Key considerations for Australian expats

Relocating abroad often presents Australian expats with attractive employment prospects and lucrative incentive packages. With the potential for a lower tax environment, these factors often create opportunities for Australian expats to significantly enhance their wealth.

However, moving abroad can add complexity to your financial situation, and a little planning can go a long way. With the right planning, you can rest assured that your time abroad can create long-term value for you and your family.

Here, we discuss some of the key considerations when planning a move or living abroad as an Australian expatriate.

Have goals and an appropriate financial plan

• Identify the personal and financial goals for you and your family. It is essential that these goals are identified and financially quantifiable. For expats, setting goals may be sometimes difficult as you may be unsure of the time you will spend abroad.

• Before moving abroad or repatriating back to Australia, it is essential to plan ahead. Valuing your assets, updating providers, sorting out past tax returns, cashing in tax credits, and giving yourself time to implement effective strategies well before your move date.

• It is important to regularly review your progress toward your goals. A good plan is a flexible plan.

Understand your tax residency and obligations.

• Which country are you currently a tax resident of? The criteria for residence for tax purposes vary from jurisdiction to jurisdiction.

• Personal tax and CGT obligation – Worldwide tax - Not only may you be subject to returns generated within the county you reside in, but there may also be worldwide tax implications whereby you are taxed on assets you own anywhere else in the world. It is essential to understand any potential capital gains tax implications you may be liable for before selling or purchasing investments, particularly when it comes to real estate.

Australian property and managing debt

If you have decided to rent out your home or plan to purchase an investment property whilst you are overseas, is paying off the mortgage the best decision? Here is some food for thought for a non-resident:

• Tax-deductible debt - The interest cost, along with various other expenses, on your rent-generating property may be tax-deductible. You can utilise these deductions to offset your taxable income in Australia to reduce the overall tax payable. It is important to be well-informed and have the appropriate level of debt in place for your situation.

• Negative vs. positive gearing - An appropriate level of borrowing may not only reduce the tax payable annually but also create an annual tax loss, which would allow you to accumulate tax credits that may be utilised in later years.

• Selling your Australian property - Changes in legislation in June 2020 removed the exemption on capital gains tax for the main residence for non-residents. Consideration should be given as to the timing of any property when you are a non-resident.

Wealth accumulation and investment

• Where to invest - In the lead-up to repatriation, it is vital to understand the change in tax implications of becoming subject to worldwide tax again and understand the strategies available to mitigate your ongoing tax obligations.

• Superannuation - Can you or should you contribute to superannuation while you are overseas? There may be tax advantages available on the contributions made and the future investment returns of the capital contributed to superannuation.

Contingency planning

• Risk protection - Do you have adequate personal insurance to provide for you and your family in the case of an unexpected illness or accident? Also, do you know if your existing insurance cover remains appropriate following your relocation outside of Australia?

  Australian insurers often have ‘territorial exclusions’ on disability cover for Australians living abroad. This may preclude claiming your full insurance benefit in the unfortunate event while living overseas. It is essential to ensure that you have the right cover in place for your protection and you are not paying premiums for ineffective cover.

• Estate planning - Is your existing Australian Will sufficient if you have assets in multiple jurisdictions? Depending on the complexity of your financial affairs, it is often important to consider having separate Wills addressing assets you may have in each jurisdiction.

  An Estate Plan enables you to manage the transfer of wealth to the next generation, ensuring your wealth, your wishes, and the interests of your loved ones are protected. The best way to understand the complexities is to speak to a licensed estate planning specialist dedicated to expatriate needs and requirements.

If you are an Australian expat considering a move to Singapore or elsewhere, please get in contact below to find out more information.

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Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek personal advice from a finance professional.

This advertisement has not been reviewed by the Monetary Authority of Singapore.