Are Australian Expats prepared financially?

Published on: September 18th, 2018

Living and working overseas is on the bucket list for many of us. So when a job opportunity presents itself, you may find yourself jumping at the chance to live an expat lifestyle in a new country. However, if you have worked hard to accumulate assets over the years, moving overseas raises a number of financial questions; what to do with your home, investment property, shares and even your superannuation and insurance policies.

One of the biggest mistakes an expat can make is not considering their current assets or future investment strategies before they move overseas. A lack of planning and understanding of a new financial landscape can lead to losing out financially in the long run.

Take the time to plan your financial goals and consider your long-term strategy, whether it is to settle permanently in your new country or return home in five years time. These decisions are vital to ensure you continue to grow your wealth and save for the future – no matter where in the world you are located.

So, before you dive straight into a new life as an expat, here are some tips to help you ensure your finances don’t take a hit in the process.

Partner with an expert who understands both locations

Finding a financial planner and an accountant who have experience in and understand both jurisdictions is essential if you want to maximise your financial position. When moving or working overseas, any financial or investment decision you make can have tax implications in both your new country and your home one. An expert can advise you on tax-effective strategies to help you make the most of your assets and avoid making decisions that could penalise you come tax time.

Understand the financial landscape in your new country

Australia has Double Tax Agreements with around 40 countries worldwide, so check if your new country has an agreement and take the time to understand it and seek professional advice. Different countries will have tax advantages or disadvantages based on this agreement, so it is important to structure your finances with this in mind. For example, if you are an Australian expat who is a non-resident for Australian tax purposes, there may be advantages to investing in the Australian share market while living overseas.

Stay abreast of changes in the Australian market

Keeping up-to-date with proposed changes in the Australian tax system will enable you to adjust your financial plans to take advantage of them and/or avoid losing out. For example, the Australian Government has proposed changes that mean foreign residents will no longer be entitled to claim the main residence exemption when selling property in Australia. If this change is implemented, it will have a significant impact on the amount of Capital Gains Tax Australian expats pay on the sale of property.

Plan currency movements

One of the biggest mistakes we see when people are relocating overseas, is moving money, even very large transfers, at the last minute. If you are planning to move funds across international borders, it is important to get the timing right to minimise the risk of losing out in the exchange. If this is something you will need to do on a regular basis, seek expert advice as there is an extra level of risk involved with currency exchange.

Review your insurance

Understanding your level of cover for personal risk is important when living abroad. Your employer may provide you with cover for certain risks, however, some may not cover you for your time overseas. The same goes for keeping your home country insurance policies. For example, your Australian policy may not cover you for income protection while working abroad.

Ensure your assets are protected

Where assets are owned in multiple countries, you should remember that every country and jurisdiction has different asset succession and estate tax laws. It is important to keep your assets up-to-date and work with an estate planning specialist to ensure your assets are protected.

Moving to a new country does come with some unique challenges, however, if you are prepared, pay sufficient attention to your financial set-up, and seek specialist advice, it can be an extremely exciting and rewarding journey.