There are many areas you must address before you leave Australia and some that need ongoing attention after you have settled abroad. These include taxation and superannuation, regardless of whether you are working overseas or retiring. Here are just some of the important points to include in your plans.
The first point to consider with taxation is your status as an Australian resident. Declaring as a non-resident is not just a matter of saying so; there is a set of domicile tests that you need to satisfy beforehand. Becoming a non-resident for tax purposes may carry significant advantages when acquiring or disposing of certain assets, specifically when it comes to capital gains tax (CGT). Some assets can potentially carry a 50% CGT discount for non-residents. But the CGT rules are complex at the best of times, so it’s imperative that you seek professional advice – especially if you plan to derive income by renting out your home in Australia. If you’re an Australian resident and you’re working while living overseas, remember that any income you earn must be declared to the Australian Taxation Office (ATO) – even if tax was deducted in the country where earned. Your tax adviser is the best qualified person to consult in determining your residency status for tax purposes.
On the flip-side, as a non-resident, investing back into Australia can attract a relatively low withholding tax rate. This can be particularly favourable for superannuation however a number of pitfalls exist, especially with Self-managed Super Funds (SMSF). Trustees of SMSFs must set up a Power of Attorney to ensure the fund’s central management and control remains in Australia. Be aware that SMSFs risk losing their complying status if the benefit entitlements of non-residents
exceed 50% of the fund’s assets. Both residents and non-residents may contribute to superannuation provided they have a tax file number (TFN), and those over age 65 must satisfy the work test. When accessing super, regardless of residency status, the normal release restrictions apply; if you retire after reaching preservation age, you may access your funds. Superannuation is extremely complicated, so it’s recommended that you speak with your financial adviser before making any decisions.
If you receive a Centrelink benefit, your departure may affect your payments**.
Health and Pharmaceutical Benefits
Australia maintains reciprocal health agreements with some countries**. If you need prescription medicine, check your medicine’s availability overseas. Additionally, don’t assume your medicine is legal in your new country just because it’s legal here. Your best advice is to check with the relevant embassy or consulate before
Equally important are insurance and estate planning. Ensure your will is current and appoint the appropriate Powers of Attorney – especially if you have assets in Australia. Overseas assets will need to be included in your planning. Further, not all life insurance policies remain valid if you’re living overseas. Check the terms and conditions with your financial adviser and make the appropriate updates. Moving overseas can be life-changing. Planning and professional advice can make it life-changing for the right reasons.
**Details on these items be found on www.humanservices.gov.au and searching “Australians overseas” and “reciprocal health care”.
www.ato.gov.au – International tax for individuals
www.humanservices.gov.au – Australians overseas