Receiving a once-in-a-lifetime job opportunity or wanting to experience a different culture are just some of the many reasons to become an expat. However, before you embark on this grand adventure, you have to consider your financial situation. To make the transition easier, here’s four financial considerations for Aussie expats to consider:
#1 Find an employment sponsor
Many aspiring expats make the mistake of moving overseas first, and finding a job later. This approach can prove difficult, as many governments only provide visas if you have an offer of employment. To prevent any delays, we recommend searching for a job with the option to be hired overseas. When applying, you can increase your chances by highlighting your talents which are useful in the local market. Additionally, in the absence of any job offer, and right to residency in the foreign country, you will more than likely remain as a tax resident of Australia. This means that all of your worldwide income will remain subject to taxation in Australia
#2 Renegotiating your employment contract
Before relocating, go over your employment contract carefully. Ensure, for instance, there are certain provisions in the contract. For expats, these include: a clause ensuring you’re brought home in the event of job loss, a guarantee that repatriation expenses are paid when the contract ends and the allocation of an independent tax advisor.
#3 Filing two tax returns
Filing your Australian tax return can be complicated. It becomes even more difficult, however, when moving abroad. Along with your Australian tax return, you’ll have to file a return in your new jurisdiction. This means, you need to learn about the tax laws and regulations of your new homeland. Also keep in mind that, regardless of your income, as you hold an Australian tax file number you will continue to be liable to submit a tax return in Australia – to learn more, take a look at Do I need to lodge a tax return while living overseas?
#4 Protecting your superannuation
To bolster your retirement income, you can continue to contribute to your superannuation while overseas. It may be a good idea to do so if you plan to retire in Australia, or if the tax rate for Australian superannuation is lower than the tax rate that which you pay overseas. In certain countries, you may also have to contribute to a pension plan. While these payments may be tax-free in your country of residence, they may not be in Australia.
For all expats, we highly recommend that you seek advice before making any contribution to superannuation, as it may or may not be tax effective given your particular set of circumstances. For example, if you are living and working in the United States, you need to be aware that in most cases, your Australian superannuation fund contributions, earnings and growth are subject to US taxation.
In addition, you’ll usually need to report your superfund (and every non-US financial/bank account) on an FBAR, and also potentially on a Form 8938 – Statement of Specified Foreign Financial Assets. To learn more, take a look at Is my superannuation assessable in my US tax return? A detailed overview.
Need some advice?
If you’re ready to begin your expat adventure and you need some advice, reach out to our Expat Tax Services team today. We’d be glad to be able to assist you with sound tax advice that will assist you on your expat journey.