Australian Expat Tax Advice.

When Australians decide to make the move overseas, many often don’t take the time to get Australian expat tax advice or do any form of tax planning.
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Arguably, your tax strategies and planning are just as important as which country you’re looking to move to or where your children will go to school. There are significant costs that can come with poor tax planning for expats, and you need to be proactive in your approach to tax planning strategies before moving overseas and also before returning home.

Some of the areas that you need to seek Australian expat tax advice on include:

Investment Properties

Many Australians, choose to purchase an investment property when living overseas with the intention of using it as their principal place of residence when they return. It’s important to consider tax implications and also the fact that you will not likely qualify for any Government exemptions or bonuses at the time of purchase.

Similarly, if you own a property as an owner-occupier and then move overseas only to rent that property out, the laws around capital gains tax have recently changed, and you could find yourself liable should you choose to sell that property whilst you are a non-resident expat.

Retirement Savings

If you’ve been living and working overseas and contributing money to a local pension or superannuation scheme, you will need to consider the costs and tax implications of rolling those funds over into an Australian-based superannuation fund when looking to repatriate back to Australia.

Similarly, investments in managed funds and their CGT implications can change when your residency status changes.

Tax Credits

The most common situation where this occurs is with expats who own Australian property that is receiving rent as this is considered Australian Taxable Income (ATI) and the expenses incurred in holding the property exceed this amount. This can be quite considerable at times, especially if the property is a high-quality new dwelling that has large non-cash depreciation deductions allowed under Div 40 & 43 ITAA97.

In this situation, the taxpayer is allowed to carry forward these tax credits to use when required at a later point in time. This could be when repatriating and then earning personal exertion income in Australia, sale of the property and managing Capital Gains Tax or acquiring other property that may be positively geared.

SMSFs

The laws surrounding SMSFs are complex and there are a number of steps you must take to remain compliant. Changes to tax residency could potentially cause the SMSF to become non-compliant and the mooted changes from the 2021 Budget will also need to be considered once they are legislated.

These are just some common examples of what should be considered when looking to become an expat, and is by no means exhaustive. That is why it is always important to seek specialist advice before actually making any significant changes for the expats living in the UK, USA, Hong Kong, Singapore and other areas.

In this week's Q&A, we're addressing a crucial question from one of our viewers:

"How much do I need to purchase a property in Australia?"

Buying a property in Australia requires meticulous financial planning to cover several key expenses beyond the purchase price. First, you'll need a deposit, which typically ranges from 5% to 20% of the property's value. 

Additionally, stamp duty—a state or territory government tax—can significantly add to the cost, varying by location. Legal and conveyancing fees, usually between AUD 800 and AUD 2,000, are required to transfer the property legally.

If you have any questions or need personalized advice, please don't hesitate to reach out to us.

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May 2024 - Australian Property Markets & Finance data quarterly workshop 

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In this week's Q&A, we're tackling a query from one of our viewers:

"Will I be required to pay 50% more tax on the capital gain from my property sale?"

The Capital Gains Tax Discount, overseen by the Australian Taxation Office (ATO), is a tax concession for individuals, trusts, and complying superannuation funds who sell certain assets and result in a capital gain. This discount effectively reduces the taxable portion of the capital gain, providing relief to taxpayers.

It's essential to remember that tax laws and rates are subject to change over time. Therefore, we strongly advise seeking guidance from a qualified tax professional to obtain the most current information and personalized advice tailored to your circumstances. Should you have any further questions, please feel free to reach out to us.

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In this week's Q&A, we will answer a question from one of our viewers.

"How can I further reduce my monthly mortgage payments?"

You can consider several options to reduce your monthly mortgage payments. One is refinancing to secure a lower interest rate or extending the loan term for more manageable payments spread over a longer period. 

However, it's important to be mindful that adjustable-rate mortgages may offer initial relief but could result in potential interest rate hikes later on.

Therefore, it's crucial to carefully evaluate the long-term impact of each option and consider consulting with a financial advisor or mortgage professional to determine the best course of action based on your circumstances. If you have any questions or need personalized information, please don't hesitate to contact us.

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In this week's Q&A, we will answer a question from one of our viewers.

"How can I use debt recycling to reduce my home loan?"

Debt recycling is a financial strategy where you leverage the equity in your home to invest in income-generating assets. However, it's important to consider the risks involved, such as potential fluctuations in investment returns and interest rates.

Consulting with a financial advisor or mortgage broker can help determine if debt recycling suits your financial goals and circumstances. If you have any questions or need personalized information, please don't hesitate to contact us.

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In this week's Q&A, we will answer a question from one of our viewers.

"Will future interest rates create more opportunity for middle-range income earners to invest in property?"

Lower interest rates generally make borrowing cheaper, potentially increasing accessibility to property investment, but the overall economic environment, housing market conditions, and government policies also impact affordability and investment incentives. 

If you have any questions or need personalized information based on your circumstances, please don't hesitate to contact us.

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As we navigate the dynamic landscape of the Australian economy, staying informed and engaged is essential. With that in mind, I'm excited to invite you to our upcoming Quarterly Review, scheduled for 20th/21st February.

We will delve into the current state of the Australian economy, shedding light on the challenges and opportunities within the mortgage finance market amidst these extraordinary times.

To secure your spot, please register through the following link: https://rebrand.ly/Feb2024_quarterlyreview

If you have any questions or concerns, please don't hesitate to reach out.

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In this week's Q&A, we delve into a viewer's query regarding potential windfalls for Australian expats earning in US dollars.

The value of the Australian dollar is subject to a complex interplay of factors, including interest rate decisions, economic indicators, commodity prices, central bank policies, political stability, and market speculation.

These elements collectively influence the performance of the AUD in currency markets. Notably, Australian expats earning in US dollars may find favourable conditions, particularly when contemplating future investments such as homes or properties in Australia.

The dynamics of these factors could provide a beneficial tailwind, enhancing the potential outcomes for expatriates considering financial moves back home.

If you have any questions or need personalized information based on your circumstances, please don't hesitate to contact us.

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