By Simon Pederson
More than 60,000 Australians emigrate overseas for 12 months or more in search for greener pastures. Whether you are simply travelling, seeking career advancement or an opportunity to build wealth in a low tax country, there are several considerations to be aware of before leaving, while you reside overseas and when you return to Australia.
Firstly, let’s take a look at some of the main financial considerations. According to the Australian Bureau of Statistics (ABS), net overseas migrating (NOM) is currently at 231,000. This means an additional 231,000 people are permanently residing in Australia this year alone.
Many of these people are expatriates returning home from overseas or are new citizens experiencing Australian life for the very first time. The taxation and superannuation laws in Australia are complicated. Before moving assets into Australia from abroad, it is important to seek professional financial advice to ensure you are not adversely impacting your wealth.
In general, the vast majority of people fit into one of the following categories, and they each have different considerations:
- You have resided overseas and are now returning to Australia to permanently retire.
- You are emigrating to Australia permanently and have assets in another country.
- You are just a temporary Australian resident.
Based on these broad scenarios, the major financial issues you need to consider are: what taxes have been paid while overseas, what is the best course of action to transfer assets between countries, what to do with foreign bank accounts and the transfer of overseas superannuation and pension accounts.
What taxes have been paid while overseas?
Australia has taxation treaties with over 45 countries and these agreements are not straight forward. The aim of these treaties is to reduce double taxation, however, some taxes are not like-for-like between countries. You may have paid tax in your home country, but there may be a different tax applicable in Australia. You can find more information about this and the various tax agreements at www.treasury.gov.au/tax-treaties
What is the best course of action to transfer assets between countries?
Due to the complexity of the legal systems in each jurisdiction, it is the best course of action to seek advice from a local expert. They are aware of the intricacies of your home country and can assist in the liquidation of any asset that you want to bring to Australia.
What to do with foreign bank accounts?
Depending on whether you are a tax resident or non-tax resident, Australia has complex foreign exchange gain and loss rules that may apply to certain transactions. For example, once you return home and become a resident for Australian tax, any future currency exchanges may result in income tax payable in Australia. It is critical to plan ahead when moving currency from different countries.
Transfer of overseas superannuation and pension accounts
Australia does have some superannuation agreements with other countries, but these arrangements are not straight forward and care needs to be taken. You will also need to ensure your Australian superannuation fund is able to accept transfers from other countries (known as Qualifying Registered Overseas Pension Schemes). Where possible, you want to build your retirement savings in the country where you expect to retire. More information can be found at http://www.bridges.com.au/superannuation
While we cannot provide personal advice on assets held overseas, myself and the team at Bridges Sunshine Coast specialise in Australian superannuation law. We also have partnerships with professional taxation accountants who specialise on Australian tax law. Getting professional financial advice is important. If you have any questions about this article you can contact us at Bridges Sunshine coast or make an appointment with your local financial adviser.
Bridges Financial Services Pty Limited (Bridges). ABN 60 003 474 977. ASX Participant. AFSL No 240837. This is general advice only and does not take into account your objectives, financial situation and needs. Before actin