Much of the criticisms levelled at financial planning in Australia relate to the fact that Financial Plans are often “push button” nature, driven by standard templates and producing generic recommendations. This has potentially serious implications for the client and none more so than for the expatriates, whose circumstances often exist well outside the Australian financial planning “norm”. Here are some examples of situations which are specific to Australian expats and need to be considered in any planning exercise.

Taxation

As mentioned elsewhere, financial plans will always consider the taxation implications of any strategy. Depending on the circumstances, expatriation can make taxation a much more complicated process and one that should involve expatriates only taking advice from a licensed tax agent, and one that is familiar and experienced with offshore issues. Expatriates should also be aware of the advantages of using the Australian tax system to build assets in Australia that can be potentially free from capital gains tax.

Assessing Additional Benefits

In a traditional expatriate environment, the employer would often provide a range of services within the local package - including education assistance for the children, health care, accommodation and annual travel to the base country. While this still occurs, other employers are increasingly offering local packages or “cash in lieu” of providing benefits. It needs to be appreciated that while a package might appear very attractive from Australia the cost of the benefits mentioned above - and particularly education (both host country and base country boarding) and housing can be very, very significant. Hence, issues such as meeting education costs, need to be considered well in advance.

Life Insurance

Part of any financial plan should include a review of how well protected the family's assets and income are in the event of untimely death, injury or critical illness. While employers in the host country may provide some coverage, expatriates should appreciate that i) any additional insurance cover, if necessary, may be difficult to obtain back in Australia - depending on the expatriate's host country and ii) there is some possibility that the expatriate may be voiding life insurance cover they have back in Australia unless they have worldwide cover.

Superannuation

The planner should consider your particular position in relation to Superannuation. Whether you should continue to make superannuation contributions in Australia, opt out entirely in favour of an international retirement structure which is more tax favourable for the period of your non-residency, or “make up” contributions to an international structure. Much will depend upon your current superannuation arrangements in Australia, any plans you have in terms of where and when you plan to retire, and regulations within your host country regarding superannuation contributions.

If you are in a Self Managed Superannuation Scheme (DIY) in Australia, you need to be careful that your residency outside of Australia does not affect the residency of the fund and hence make it non-complying and subject to higher tax rates. The fact that non-concessional superannuation contributions have also been capped, and some require a “work test” be met, strengthens the need to plan for superannuation well before a return to Australia – particularly if this is near the traditional retirement age. 

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