on every holding, as a basis for the trigger-or-defer decision
• Any capital losses, current or carried forward, that could absorb gains
• The income profile of the portfolio, and how much of it depended on franking
• Concentration, because a portfolio heavily weighted to one market or a few stocks carries risk that an expat life may not need
• The structure and domicile of each holding, including ETFs
• Whether each holding still has a clear reason to be there for a non-resident with a likely return plan

The review is also the moment to think about your platform and broker. Not every Australian broker or platform will keep you as a client once you are a non-resident, and some apply restrictions or different processes. It is far better to know that, and to act on it, before you leave than to discover it from overseas.

The goal of the review is simple. By the time you depart, you want a portfolio you have looked at on purpose, with each holding either confirmed as suitable for the next stage of your life or dealt with deliberately. A portfolio drifting unchanged into a non-resident life, with the departure tax calculated on whatever happens to be in it, is a missed opportunity. The review does not have to lead to dramatic change. Often it confirms that most of the portfolio is sound and only a few holdings or the trigger-or-defer decision genuinely need attention. Either way, the value is in having looked.

Should You Sell, Hold or Rebalance Before You Go?

The review naturally leads to a question for each holding, and for the portfolio as a whole: sell, hold or rebalance before departure.

There is no single answer, because it depends on the holding and on your circumstances. But some patterns are worth naming.

Selling a holding before you leave can make sense when:

• The holding was chosen mainly for a franking benefit a non-resident does not receive in the same way
• The portfolio is overly concentrated and the move is a natural moment to reduce that risk
• The holding no longer fits a portfolio built for a mobile, non-resident life
• Crystallising the position while still a resident suits your overall tax picture
• Holding can make sense when:
• The holding is sound, diversified and genuinely suitable regardless of residency
• The investment case is intact and selling would simply trigger cost and tax for no real benefit

Rebalancing, rather than wholesale selling, is often the realistic middle path. The move is a natural prompt to bring a portfolio that has drifted back to a sensible structure: appropriately diversified, not over-concentrated, and built around your goals and likely return plans rather than around features, such as franking, that mattered more to the resident version of you.

There is one further point worth weighing. Some investors are tempted to sell down heavily before leaving simply to clear the decks, on the assumption that a fresh start abroad is tidier. That instinct can be costly. Selling sound, diversified holdings purely for tidiness crystallises tax and transaction costs for no real benefit, and a non-resident can generally continue to hold a well-built portfolio without difficulty. The aim of the review is not to empty the portfolio. It is to make sure that what remains is there for a reason that still holds once you are a non-resident, and that anything sold is sold because the case for selling it was genuine.

Whatever you decide, it should be a decision, taken with the departure tax in view, rather than an accident. The trigger-or-defer election interacts with all of this, because selling before departure and the deemed disposal on departure are different events with different consequences. That interaction is exactly why the portfolio and the departure tax should be looked at together.

ETFs, Domicile and the Quiet Detail

Exchange traded funds deserve a section of their own, because they carry a detail that is easy to overlook: where the ETF itself is domiciled.

Many Australian investors hold a mix of ETFs. Some are Australian-domiciled funds. Others, even when bought through an Australian broker, are domiciled overseas, often in the United States. The two are not always distinguished clearly in an investor's mind, because they trade similarly and may track similar markets.

For a non-resident, the domicile of a fund can matter. Foreign-domiciled assets can carry their own tax features that have nothing to do with Australia. As one well-known example, assets domiciled in the United States can expose a non-US person to United States estate tax considerations on those assets, which is a quite separate issue from Australian capital gains tax and one that many Australian investors are simply unaware of.

The point here is not to set out the detail of any one foreign regime. It is to flag that:

• The domicile of each ETF in your portfolio is worth knowing, not assuming
• Foreign-domiciled holdings can carry consequences beyond the Australian rules
• A portfolio that looks simple on a brokerage screen can have more moving parts than it appears

This is a strong argument for the pre-departure review covering structure, not just performance. An expat with a clear, well-understood portfolio of holdings whose domicile and structure they actually know is in a far better position than one holding a collection of tickers whose underlying nature they have never examined. The review is the natural moment to close that knowledge gap, while you can still act on what it reveals.

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The Records the Departure Demands

Whichever decisions you make, the departure imposes one practical obligation that should not be left to chance: record-keeping.

The departure tax is calculated from two numbers for each affected holding: its cost base, broadly what you paid for it including certain costs, and its market value on the day you cease residency. If you trigger the deemed disposal, those numbers produce the gain or loss directly. If you defer, those numbers still matter for the eventual calculation.

So before and around your departure, you should make sure you have:

• A clear record of the cost base of every holding, including the dates and prices of each parcel
• The market value of every affected holding as at your actual departure date
• Documentation of any capital losses available to you
• A record of the trigger-or-defer decision and how it was made

For listed shares and ETFs, market values on a given date are readily available, but they still need to be captured and kept. Cost base information can be harder to reconstruct years later, especially for holdings accumulated gradually over a long period or affected by corporate actions and reinvested distributions.

The sensible approach is to treat record-keeping as a deliberate departure task. Good records make the departure-year return straightforward and protect you years into the future, particularly if you deferred the departure tax and the eventual sale calculation depends on figures from the time you left. Poor records turn a manageable calculation into a reconstruction exercise, often years later and under far less favourable conditions.

Coordinating With the Rest of the Move

Finally, the portfolio review should not happen in isolation. It connects to several other parts of the move.

It connects to your residency position, because the departure tax depends on when, and whether, you genuinely cease residency. The portfolio decisions cannot be finalised until the residency picture is clear.

It connects to the trigger-or-defer election, which is a portfolio-wide decision with cashflow consequences that need to be planned, not discovered.

It connects to your cashflow, because triggering the departure tax can create a liability that has to be funded, while selling holdings before departure changes the cash you have available for the move itself.

It connects to your currency position, because once you are earning in dirhams and living a UAE life, an Australian-dollar portfolio is one part of a wider currency picture.

And it connects to your return plans, because a portfolio built for someone who may come back to Australia looks different from one built for a permanent departure.

The practical lesson is that the portfolio is one thread in a larger plan. Reviewed on its own, it can still miss things. Reviewed as part of a coordinated pre-departure plan, alongside residency, property, superannuation and cashflow, it slots into place. That is why a portfolio review is often most valuable as part of a single structured conversation rather than a standalone task.

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How Professional Planning Support Actually Fits

For Australians leaving for the UAE with an investment portfolio, professional support is most valuable when it:

• Quantifies the unrealised position of every holding before the departure tax is calculated
• Frames the trigger-or-defer decision clearly, with the numbers attached
• Reviews the income profile, concentration and structure of the portfolio
• Flags the domicile and structure issues that a performance-only view misses
• Connects the portfolio to residency, cashflow, currency and return plans

The value is not a product or a set of stock tips. It is making sure the portfolio is reviewed deliberately before a move that affects it directly and largely irreversibly.

This is why many departing investors treat the pre-departure portfolio review as a specific, worthwhile conversation. It is the moment when the portfolio can still be shaped for the life ahead rather than simply carried, unexamined, into it, and that moment does not come again.

The Soft But Decisive Next Step

If you are reading this and thinking:

• "I was planning to just leave my portfolio as it is"
• "I did not realise leaving triggers a tax event on my shares"
• "A lot of my portfolio was built around franking I may no longer benefit from"
• "I am not sure my records are good enough for the departure tax"

Then the next step is usually a structured conversation focused on clarity, not implementation. Not because anything is wrong, but because the portfolio is the asset leaving touches most directly, and the pre-departure review is the moment its position can still be shaped.

Before you leave, the portfolio can be reviewed and adjusted calmly. After departure, the departure tax has been calculated on whatever was there.

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Final Takeaway

Reviewing your shares and ETFs before leaving Australia is not about:

• Leaving the portfolio untouched because shares are easy to hold from anywhere
• Assuming franking will keep working the way it did for a resident
• Treating the portfolio as a detail to sort out from Dubai

It is about:

• Recognising that the portfolio is the asset most directly exposed to the departure tax
• Understanding the trigger-or-defer decision and making it deliberately
• Reviewing income, concentration and structure for a non-resident life
• Keeping the records the departure tax calculation depends on

Most expats only look closely at their portfolio when the departure-year tax return is being prepared, by which point the position is fixed. Those who review it deliberately beforehand, alongside the wider job of planning a move from Australia to the UAE, leave with a portfolio built for the life ahead.