Thinking of living overseas?

Dec 8, 2021 | Wealth

Many Aussies dream of living in different countries at some point during their life. For some this remains just a dream but for hundreds of thousands of Australian residents who move away permanently from our shores, it is a reality. Whether it’s a long-term career move to New York or retiring in an island paradise, the decision to permanently leave Australia is one that requires sound financial planning.

In addition to learning as much as you can about your new home, there are many areas you must address before you leave Australia and some that need ongoing attention after you have settled abroad. These include taxation and superannuation, regardless of whether you are working overseas or retiring. There are also things like insurance cover and updating your Will that must be taken into account. Here are just some of the important points to include in your plans.

Taxation

The first point to consider with taxation is your status as an Australian resident.

Declaring as a non-resident is not just a matter of saying so; there is a set of domicile tests that you need to satisfy beforehand.

Becoming a non-resident for tax purposes carries significant advantages when acquiring or disposing of certain assets, specifically when it comes to capital gains tax (CGT). Some assets can potentially carry a 50% CGT discount for non-residents, depending on the date of purchase.

But the CGT rules are complex at the best of times, so it’s imperative that you seek professional advice – especially if you plan to derive income by renting out your home in Australia.

If you’re an Australian resident and you’re working while living overseas, remember that any income you earn must be declared to the Australian Taxation Office (ATO) – even if tax was deducted in the country you earned it.

Your tax adviser is the best qualified person to consult in determining your residency status for tax purposes.

Superannuation

On the flip-side, as a non-resident, investing back into Australia can attract a relatively low withholding tax rate.

This can be particularly favourable for superannuation, however a number of pitfalls exist, especially with Self-managed Super Funds (SMSF). Trustees of SMSFs must set up a Power of Attorney to ensure the fund’s central management and control remains in Australia.

Be aware that SMSFs risk losing their complying status if the benefit entitlements of non-residents exceed 50% of the fund’s assets.

Both residents and non-residents may contribute to superannuation provided they have a tax file number (TFN), and those over age 65 must satisfy the work test.

When accessing super, regardless of residency status, the normal release restrictions apply; if you retire after reaching preservation age, you may access your funds.

Superannuation is extremely complicated, so it’s recommended that you speak with your financial adviser before making any decisions.

Centrelink

If you receive a Centrelink benefit, your departure may affect your payments. To learn more, go to www.humanservices.gov.au and type “Australians overseas” in the search field.

Health and pharmaceutical benefits

Australia maintains reciprocal health agreements with some countries. For details, go to www.humanservices.gov.au and type “reciprocal health care” in the search field.

If you need prescription medicine, check your medicine’s availability overseas.

Additionally, don’t assume your medicine is legal in your new country just because it’s legal here. Your best advice is to check with the relevant embassy or consulate before leaving Australia.

Other issues

Equally important are insurance and estate planning.

Ensure your will is current and appoint the appropriate Powers of Attorney – especially if you have assets in Australia. Overseas assets will need to be included in your planning.

Further, not all life insurance policies remain valid if you’re living overseas. Check the terms and conditions with your financial adviser and make the appropriate updates.

 

Moving overseas can be life-changing. Planning and professional advice can make it life-changing for the right reasons.

 

Sources:

Department of Human Services website www.humanservices.gov.au Australians overseas

 

Do you have a question?

Latest Blog Articles

To be or not to be the Executor

This article touches on what is expected of an executor of a Will and outlines the extensive duties the executor must fulfil. – To be or not to be the Executor.

read more

Financial advice is not the same for everyone

Many people think that financial advice is only for the rich and famous. This article explains why this is not the case and focuses on the importance of having a strategy regardless of age, gender or circumstances. – Financial advice is not the same for everyone.

read more

How to go broke trying to get rich

A get-rich-quick scheme can be defined as, a promise to make a person extremely wealthy over a short period of time, often with little effort and no risk. If you think that sounds a bit dodgy, you could be right. – How to go broke trying to get rich.

read more

5 tips to improve your financial wellbeing

When was the last time you considered the effect your financial wellbeing has on your overall health? This article touches on the stressors that managing our finances places on our health and provides five easy to implement strategies to improve our finances and our overall wellbeing. – 5 tips to improve your financial wellbeing.

read more

Financial Advice services are provided by Insight Financial Partners Pty Ltd T/A Insight Wealth Perth as a Corporate Authorised Representative of
Australian Unity Personal Financial Services Limited (ABN 26 098 725 145), AFS Licence no. 234459.

PRIVACY POLICY       FINANCIAL SERVICES GUIDE