Tax implications for Aussie expats

According to the most recent estimates, around 346,000 Australian-born people are living and working abroad in OECD countries. The Australian Bureau of Statistics reports that the number of people departing Australia permanently or for the long term has increased considerably over the last 20 years, and it is expected this trend will continue.

Australian expats have a number of additional considerations when it comes to managing their money. Often they will be caught up in two different tax systems, find they need to make contributions to an overseas retirement scheme and have to determine not only where to invest their money, but the most appropriate structure to do so.

Tax implications are often the catalyst for expats obtaining financial advice, and rightly so. Having a thorough understanding of the taxation arrangements between Australia and your new country of residence is key to maximising your financial position.

Most expats will have become a non-resident for tax purposes once they depart Australia and start earning an income elsewhere. If you have income-producing assets in Australia, or you intend on investing your money in Australia whilst working overseas, you firstly need to understand what it means to be a non-resident for tax purposes.

Non-residents are subject to a much higher rate of tax with rates starting at 29%. Additionally, non-residents are not entitled to the $6,000 tax-free threshold. This means that 29% tax (or more) is applied to the first dollar earned as a non-resident.

You then need to consider how income from different (Australian) assets and investments is treated for non-residents. For instance, if you have an investment property (or you have rented out your home), rental income is assessable income in Australia.

Conversely, if you own shares, dividend income is not assessable income in Australia but is still taxable unless fully-franked. Withholding tax is deducted from unfranked dividends and if you are residing in a country that doesn’t have a double taxation agreement (DTA) in place with Australia, you may pay tax on this income twice.

Superannuation also needs to be considered. If you are working for an international company it is unlikely they will make contributions to an Australian super fund on your behalf. Instead, it is more likely you will have to join your employers chosen overseas-based retirement scheme and make contributions to it. This may or may not be in your best interests. It is, however, possible for expats to make voluntary contributions to an Australian super fund if they wish.

When investing your money, capital gains tax (CGT) is also something you need to consider. Presently, non-residents are entitled to the 50% CGT discount where an asset is sold but was owned for 12 months or longer. However, the government have proposed changing eligibility for non-residents in the 2012 budget. CGT applies to profits realised on property in Australia, but profits on Australian shares are exempt for non-residents.

So, working as an expatriate gives rise to a number of additional complexities and considerations. Obtaining advice in key areas such as tax planning, investment strategy, superannuation and retirement planning, insurance and estate planning will assist you to maximise your financial position and secure your future.


This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial and tax advice prior to acting on this information.Opinions constitute our judgement at the time of issue and are subject to change. Financial Planning Expert Pty Ltd does not give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.
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    Financial Planning Expert is an independent financial planning business based in Melbourne. We provide genuinely independent and conflict free financial advice. We’re experts in self-managed superannuation fund (SMSFs) advice and strategy, retirement planning, property and share investment advice, life and income protection insurance, tax planning, asset protection, estate planning and advice for Australian expatriates.