You sold your Australian business and moved to Dubai. The ATO stopped following you — mostly. Here is what it still taxes, and where PPLI changes the picture.
There is a common, comfortable assumption among Australians who leave. The moment the residency status flips — the airline ticket, the Australian Taxation Office’s residency questionnaire, the closing of the Medicare card — the ATO falls away. Worldwide income tax becomes Australian-source income tax. Worldwide CGT becomes CGT on a narrow class of assets. For most former residents, that intuition is roughly correct. The Australian tax base contracts dramatically on departure.
But it does not contract to zero. Division 855 of the Income Tax Assessment Act 1997 confines a non-resident’s CGT exposure to ‘taxable Australian property’ (TAP). TAP is a defined term, and the definition matters. It includes: direct interests in Australian real property; indirect interests in Australian real property — broadly, a 10% or greater holding in a company or trust whose underlying value is principally derived from Australian real property (the so-called ‘principal asset test’); CGT assets used in carrying on a business through an Australian permanent establishment; options or rights over any of these; and certain interests where a section 104-165 election was made on ceasing residency.
| PPLI does not shelter a Sydney apartment from Australian CGT. The carrier owns the policy; the apartment is still the apartment. |
The first thing to understand: PPLI cannot solve the TAP problem. A non-resident who places an Australian residential property inside an offshore unit-linked life policy continues to be exposed to Australian CGT on disposal of that property. The legal owner of the policy assets is the carrier, but the underlying TAP asset retains its character — and from 1 January 2025, the foreign-resident CGT withholding rate is 15% of the gross sale consideration under Subdivision 14-D of Schedule 1 to the TAA 1953. The withholding is reconcilable against the actual tax liability on assessment, but the cash-flow impact is immediate.
Layer on the post-2012 reality: the 50% CGT discount for foreign or temporary residents was effectively removed for gains accruing after 8 May 2012. A non-resident selling Australian property held for fifteen years now faces an apportioned discount at best, and full-rate CGT on the post-2012 portion of the gain. The number is meaningful — and for a high-value property, it dominates the planning conversation.
Where PPLI does change the picture
PPLI is not the right answer for the property side of a non-resident’s Australian balance sheet. It is the right answer for the rest — and for the succession question that hangs over the whole portfolio.
Start with Australian-listed shares held by the non-resident. A non-resident’s dividends carry no Australian withholding tax on the franked portion (the franking system eliminates WHT on franked amounts entirely). Unfranked dividends carry a 30% statutory rate, reduced under treaty — typically to 15%, lower for substantial shareholdings. Inside a PPLI carried by an Ireland-, UK-, Switzerland- or Singapore-domiciled insurer, the franked dividend stream remains untaxed at source; the unfranked component benefits from the carrier-residence treaty. The carrier must be able to evidence its beneficial ownership and residency to claim the treaty rate — administratively important, but tractable for carriers in the major PPLI jurisdictions.
The treaty point cuts the other way for some carrier jurisdictions. Australia has no double-tax treaty with Luxembourg, with Bermuda, or with the Isle of Man. For a non-resident PPLI policyholder whose portfolio includes Australian unfranked dividend income or Australian-source interest, choosing a carrier in a treaty jurisdiction (Ireland, UK, Switzerland, Singapore) versus a non-treaty jurisdiction is the difference between a treaty WHT rate and the statutory 30% / 10% rates. For a portfolio held only outside Australia, treaty access is irrelevant.
The succession problem PPLI actually solves
The strongest case for PPLI for a non-resident with Australian assets is not the income side. It is succession.
Consider the typical fact pattern: a former Australian resident now living in Dubai, Singapore or Hong Kong, with one or two Sydney properties, an Australian share portfolio, and children resident in three different countries. On death, the Australian estate must pass through Australian probate. The properties may need to be sold to fund distributions to beneficiaries in other jurisdictions; sale crystallises the post-2012 CGT exposure already discussed. Each beneficiary’s home country then taxes its share of the inheritance according to its own rules — and the timing of the Australian probate, the foreign-resident CGT withholding regime and the carrier-resident estate’s succession rules creates a real, year-long administrative drag.
A PPLI wrapper around the share portfolio cuts this problem at the root. The carrier pays the death benefit directly to the named beneficiaries under the policy contract. There is no ‘passing’ of the share portfolio through an Australian deceased estate; there is no Australian probate timing dependence; the beneficiaries receive their share simultaneously, in cash, under the law of the policy contract. Their home-country tax treatment of insurance proceeds — generally cleaner and faster than the tax treatment of an inherited Australian share portfolio — applies.
Two warnings. First, PPLI does not solve the property side: real estate still needs separate succession structuring (typically a will dealing specifically with Australian-situated assets, and possibly a holding structure that is itself succession-efficient in the home country). Second, the policy must be properly funded and properly characterised at the carrier-jurisdiction level. The minimum death-benefit corridor, the policy form, and the carrier’s regulatory authorisation all matter for both the policyholder’s home-country tax regime and for the recognition of the policy as life insurance under Australian law (relevant principally where the policyholder later resumes Australian residency).
Where to start
For a non-resident with Australian-source assets, the planning sequence is straightforward. Catalogue the assets by their Australian tax character: TAP versus non-TAP. For TAP, the planning question is sale-timing, the 15% CGT withholding regime, and succession through an Australian-situated will. PPLI is not engaged. For non-TAP — Australian-listed shares held by the non-resident, foreign assets, foreign-source income — PPLI is potentially a strong tool, with carrier-jurisdiction treaty access and the home-country tax regime as the determining factors.
The ATO’s reach on a non-resident is narrower than people expect. But it is not zero. Knowing the shape of what is taxed — and what PPLI can and cannot change — is the difference between effective planning and expensive surprises.
Download the full Australia PPLI Whitepaper
PPLI's tax deferral benefits are more limited in Australia than in most European jurisdictions. Division 394 FIF rules and Part IVA GAAR mean that deferral claims need careful analysis. This guide does not oversell the product: it sets out exactly where PPLI works for Australian residents (asset protection, succession, offshore consolidation) and where it does not. It also covers non-residents with Australian-sited assets and the absence of federal estate duty. A candid guide for advisers who want the full picture. Free for professional advisers. Verified email required.