Tax and investments for Australian Expats

Financial planning for Australian expats

Financial planning for Australian expats – it’s just so important, perhaps even more so than for Australian residents!

Aside from the sheer adventure of living and working overseas, working as an expat can be a great way to grow your wealth. And if you’re working in a country with a low cost of living and low tax rates (or none at all), there’s an even greater opportunity to save!

But unlike Australian residents who have relatively simple investment choices, for an expat there’s a myriad of things to think about. There’s a greater range of products and investments to consider, along with where to invest (onshore, offshore or back home in Australia), currency considerations and ultimately tax issues, both at home (Australia) and in the expat’s host country.

This is where a good financial planner working together with a good expatriate tax accountant can add great value by helping to grow your wealth. With your financial planner focusing on maximising your investment income, at Expat Tax Services we’ll focus on getting the structure right and minimising your tax!

Why use a Financial Planner?

There’s just so many investment choices out there to consider, they all work that little bit differently and they all involve investment risk. Working with a financial planner helps to reduce risk by creating a strategic framework (based on your own investment and risk profile) for the successful operation of all your financial activities and decisions. Here are a few elements of financial planning that an expat should consider:

Investment planning

Just because you’re seeing the world, it doesn’t mean that you should miss the opportunity to increase your wealth. In fact, your time as an expat may represent the best opportunity you will have to amass wealth, as you may benefit from a higher income and lower tax rates.

Recognising that sensible financial planning will take advantage of your time overseas is the first step. Since there’s just so much choice available, we see time and time again, that many Australian expats have made poor investment choices by investing in inappropriate investments and/or investments that are not tax effective. That’s why it’s always recommended that you seek out a reputable financial planner to discuss your investment options and an expat tax accountant to discuss your investment plans in both an Australian and international tax context.

Retirement planning

In Australia, we are all too aware of the need for retirement planning – whether you are 25 or 75 years old. When you are overseas, it’s even more important, as often you won’t have the benefit of a compulsory superannuation scheme paid into by your employer.

So you will need to consider how to invest for your future yourself. You will need to make key decisions about the location of your investments, whether on-shore in the country where you live, off-shore or in Australia. The decision is highly personalised and needs to be based on your individual circumstances. That’s why it’s always important to speak to a financial planner who specialises in working with Australian expatriates and who is experienced in the international and Australian investment products available to Australian expats.

Additional considerations

As an expat working overseas, you’ll have other things to consider also . . . things like health insurance and life insurance. As with all policies, the devil is in the detail but with international health insurance, it’s even more complex simply because of the wider range of situations to cover, including emergency repatriation back home where neceessary. An qualified financial planner with expatriate financial planning experience can help you with all of this.

Tax planning

As accountants, we understand that appropriate tax planning is critical. It’s no good having a great financial planner who generates excellent returns for your portfolio, if it’s structured poorly for tax purposes . . . as those great returns are lost because of higher taxes. This is where it is critical that your financial planner work together with your accountants from the outset, so that your investments are appropriately structured to maximise their investment returns whilst minimising tax from start to finish.

For you as an expat, it’s even more important than for domestic tax-payers because you have a relationship with the tax systems of at least two countries. This significantly raises the complexity of submitting your Australian tax return and potentially your overseas tax return. And yes, in many cases, an expat will have to submit tax returns to not only their host country, but to Australia also.

When you’re working away from home and dealing with a busy work and social life overseas, it’s easy to sweep things under the carpet and forget your Australian tax returns, but not managing your tax obligations in either country may lead to heavy fines and substantial penalties.

At Expat Tax Services, we regularly work with financial planners for the benefit of our clients. If you’d like an introduction to a financial planner to discuss your circumstances, just send us a message (below) and we’d be more than happy to refer you to someone that can help:

Questions? . . .

If you have some questions or would like us to introduce you to a expat financial planner whom we’ve worked with previously, click on the button below and send us a message:

Shane Macfarlane CA
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