Financial Considerations for Expats Before June 30 – June 30 is fast approaching and for Aussie expats there are several financial considerations you need to keep in mind to ensure all your ducks are lined up.
With tax returns due soon after, it’s important to ensure that you’ve taken advantage of all the opportunities available to you to reduce your tax liability and maximise your savings.
Here are some points to consider.
Reviewing your Superannuation
It’s important you review your Australian superannuation contributions and they type of contributions you have made.
As we know, we currently have tax deductable contributions and non-tax deductible contributions, so make sure you have made the correct super contributions for your desired outcome.
Ensure you also double check your contribution caps, to remain below the thresholds withing your strategy. Exceeding the caps can result in additional tax liabilities and penalties.
Consider a spouse contribution if your spouse has a low income or isn’t working, making a spouse contribution to their superannuation account can be a tax-effective way to boost their retirement savings while reducing your tax liability.
You may be eligible for a tax offset of up to $540 for the year.
Want free money? Currently expats can take advantage of the government co-contribution whereby, if you earn less than $54,837 per year and make a non-concessional contribution of $1,000, the government will contribute up to $500 to your superannuation fund.
This is based on Australian sourced income, allowing majority of Australian non-tax residents to fall below the threshold with ease.
Review your investment portfolio
As the end of the financial year approaches, it’s a good idea to review your investment portfolio and assess whether any adjustments are needed.
This could involve selling off any underperforming investments or rebalancing your portfolio to achieve your desired asset allocation.
By taking this step, you can ensure that your investments align with your goals and risk tolerance, potentially leading to better returns in the long term.
Take the time to review your expenses and identify any work-related or investment costs that can be claimed.
Remember to also gather any receipts for donations made to charities that are eligible for a tax deduction. By doing so, you can potentially reduce your taxable income and boost your refund or reduce your tax liability.
As we know Australian Property is classified as Taxable Australian Real Property (TARP) by the ATO and are subject to the higher foreign resident tax rates starting at 32.5%.
As such, an Australian expat is losing almost one third of the income on tax. In preparation for the EOFY, it would be wise to begin reviewing your property related expenses, cumulating receipts and consider any renovations/repairs that have undergone to reduce the potential income tax you may have to pay.
In most cases, it is best for your property to remain neutrally geared as an expat, so aiming to achieve this should be a priority.
In the event you have a positively geared property, then you may want to speak with a professional about making tax deductable contributions to super.
Your residency status can have a significant impact on your tax liability. If you’ve recently moved to or from Australia, or if you spend significant amounts of time overseas, it’s important to review your residency status to determine whether you’re classified as a resident or non-resident for tax purposes.
This can affect the amount of tax you’re required to pay and the deductions you’re entitled to claim.
Plan ahead for the next financial year by creating a budget and financial goals.
Planning ahead for the next financial year is an essential step in managing your finances effectively. By creating a budget and setting financial goals, you can ensure that you’re on track to meet your objectives and avoid any unexpected expenses or financial surprises.
This may involve reviewing your income and expenses from the current year, forecasting your income and expenses for the next year, and making any necessary adjustments to your financial plan.
Planning ahead can also help you identify potential tax-saving opportunities and take advantage of them throughout the year.
By taking a proactive approach to managing your finances, you can set yourself up for financial success and achieve your long-term financial goals.
Seek professional advice
Navigating the Australian tax system as an expat can be complex, and it’s important to seek professional advice to ensure that you’re complying with all relevant regulations and taking advantage of all available opportunities.
A qualified financial planner can help you review your finances and develop a tax-effective strategy that suits your unique circumstances.
Seeking professional advice can also help you develop a tax-effective strategy that takes into account your unique circumstances.