Moving to Dubai from Australia is a residency test, not a flight

The question that arrives after the school is chosen

An Australian family moving to Dubai usually settles the destination first and the departure last, and the departure is where the tax is decided. By the time the question reaches an adviser, the school has been chosen, a villa has been viewed, and the business plan assumes that a free zone licence and a residence visa will make the family non-resident in Australia. Neither of them does that. The Australian Taxation Office decides when an Australian has left, under Australian tests, and the UAE has no say in the matter.

The pattern is consistent enough to describe in general terms. In the relocations from Australia that reach us, the Dubai side is rarely what goes wrong.

The licence is issued, the visas follow, and the bank account eventually opens. What goes wrong is the set of Australian arrangements the family leaves running behind it: the company in Brisbane with no resident director, the family trust whose trustee now lives in Dubai, the self-managed super fund run from a phone in Business Bay, and the shares that were treated as sold on the day of departure without anyone noticing.

This note takes the Australian side of the move in the order it has to be decided, and shows where the Dubai side fits into it. It is written for a founder or business owner relocating with a family, and it assumes the aim is a genuine move rather than a tax arrangement dressed as one.

Australia decides when you have left, and the UAE cannot overrule it

Australian tax residency ends only when the ATO's own tests say it has ended, and there is no treaty that lets the UAE settle the question instead. The ATO applies the resides test first, which asks whether a person resides in Australia in the ordinary sense of the word.

If that test is not met, three statutory tests follow: the domicile test, the 183-day test and the Commonwealth superannuation test. All four sit in the definition of "resident" in section 6(1) of the Income Tax Assessment Act 1936, and the ATO's view of how they operate is set out in Taxation Ruling TR 2023/1.

For someone emigrating, the domicile test usually carries the decision. An Australian-born founder keeps an Australian domicile after moving, so the founder remains resident unless the Commissioner is satisfied that their permanent place of abode is outside Australia.

That is a question of fact, weighed on evidence. Where the family actually lives, whether the Australian home has been sold, let or kept ready, where the children are enrolled, where the furniture went and how long the move is meant to last all count. A two-year posting with the house kept ready is read very differently from a permanent relocation with the house sold.

The reason this matters more for the UAE than for most destinations is that Australia has no double tax agreement with the UAE. Treasury's list of Australia's income tax treaties covers 47 jurisdictions, and the UAE is not among them. Where a treaty exists, a person resident in both countries can be allocated to one of them by a tie-breaker. Here there is nothing to break the tie, so the Australian tests apply on their own terms, whatever the UAE concludes.

Two confusions follow from that gap. The first concerns the Australia-UAE Comprehensive Economic Partnership Agreement, signed on 6 November 2024, with tariff preferences available from 1 October 2025. It is a trade agreement about goods and services, and it does nothing for an individual's tax residence.

The second concerns the UAE tax residency certificate. A founder who meets the UAE's tests under Cabinet Decision No. 85 of 2022 can obtain one from the Federal Tax Authority, and those tests are set out in the note on the UAE's 90-day and 183-day residence rules. The certificate is useful evidence that a permanent place of abode now exists in Dubai. It is not a ruling on Australian residency, and it cannot override one.

Leaving is itself a taxable event

The day Australian residency ends is a capital gains tax event, even if nothing is sold. Under CGT event I1, in section 104-160 of the Income Tax Assessment Act 1997, an individual who stops being an Australian resident is treated as having disposed of each CGT asset that is not taxable Australian property, at its market value on that day. In practice that captures the assets a founder is most likely to own: shares in the family company, a listed portfolio, units in a unit trust and stakes in unlisted ventures.

Australian real estate is outside the deemed disposal, because it remains taxable Australian property and stays within the Australian net after departure in any case. The price of that is that its eventual sale is taxed in Australia whenever it happens, wherever the family then lives.

There is a choice. Under section 104-165, instead of recognising the gain on departure, the individual can choose to treat those assets as taxable Australian property until they are actually disposed of. That defers the tax, but it keeps the assets inside the Australian system for as long as they are held. Neither path is free. Crystallising on departure means paying tax on a gain that has not been realised, usually without the cash a sale would have produced. Deferring means that a family living in Dubai carries an Australian tax exposure for years, on the whole gain, under whatever rules are in force when the sale finally comes.

Two further rules change the arithmetic for anyone who keeps Australian property. A foreign resident is not entitled to the main residence exemption on the former family home, unless one of a narrow set of life events occurs within six years of becoming a foreign resident, a rule introduced by the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Act 2019.

And a foreign resident does not receive the 50% CGT discount on the part of a gain that accrues during periods of foreign residence after 8 May 2012. A home that would have been tax-free while the family lived in it can become fully taxable if it is sold after the family has settled in Dubai, which is among the more costly surprises of an Australian departure.

The 1 July 2027 change alters the arithmetic, not the deadline

The reform that takes effect on 1 July 2027 changes how gains are taxed, but it does not turn that date into a deadline for leaving. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026, enacted in June 2026 after the 2026-27 Budget, replaces the 50% CGT discount for individuals, trusts and partnerships with indexation of the cost base for assets held for more than 12 months, and introduces a 30% minimum tax on net capital gains. The Budget papers state that the reforms apply only to gains arising after 1 July 2027, and transitional rules separate growth before that date from growth after it.

For a departing founder that separation matters more than the date. Growth that has already accrued is not handed to the new regime by staying until August 2027, and it is not rescued by leaving in June 2027. What the reform changes is the value of the CGT event I1 choice. A founder who crystallises on departure fixes the gain under the rules that apply to it at that moment. A founder who defers carries the shares forward, and growth after 1 July 2027 will be taxed on the eventual sale under indexation and the minimum tax, with the discount already reduced for any period of foreign residence.

The sensible response is to model both paths on the family's own figures before the departure date is fixed: the expected growth, the likely year of sale and the cash available to meet a departure bill. It is rarely right to let a change in tax law choose the month a family moves country. It is often right to let it decide which way the I1 choice is made.

The company in Brisbane does not follow you

An Australian company stays Australian resident when its owner moves to Dubai, because a company incorporated in Australia is resident under section 6(1) of the Income Tax Assessment Act 1936 wherever its directors live. Its profits remain within Australian company tax, its reporting continues, and the founder's new address changes none of that. What does change is the position of the shareholder and the make-up of the board.

The board comes first, because it is a legal requirement rather than a tax point. Under section 201A of the Corporations Act 2001, a proprietary company must have at least one director who ordinarily resides in Australia. A founder who is the sole director and then emigrates leaves the company out of compliance, and the fix, appointing a resident director, has to be made before departure rather than discovered afterwards. That director is not a formality. The director signs, carries personal duties, and needs to understand what is being signed.

The shareholder position is where the money sits. Dividends paid by an Australian company to a foreign resident attract withholding tax under section 128B of the Income Tax Assessment Act 1936, at 30% on the unfranked part, while the franked part is free of withholding. With no treaty in place, nothing reduces the 30% rate on unfranked dividends, which a treaty would commonly cut to 15%. A founder who plans to keep the Australian company and draw income from it in Dubai therefore has a direct interest in the company's franking account and in the order in which profits are paid out.

Interest paid to a foreign resident attracts 10% withholding. Salary for work actually performed in Dubai is a separate question with its own source rules, and it is one to settle deliberately at the outset rather than by default in the first year abroad.

A UAE company is not an exit. It is a second company to govern

Forming a UAE company does not end any Australian obligation by itself, and for a period it can add one. Many founders form the UAE company months before the family moves, which is sensible for visas and banking, but for those months the founder is still an Australian resident who controls a foreign company.

While that is so, Australia's controlled foreign company rules in Part X of the Income Tax Assessment Act 1936 can reach the new company. The UAE is not one of the seven listed countries under regulation 19 of the Income Tax Assessment Regulations 2015, which are Canada, France, Germany, Japan, New Zealand, the United Kingdom and the United States, so a UAE company is an unlisted-country CFC.

Its passive or tainted income can be attributed to an Australian-resident controller each year unless the company passes the active income test in section 432. A UAE trading company doing real business in the UAE will usually pass. A UAE company that holds investments, lends money or collects royalties while its owner is still in Sydney often will not.

The second risk is residence. A company incorporated in the UAE can still be an Australian resident if it carries on business in Australia and its central management and control is in Australia. The High Court in Bywater Investments Ltd v Commissioner of Taxation [2016] HCA 45 made clear that this turns on where the real decisions are taken, not on where the board formally meets. A UAE company run from Melbourne until the move is, for that period, at risk of being an Australian company in everything but its registration. The same doctrine, as applied to founders in the UK-UAE corridor, is examined in the note on central management and control.

On the UAE side the company is governed by UAE law from its first day. It needs a licence that matches its activity, it registers for UAE corporate tax under Federal Decree-Law No. 47 of 2022, which charges 9% on taxable income above AED 375,000 unless the company qualifies for the conditional free zone regime, and it runs an annual compliance calendar of its own. The choice between a free zone and the mainland, and what that choice commits the company to, is set out in the guide to choosing a UAE free zone. What the company costs to run over its first three years is broken down in the structure of UAE set-up costs, and the first year's filings in the first-year compliance calendar.

Family trusts and SMSFs are where departures go wrong

The arrangements that fail most expensively on an Australian departure are the ones that depend on where their trustees live, and the two that matter most are the self-managed super fund and the discretionary family trust.

A self-managed super fund keeps its concessional tax treatment only while it is an Australian superannuation fund, and one condition in section 295-95 of the Income Tax Assessment Act 1997 is that its central management and control is ordinarily in Australia. The law tolerates a temporary absence of up to two years.

Members who are also the fund's trustees and who move to Dubai permanently will usually fail that condition once they have been away for longer, and the ATO puts the consequence plainly: a fund made non-complying can lose almost half of its assets in tax. The remedy is structural and has to come before the absence runs out, typically by rolling the balance into a large regulated fund or moving to a professional trustee arrangement, with advice on what that move itself costs.

The superannuation does not become accessible because the family has left. The departing Australia superannuation payment is available only to temporary visa holders, and not to Australian citizens or permanent residents, whose benefits stay preserved until a normal condition of release is met.

A discretionary family trust faces a parallel question. A trust is resident for capital gains purposes if a trustee is an Australian resident or its central management and control is in Australia. When a trust stops being resident, CGT event I2 in section 104-170 of the Income Tax Assessment Act 1997 treats it as disposing of its assets other than taxable Australian property.

A trust with an individual trustee who emigrates, or with a corporate trustee whose only director emigrates, can trigger that event without a single asset changing hands. An Australian trustee company with Australian-resident directors is the ordinary protection, and it has to be in place on the day the founder leaves.

The Australian exit, item by item

The table sets out what each part of an Australian departure does, and the decision each one needs before the move rather than after it.

Reading down the right-hand column, almost every decision is Australian and almost every one has to be taken before the flight. The Dubai licence appears only in the last row.

The order that works

The order that works is the Australian departure first, the UAE company second, and the family's life in Dubai built on top of both, because every Australian decision depends on the departure date while the UAE formation depends mainly on paperwork. Over the years the relocations that have gone cleanly have had little in common except that sequence.

• Fix the departure date and decide what happens to the Australian home, since both feed the domicile test.
• Settle the CGT event I1 choice for each significant asset, run under the current and the 1 July 2027 rules.
• Deal with the SMSF and the family trust before leaving.
• Appoint a resident director of the Australian company and plan how its profits reach you.
• Form the UAE company, then obtain the owner's visa, the family's visas and the bank account, in that order.
• Keep a record of the move itself, the dates, leases, enrolments and what happened to the house, because it is the evidence the ATO will ask for.

The Dubai side of that sequence is the predictable part. The owner's residence visa comes before the family's, because the family are sponsored as the owner's dependants, and the routes, including a five-year self-sponsored option most founders are never offered, are compared in the note on investor visas and family sponsorship. A remote registration takes weeks rather than months, as set out in the registration timeline. UAE banks will ask a founder who arrives with the proceeds of an Australian business sale to show where the money came from, which is the subject of the source of wealth file and of why UAE banks decline corporate accounts.

The Australian side needs an Australian registered tax agent, and the two sides have to run to one timetable. The families for whom the move works are rarely the ones with the cleverest structure. They are the ones who treated the departure as the main event and the Dubai licence as the last step. The flight is the last thing that happens, and the least important.

Frequently asked questions

Does Australia have a tax treaty with the UAE?

No. Australia has no double tax agreement with the United Arab Emirates, and the UAE does not appear on Treasury's list of Australia's income tax treaties. The Australia-UAE Comprehensive Economic Partnership Agreement, signed on 6 November 2024, is a trade agreement and does not deal with income tax. The practical consequence is that there is no tie-breaker for an individual who could be treated as resident in both countries, so Australian residency is decided entirely under the ATO's own tests, and there is no treaty rate to reduce Australian withholding on dividends or interest paid to a UAE resident.

Do I still pay Australian tax if I move to Dubai?

On some income, yes. Once you are genuinely a foreign resident, Australia taxes only Australian-source income, but it taxes that income without the tax-free threshold that residents receive, and it continues to tax Australian real estate when it is sold. Dividends from an Australian company bear 30% withholding on the unfranked part and none on the franked part, and interest bears 10%. Until the ATO's tests say you have stopped being resident, you remain taxable in Australia on worldwide income, including anything earned in Dubai, which is why the date residency actually ends matters more than the date you fly.

How does the ATO decide whether I have stopped being an Australian resident?

By applying its residency tests to the facts. The ATO asks first whether you still reside in Australia in the ordinary sense, and then applies the domicile, 183-day and Commonwealth superannuation tests, as explained in Taxation Ruling TR 2023/1. For most emigrants the domicile test is decisive: an Australian domicile makes you resident unless the Commissioner is satisfied that your permanent place of abode is outside Australia. The evidence that counts is practical, including where your family lives, what you did with your Australian home, where your children study, how long you intend to stay away and whether your life has actually moved.

What is CGT event I1, and can I avoid it when I leave Australia?

CGT event I1 is the deemed disposal that happens when you stop being an Australian resident. Under section 104-160 of the Income Tax Assessment Act 1997, assets that are not taxable Australian property, typically shares and similar investments, are treated as sold at market value on the day your residency ends. It cannot simply be avoided, but it can be deferred, because you can choose to treat those assets as taxable Australian property until you actually sell them. That postpones the tax without removing it and keeps the assets inside the Australian system while you hold them, so the choice should be modelled rather than assumed.

Should I leave Australia before 1 July 2027 because of the CGT changes?

Not for that reason alone. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 replaces the 50% CGT discount with cost-base indexation and a 30% minimum tax, but only for gains arising from 1 July 2027, and transitional rules separate earlier growth from later growth. Leaving before the date does not protect future growth, and staying after it does not expose growth that has already accrued to the new rules. What the change does affect is whether to crystallise or defer under CGT event I1, which is a calculation to run on your own figures rather than a reason to move a family early.

Can I keep running my Australian company after moving to Dubai?

Yes, but it remains an Australian company with Australian obligations. A company incorporated in Australia stays Australian resident wherever its owner lives, so its profits stay within Australian company tax. Under section 201A of the Corporations Act 2001, a proprietary company must also have at least one director who ordinarily resides in Australia, so a founder who is the only director needs to appoint a resident director before leaving. Dividends paid to you in Dubai bear no withholding on the franked part and 30% on the unfranked part, with no treaty to reduce that rate.

What happens to my self-managed super fund if I move to Dubai?

It can lose its tax concessions if you are away too long. To remain complying, an SMSF must be an Australian superannuation fund, which under section 295-95 of the Income Tax Assessment Act 1997 requires its central management and control to be ordinarily in Australia, with a temporary absence of up to two years allowed. Trustees who move to Dubai permanently will usually fail that condition after two years, and a non-complying fund can lose almost half of its assets in tax. The fund is normally restructured before departure, and your super stays preserved, because the departing Australia superannuation payment is not available to citizens or permanent residents.

Does a UAE tax residency certificate prove I am no longer an Australian resident?

No. A UAE tax residency certificate confirms that you meet the UAE's own residence tests under Cabinet Decision No. 85 of 2022, such as 183 days of presence, or 90 days combined with a UAE residence permit and a permanent home or business in the country. It is useful evidence that your permanent place of abode has moved to Dubai, which supports your position under the ATO's domicile test. It is not a determination of Australian residency, and because there is no Australia-UAE tax treaty it cannot serve as a treaty certificate that overrides the Australian tests.

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Critical advisory. A move from Australia to Dubai is decided by Australian rules before it is completed in the UAE, and every item above, the residency evidence, the CGT event I1 choice, the company's board and dividends, the SMSF and the family trust, turns on facts and dates specific to your family.

The UAE side is the part that can be planned with confidence: the licence that fits the activity, the owner's visa and then the family's, the bank account and the first year's compliance calendar, each timed to the Australian departure rather than ahead of it. That is work we do in-house as a corporate service provider across the UAE, the United Kingdom and Ireland, alongside the family's Australian registered tax agent, so that both sides run to one timetable. If you are planning a move from Australia, settle the Australian decisions before the licence is bought, and speak to us when you are ready to build the Dubai side.

This article is general information and not legal, tax or financial advice, and your own position should be confirmed against your specific facts before you act...