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For Australians living and working overseas, the legal and financial consequences of separation are more complicated than for couples whose lives, assets, and legal obligations are entirely within Australia. When property is held in multiple countries, when one or both parties are tax residents elsewhere, and when the question of which country’s courts should hear the matter is genuinely open, getting advice early is not optional — it is essential.

This article covers the key issues Australian expats face when a relationship breaks down: how Australian family law applies to overseas situations, the tax implications of property settlement for expats, and the practical questions that arise when assets and people are spread across jurisdictions.

For a broader overview of cross-border family law, see the Koffels cross-border and international family law hub.

Does Australian family law apply to expats?

The short answer is: often yes, and sometimes simultaneously with the law of another country.

The Family Law Act 1975 (Cth) applies to marriages solemnised in Australia and to marriages between parties who are Australian citizens or ordinarily resident in Australia, regardless of where they currently live. For de facto couples, the position is determined by whether the relationship has a sufficient connection to Australia — including whether either party is ordinarily resident here or whether a substantial part of the relationship was conducted here.

This means that an Australian expat living in Singapore, the UAE, or the United Kingdom may still be subject to Australian family law jurisdiction — even if they have been overseas for years, even if their assets are primarily held abroad, and even if proceedings have been or could be commenced in another country. The risk of parallel proceedings in two jurisdictions, potentially producing inconsistent outcomes, is real and is one of the strongest arguments for obtaining coordinated legal advice at the earliest opportunity.

Australian property held by expats: family law and CGT

Many Australian expats retain property in Australia — a family home, investment properties, or other real assets — while living abroad. When a relationship breaks down, those assets become part of the family law property pool and their transfer or realisation may trigger significant tax consequences.

The main residence CGT exemption and expats

The interaction between the main residence capital gains tax exemption and Australian tax residency rules is one of the most significant financial risks for expats who own Australian property.

Under changes that took effect from 1 July 2020, Australian expats who are foreign residents for tax purposes at the time they sell their Australian home are no longer entitled to the main residence CGT exemption — subject to limited transitional exceptions that have now largely expired. This means that a property that an expat owned and lived in before moving overseas, and which they assumed was covered by the exemption, may be subject to CGT on the entire capital gain from the date of acquisition, not just from the date they left Australia.

In a family law context, this matters because property settlement often involves the transfer or forced sale of the family home. If the transferring party is a foreign tax resident at the time of the transfer, the full CGT liability may crystallise — potentially on decades of capital gain. The timing of a settlement, the structuring of any transfer, and the question of whether roll-over relief is available all require careful analysis before any agreement is finalised.

CGT roll-over relief in property settlement

The Income Tax Assessment Act 1997 provides roll-over relief for assets transferred between spouses as part of a family law property settlement, where the transfer is made pursuant to a court order or a binding financial agreement under the Family Law Act. The roll-over defers the CGT liability — the receiving spouse takes the asset at the transferring spouse’s cost base, and CGT is not triggered until they subsequently dispose of it.

However, the availability of rollover relief where one or both parties are foreign tax residents requires careful analysis. The interaction between the rollover provisions and the expat CGT rules is not straightforward, and the outcome depends on the parties’ specific circumstances, the nature of the assets, and the terms of any double tax agreement between Australia and the relevant foreign country. This is an area where coordinated advice from both a family lawyer and a tax adviser with experience in cross-border matters is essential.

Withholding obligations on property transfers

Where an Australian resident purchaser acquires property from a foreign resident vendor, foreign resident capital gains withholding obligations may apply under the Taxation Administration Act 1953. In a family law context, where one spouse is a foreign tax resident, and the other is acquiring their interest in Australian property as part of a settlement, the withholding rules may be engaged. The practical and timing implications of this need to be addressed in the settlement documentation.

Overseas property in an Australian settlement

Australian family law courts treat overseas property as part of the asset pool available for division, regardless of its location. An expat couple who hold real property in the UK, an investment account in Hong Kong, and superannuation in Australia will have all of those assets included in the Australian property pool if Australian courts have jurisdiction over their matter.

The practical challenge is that Australian court orders do not automatically have legal effect in foreign jurisdictions. An order directing a party to transfer overseas property to their former spouse may require separate enforcement proceedings in the relevant country, which involve engaging local legal counsel and navigating the recognition and enforcement regime applicable there. In some jurisdictions, particularly those with their own matrimonial property regimes, Australian orders may be recognised readily. In others, enforcement is more complex.

A practical alternative — and one that experienced family lawyers regularly use in complex cross-border matters — is to structure the settlement so that overseas assets are offset against Australian assets, with one party taking the overseas holdings and the other receiving a corresponding adjustment from Australian assets. This avoids the need for cross-border enforcement and can produce a cleaner, more certain outcome for both parties.

Superannuation and expats

Australian superannuation is treated as property for family law purposes regardless of whether the parties are resident in Australia at the time of separation. An expat who has accumulated significant superannuation in Australia before or during their overseas posting retains that interest as an asset subject to the property settlement.

For expats who have also accumulated pension or retirement savings in foreign jurisdictions — a UK pension, a US 401(k), an employer provident fund in Singapore or the UAE — those interests are similarly assets of the relationship that need to be disclosed and addressed. The valuation of foreign pension interests, whether they can be split or offset, and the tax consequences of any dealings with them require specialist advice in both jurisdictions.

Jurisdiction: where to commence proceedings

For expats, the choice of where to commence family law proceedings is a genuine strategic decision with material consequences. Different jurisdictions approach property division in very different ways. The treatment of a long marriage in English law, for example, tends toward equal division regardless of contributions, while Australian law applies a contributions-based analysis that can produce different outcomes. The maintenance regime in some European jurisdictions is more generous than the Australian approach. The treatment of pre-relationship assets varies significantly across jurisdictions.

Where there is a genuine choice of jurisdiction, obtaining advice on the likely range of outcomes in each country before proceedings are commenced is time well spent. Once proceedings are on foot in one jurisdiction, it becomes significantly harder to argue that another jurisdiction is more appropriate.

The risk of the other party commencing proceedings first — in a jurisdiction that favours their position — is real in international matters. Early advice is not just about planning. It is sometimes about moving quickly enough to control where the matter is heard.

Expats returning to Australia during or after separation

An expat who returns to Australia in connection with a separation — whether to commence proceedings, to be closer to children, or simply because the overseas posting has ended — needs to understand how their return affects their legal and tax position.

Returning to Australian tax residency has implications for the CGT main residence exemption, for the treatment of foreign income and assets, and for the calculation of any Australian tax liability on foreign pension or investment interests. The timing of a return relative to any property transfer or sale can significantly affect the tax outcome, and this should be modelled before any decisions are made.

For parenting matters, returning to Australia with children — or remaining overseas with children after the other parent has returned — engages the international child abduction framework under the Hague Convention if the children’s habitual residence is in dispute. An expat who is uncertain about their rights in relation to children should obtain advice before making any decisions about where the children will live during the separation process.

How Koffels can assist

Koffels has acted in family law matters for Australians living and working in the United States, Latin America, Europe, the Middle East, and Asia. We understand the specific challenges that expats face — the interplay between Australian family law and foreign legal systems, the tax complications arising from non-resident status, and the practical difficulties of conducting proceedings when parties and assets are in different countries.

We have working relationships with legal practitioners in key overseas jurisdictions and can coordinate advice across borders where a matter requires it. Where tax advice is needed in connection with a property settlement involving expat-specific issues, we work closely with accountants and tax advisers who specialise in cross-border matters.

If you are an Australian expat facing separation, or if you are concerned about how your overseas situation affects your legal and financial position, we invite you to contact us for a confidential discussion.

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This article is intended as a general reference only and does not constitute legal or tax advice. Expat family law and tax matters are highly fact-specific. You should seek advice from a qualified family law solicitor and, where relevant, a tax adviser with cross-border expertise, in relation to your particular circumstances. Koffels Solicitors and Barristers, Level 23 Angel Place, 123 Pitt Street, Sydney NSW 2000.