A Financial Checklist

A Financial Checklist for Australian Expatriates

This is not difficult. The Checklist below is simply a summary of the things you need to consider or do if moving overseas from Australia on a long-term basis.

Unfortunately, many Australian expats return from overseas assignments with less money in the bank than when they left. There is no reason for this, and you can have a lot of fun overseas while still piling up the cash as long as you are sensible and do some planning.

This is just our view, but it does come with the benefit of many years as expats, and quite a few more running a website focused on finance matters for expat Australians:

  1. If you are going to return to Australia, maintain an investment in residential property - whether it's previously your own house or an investment property. Over the long term, Australian property has provided reasonable returns and it provides "peace of mind" if there is a sudden surge in house prices or the currency shoots through the roof.
  2. Check out your life insurance cover before you go overseas. This isn't being morbid, you will find that arranging cover is easier and cheaper to get in Australia than overseas. Also obtain in writing an assurance that your current insurer doesn't exclude cover if you are working in certain overseas countries or after a period overseas.
  3. Having comprehensive health insurance, either through your employer or privately, is absolutely vital. There are very few countries, such as the UK, where you can rely on the public health care system. Note also that no insurer will extend maternity benefits if your are already pregnant, and many require a 9 or 12 month waiting period.
  4. Receive a tax briefing before leaving the country and before returning to the country. Many employers will offer tax briefings as part of a relocation package - most of these are totally inadequate and simply involve completion of your leaving tax return. You must be entirely clear about whether you are going to be tax resident, or non-resident, for Australian purposes.
  5. If you retain a rental property in Australia, you will need to submit a tax return every year. Appoint a tax advisor, don't do it yourself - because it will often not get done, be submitted late or fail to claim all the allowable deductions. Do not consider not declaring the income .. in any event, if you're making a tax loss on the property, it is in your interest to submit a return because these losses roll up indefinitely and can be used when you return to Australia.
  6. Get tax advice in your host country. Large amounts of money have you been lost by expatriate's simply because of unfamiliarity with the new tax regime, or because of language difficulties. Be cautious though, only utilise well-regarded firms. If going to the UK or the US tax briefings are available in Australia and should be utilised.
  7. It is linked into tax, but consider participation in your host country private pension schemes - for example, 401(k)'s in the US, and >RRSPS's in Canada. They can be tax effective and allow for withdrawal on preferential terms when you leave. You can continue making contributions to superannuation - it's often not optimal, but at least you are saving. Obtain advice before withdrawing any funds to ensure you understand the tax consequences in the country in which they are located and Australia.
  8. Strangely enough, being non-resident can provide a good opportunity to invest in Australia - with no Australian capital gains applying to most shares and managed funds. However, daily internet reading is no substitute for being "in the market" - so arrange, and be prepared, to take advice.
  9. If you are sure you are returning to Australia, send back your savings on a regular basis - do not try and "time" the foreign exchange market. You will often hear people saying how much they made on forex transfers, but it is much like gambling and you only hear from the "winners". If you can't control the timing of a transfer - such as when you are selling a house - look at using forward contracts to provide you with some certainty on foreign currency rates.
  10. Be "cheap" when it comes to arranging forex transfers. Australian and international banks make ridiculous amounts of money on currency transfers. People find it hard to stifle boredom when informed that they can save 1 - 1.5% on a currency transfer by using online money transfer companies. However, it can amount to a staggering figure over a number of years, and it is money just thrown away otherwise. Compare your bank fees and exchange rates with OFX, a specialist money transfer company listed on the ASX.

See Exfin for more details and we have included an Overseas Relocation Checklist below which you may find useful.