Moving Overseas from Australia? Can You Answer These 6 Expat Questions?
Whether it’s for career opportunities, lifestyle changes, or family reasons, relocating abroad is an exciting chapter. But moving overseas from Australia, it’s crucial to understand how your financial, tax, and legal affairs back in Australia will be affected. Becoming an expat can significantly change the way your investments, taxes, and estate planning work. Failing to plan ahead could result in costly mistakes.
To help you navigate this transition, here are six key questions every Australian should ask before making the move overseas from Australia:
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Will your property investment strategy still work?
There are important considerations to take into account regarding the properties you own in Australia when becoming an expat:
- Capital Gains Tax (CGT): If you owned a Principal Place of Residence (PPR), you are no longer eligible for the Main Residence Exemption (MRE) and will be liable for CGT on the entire ownership if sold as an expat. You may want to consider whether to retain this property.
- 50% CGT discount: Expats are not eligible for this discount on assets owned for more than a year. However, you may receive a pro-rata discount for the period you were an Australian tax resident.
- Foreign resident tax rates: These start at 30% from the first dollar of income, meaning you could face higher tax compared to standard resident rates.
- Property sale withholding: If you sell an Australian property, 15% of the sale price may be withheld (unless you provide a clearance certificate), acting as a prepayment toward your CGT.
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Will your share investment strategy still work?
Shares are a popular wealth-building tool, but their tax treatment can shift dramatically when you become an Australian expat:
- Non-Taxable Australian Property (Non-TAP): Shares, ETFs, managed funds, and digital assets fall under this category and are not subject to CGT while you’re a non-resident, offering a potential tax-free growth opportunity.
- Deemed disposal: The ATO may calculate a “paper gain” on these assets as if you sold them the day you became a non-resident. Any CGT from this gain follows normal rules.
- Foreign tax implications: Be mindful of your new country’s tax rules, as you may owe tax there on sales of these assets.
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Will your current adviser still be able to advise you once you move overseas from Australia?
You should review your advisory relationship because not all Australian financial advisers can assist expats. Things to consider:
- Some advisers or their licensees are not authorised to service clients based overseas due to regulatory complexity.
- If your adviser isn’t well-versed in expat matters, you may be paying for their learning curve—or worse, receive incorrect advice.
- Even if your adviser can help, consider engaging a specialist firm to ensure all aspects are handled correctly.
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How will your new country treat and tax your current investments?
Tax rules vary widely from country to country and are often subject to change:
- Understand how your taxation requirements for your investments. Research and consult with tax professionals in both Australia and your new location.
- For complex tax matters, working with an expat-specific accountant can save money and reduce legal risk in the long term.
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Have you effectively left Australia and assumed non-resident tax status?
You must pass certain tests to be considered a non-resident for Australian tax purposes:
- Resides test: You must show that you’ve cut financial ties with Australia and established a new home overseas.
- Domicile test: You need to establish a permanent abode outside Australia.
- 183-day test: You shouldn’t be present in Australia for more than 183 days in a financial year unless your permanent home is clearly elsewhere.
- Superannuation test: If you’re part of certain government super funds (like PSS or CSS), you may remain a tax resident regardless of other factors.
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Will your Estate Planning work as you intended?
Living overseas or owning assets internationally makes estate planning more complex:
- Different legal systems, the potential for double taxation, and probate issues across jurisdictions can complicate things.
- It’s essential to update your estate plan with a specialist who understands both international law and Australian expat requirements.
Final Thoughts of Moving Overseas from Australia
Moving overseas is about more than just visas and packing. Your financial life follows you, and planning ahead is key to a smooth, successful expat journey. Ask—and answer—these six essential questions to prepare yourself to protect and grow your wealth, no matter where in the world you go.
Contact us for a personalised consultation and ensure your financial future is in the right hands—no matter where in the world you are.