expat tax traps

Avoiding expat tax traps

For many young Australians, going overseas to work for an extended period of time after graduating is almost a right of passage. It provides you with a chance to see the world, achieve independence, go on an adventure and gain valuable work experience. Every year, nearly 70,000 Australians head overseas for a new job and a new life, and there are an estimated one million Australian expats scattered around the world.

Unfortunately however, even the most well-prepared expat can sometimes fall into tax traps because of the complex manner in which income earned outside Australia is taxed.

Below we’ve outlined three ways to help expats avoid tax pitfalls and traps.

Ensure you are not an Australian tax resident

The most common mistake expats make in regards to tax is assuming they are not a tax paying resident of Australia simply because they’ve left the country. This is a serious trap for expats, especially for those earning salaries from a low tax foreign country without a double tax agreement with Australia. ATO audits in this area have increased and in addition for underpaid tax, expats who are found out will also be charged with interest and penalty rates.

To ensure you are not an Australian tax resident you generally need to have permanently left Australia by showing you have established a permanent home elsewhere and have notified government agencies by appropriately filling out immigration cards.

Superannuation funds

Another tax trap expats can fall into relates to superannuation funds, which can be penalised by the ATO, become depleted due to fees or cause stress for expats returning who have not made contributions while away and have a low balance on return.

It is import for expats to find out whether they are able to continue making contributions to their fund, whether they can simply maintain the fund and whether there are restrictions on bringing overseas superannuation funds back with them. There are also additional issues if expats have self-managed funds as they need to make sure they continue to meet the requirements of being an Australian superannuation fund, an issue for those gone longer than two years.

Get expert advice

The tax requirements for expats are not straightforward and expat tax returns are extremely complex, which is why it’s important to engage the services of an expert to ensure you avoid the tax traps that can make expat life stressful.

As expats ourselves, the team at Expat Tax Services understand the complex tax issues you face. We use modern technology and modern practices and don’t charge hourly rates as we believe in fairness and equity for all our clients.

For Australian tax and advice for Australian expats send us an e-mail today.

Shane Macfarlane
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Shane Macfarlane

CEO & Founder at Expat Tax Services
Shane's an Australian Chartered Accountant and Australian expat tax specialist who's also an expat himself (based in Asia).Shane's passionate about tax and legitimate tax minimisation, particularly as it relates to Australian expats who are often subject to high rates of tax back home in Australia.Beyond tax and accounting, Shane's an entrepreneur, having devised, created and founded a successful accounting startup, Fifo Workpapers (acquired by accounting software giant, Intuit inc. in 2013)

In short Shane's a tax and software techno-geek, who recognised that Australian expats were unable to obtain the specialist advice and quality service, that they needed from their accountants. Accordingly, Shane founded Expat Tax Services to provide Australian expats with access to specialist, quality advice at fair and reasonable prices (no hourly rates, fees quoted upfront with unlimited support included) . . . receive the support and advice you need without having to take second-mortgage to pay your accountant's bill! Speak to Shane & the team today.
Shane Macfarlane
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