Financial Planning for Australian Expatriates

Why you need to consider Financial Planning

The profile of Financial Planning in Australia has risen dramatically over the last decade, largely on the back of compulsory superannuation, but also because of a growing sophistication amongst Australian investors. This has partly overshadowed the true value of financial planning, which is to put a strategic framework around all your financial activities and decisions.

Financial planning is particularly important to expatriates for a number of reasons:

• Expatriates will usually have relationships with at least two tax regimes and two currencies - significantly raising the complexity of their affairs. The fact that they are tax non-resident also does not preclude liability for Australian capital gains tax, or for submitting a tax return if, for example, they have an income producing property.

• Depending on your circumstances, expatriation may represent your best opportunity to amass real wealth. Sensible financial planning can ensure that you both enjoy the experience of expatriation and take full financial advantage of your period overseas.

• Initially, new expatriates will probably experience some dislocation - this can extend to finances and possibly mean that you will not make the best use of income flows. There are also some areas where there can be substantial, long term increases in costs, such as with education and health which need to be reflected in your financial arrangements – particularly in the area of insurance.

• Whilst you area overseas you invariably faced with making a decision about what investments you should make and whether they should be offshore or in Australia – the optimal answer will probably depend very much on your personal circumstances, such as your age, the time until you become Australian resident again and your current host country tax environment.  Recent changes to Australian superannuation, which have generally made it an even more attractive investment, also mean that many Australian expatriates need to consider long term planning to ensure they make full use of their superannuation entitlements.

• There are quite a few issues which can arise on return to Australia which are significant from a financial viewpoint and deserve to be treated professionally; these include the repatriation of any pension funds and the (tax) treatment of any funds or investments which have been amassed offshore.

Australian expats almost invariably return to Australia, rather than settle overseas, and this makes it important for you to properly structure your affairs with the Australian financial system in mind so that you do not miss out on opportunities and ensure that returns are tax effective. Expatriates also usually have a foreign dimension to their financial affairs, such as offshore investments, which also need to be managed effectively - bearing in mind both the Australian and offshore regulatory regimes.

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