Following the Government’s confirmation of the introduction of a new temporary parent visa the issue that is by far the most concerning is the apparent need for parents to leave Australia after 10 years.

In other words, it will only be possible for a parent to have one renewal of a 5 year temporary parent visa.

Is the Government seriously proposing that an elderly parent will be required to leave Australia after living in Australia for 10 years?

While we acknowledge there are circumstances when this new visa will have a role to play – most notably allowing parents who have lodged an offshore Contributory Parent visa application under subclass 143 or 173 where application processing times are pushing out towards 3 years to come to Australia while their CP visa application is being processed – we think there are significant risks for parents who leave their home country for Australia, do not have a permanent residency visa pathway available, and who are expected to depart Australia 10 years later.

Given this new visa will place the risk of health costs on the parents and family in Australia we can see no reason for a limit on the number of times this visa can be renewed.

Representations are being made to the Minister’s office in an effort to relax the limitation on the duration an individual can hold a temporary parent visa, before it is included in the legislation later this year.

As readers of this blog will know, a new temporary visa for parents is being introduced by the Australian Government later this year.

One of the requirements of this visa will be for the person sponsoring the visa to pay for private health insurance, and to pay for any outstanding public health costs incurred by the visa holder.

Private health insurance with a suitable level of cover will therefore be a must have, in an effort to cap the costs of a health condition suffered by the visa holder.

While private health funds do not yet have cover for this specific visa there are offerings available, which provide an indicator of the cost of private health insurance.

More specifically, see details of the Overseas Visitors cover from these companies:

• BUPA
• Australian Unity

We suggest selecting 405 Investor Retirement as the visa type while we wait for the health funds to catch up with the new visa class.

While we await the migration legislation and underlying policy details, information about Australia’s new temporary parent visa is starting to become known through a Media Release issued by the Immigration Minister, and articles from relatively reliable sources in the online press.

So what do we now know?

• The new visa will be available to applicants from “late 2017” – which we understand to be November, 2017.
• This will be a temporary residency visa, with – the Government presently says – no direct pathway to permanent residency.
• The cost will be A$5,000 for a visa with a 3 year validity, or A$10,000 for a visa with a 5 year validity.
• A one off renewal of the 5 year validity visa will be available, allowing visa holders to remain in Australia for up to 10 years.
• Visa holders will be required to maintain private health insurance while they are in Australia.
• Sponsors will be required to sign an undertaking to meet any outstanding public health costs incurred by the visa holder.
• Visa holders will not be permitted to work in Australia.
• The balance of family test will not apply to this new visa.

Whether the requirement for parents of more senior years to depart Australia after 10 years is sustainable remains to be seen.

Indeed, we expect some difficulties for the Australian Government seeing these provisions through Parliament in their present format.  In our view some amendments are likely before the above provisions become law.

Further details are likely to be forthcoming following the Federal Budget tomorrow, and we will report back here with any information as soon as it becomes known.

UK Inheritance Tax (IHT) doesn’t go away if you move to Australia or become an expat – at least it doesn’t immediately.

This is because the liability of a deceased person’s estate to UK IHT is a function of the individual’s domicile status in the UK, rather than residency.

Note: Inheritance Tax is a tax which usually affects the estate of someone who has died.

Anyone who is domiciled in the UK is liable to IHT on their worldwide assets.

Those who are not domiciled in the UK are only subject to UK IHT on estate that is located in the UK, such as real estate in the UK, or bank accounts maintained in the UK.

There are 3 types of domicile under UK tax law for adults:

• A domicile of origin. When a person is born, s/he acquires the domicile which his/her father considered to be his real or permanent home at the date of your birth. If the individual’s parents were not married when s/he was born, the domicile of origin is usually the same as the mother’s.
• A domicile of choice. To acquire a domicile of choice:
  • The person must show that s/he has settled permanently in the jurisdiction in which s/he now considers him/her self domiciled.
  • The person must intend to stay there for the rest of his/her life.
• A deemed domicile. You are treated as being domiciled in the UK if you:
  • Were resident in the UK for 17 of the last 20 UK tax years, or
  • Had your permanent home in the UK at any time in the last 3 years of your life

Importantly, changes – the UK Government terms these as “reforms” – are on the way in respect of domicile.

These changes are discussed here.

Under these changes – which became law from the 6th of April, 2017 – a deemed domicile in the UK will arise when an individual has been a resident of the UK for 15 out of the last 20 UK tax years, rather than the 17 out of 20 years that applied previously.

Consideration is often also required of tax residency in the UK.

Since the 6th of April, 2013 the UK has had a Statutory Residency Test (SRT) in place, which provides a measure of certainty over a taxpayer’s residency status in the UK, particularly when departing the UK to live and/or work overseas, or arriving in the UK to live and/or work.

While providing certainty, the SRT is complex, and for those seeking clarity on their domicile status when departing the UK the exercise is also likely to require a consideration of UK residency status.

While few of us like contemplating our own mortality, those who are living in Australia with estate valued at more than the IHT nil rate band should consider taking professional advice if there is a wish to ensure that as much of the estate as possible is passed onto our loved ones.

This should include a consideration of taxes arising on death in Australia: while Australia does not have an equivalent to Inheritance Tax, an estate can find itself subject to capital gains tax in Australia when investment assets of the estate are bequeathed to a person who is not a tax resident of Australia.

This can be overcome – often through the use of what is called a testamentary trust – but again, professional guidance will be desirable when drafting a Will, most probably in Australia and the UK.

In an earlier post we discussed whether Medicare in Australia is available if you have applied for an onshore visa such as an Aged Parent subclass 804 visa.

We have communicated with the Department of Human Services, and the position has been confirmed as follows:

• When a person has an application for a Parent visa (subclass 804) with Department of Immigration and Border Protection (DIBP) s/he is only eligible to enrol in Medicare if s/he was residing in a Reciprocal Health Care Agreement (RHCA) country immediately before arriving in Australia.
• The Australian Government has signed Reciprocal Health Care Agreements (RHCA) with the Governments of Belgium, Finland, Italy, Malta, the Netherlands, New Zealand, Norway, the Republic of Ireland, Slovenia, Sweden, and the United Kingdom.
• These Agreements provide eligible visitors to Australia with access to limited subsidised health services for medically necessary treatment.
• The following services are generally covered under each RHCA:
  • Medicare benefits for medically necessary out-of-hospital treatment (except for New Zealand and the Republic of Ireland)
  • Medically necessary treatment as a public patient in a public hospital including pregnancy related services. Person seeking treatment must provide individual hospitals with a valid RHCA Medicare card or visitors from the Republic of Ireland or New Zealand must provide their passport or documents to confirm residency with that country
  • Medicines available on prescription which are subsidised under the Pharmaceutical Benefits Scheme (PBS)
• The period of entitlement varies depending on the Agreement with the individual country. More information about these Agreements can be found at the Department of Human Services website (click on Visitors to Australia).
• Students from Norway, Finland, Malta and the Republic of Ireland aren’t covered by Agreements with those countries.

Medically necessary treatment relates to a medical condition that needs immediate attention, and pertains to any ill health or injury which occurs while an individual is in Australia.

The Australian Government only has Reciprocal Health Care Agreements with the countries listed above. If you are applying for an Aged Parent visa and are not covered by a RHCA you should consider taking out suitable private health insurance: complete the enquiry form to the right of this page (click on Other, and type Private Health Insurance details for visitors to Australia please in the box) to receive contact details for private health funds we know of that provide private health cover for visitors to Australia.