Speak with an Australian Expat Financial Adviser

Australians are usually encouraged to take advantage of the benefits offered by superannuation (e.g. tax effective environment and availability of investment options). However, depending on your overseas location, it may be more tax-effective to build your wealth outside of superannuation while abroad and consider moving those assets into superannuation upon your return home.

Australian Expats should be aware of their overseas tax jurisdiction and how that jurisdiction will treat superannuation. For example, superannuation is generally reportable when residing in the United States. For this reason, contributions made to superannuation may result in punitive tax consequences at the hands of the IRS. Accordingly, any financial advice should take into account your entire situation, including any overseas tax jurisdictions.

Self-Managed Super Funds (SMSFs) are a popular structure among Australians. However, upon moving overseas for an extended period, they can be at risk of becoming non-compliant with the Australian Taxation Office (ATO). This is due to the SMSF failing to meet a series of residency tests and becoming non-compliant, which could result in their superannuation assets being taxed up to 47%. If you own illiquid assets in your SMSF (e.g. real estate, gold or silver bullion), Expats may have the option of nominating a trusted attorney to control their SMSF whilst living abroad. However, suppose you hold liquid assets in your SMSF that can be easily sold (e.g. Australian shares and ETFs). You may benefit from winding up your SMSF due to the ongoing reporting and potential high tax rates associated with managing a non-compliant SMSF.

Are you receiving rental income from an investment property located in Australia, whilst you are living abroad? This is considered Australian sourced income and reportable as income on an Australian tax return. Accordingly, this income may be subject to foreign resident tax rates if you are deemed a non-resident for tax purposes. You could contribute this income to your superannuation as a tax-deductible contribution. This could offset your income and result in reduced taxation payable to the Australian Taxation Office.