Home, Sweet Home
With increasing numbers of Australian expatriates starting to head home from Singapore, and elsewhere, it’s vital that you plan properly for your repatriation.
Whether you’re taking a position back home with your current employer, you’d prefer your children complete their schooling in Australia, or it’s just time for a change, by planning your repatriation properly, you can take advantage of your situation as an Australian expat.
Outlined below are some of the key considerations in planning your repatriation to Australia:
First and foremost, as most of us will be aware, the tax rates in Australia are substantially higher than they are in Singapore. It’s important, therefore, to plan properly to minimise their impact. There are two key strategies available to us as Australian residents, which are superannuation and property investment.
As an Australian resident, your superannuation is a particularly valuable investment and retirement vehicle, particularly if you’re nearing retirement.
Simply by maximising your concessional contributions, you can reduce your effective tax rate. Let’s consider the following example:
Taxable income $200,000
Tax payable as Australian resident $67,947
Concessional Contribution $30,000
Taxable income $170,000
Contributions tax payable @ 15% $4,500
New tax payable as Australian resident $58,747
Net tax benefit $9,200
- Rent vs. Buy Your Home
What area will you live in? What sort of house will you move into? What sort of neighbourhood would you like? There are many considerations when moving back to Australia, and for many of us our tastes will have changed since moving abroad. It can be a sensible approach to rent first to discover where you’d truly like to live if you’re not quite certain.
It’s then important to consider the tax implications of your deductible debt and non-deductible debt (i.e. the mortgage on your home) and the impact this has on your pre-tax earnings. If you own investment properties or have plans to get started, seek advice in structuring your financing correctly to obtain the greatest tax benefits as an Australian resident.
- Investment Vehicles
As an Australian resident, tax planning will become a lot more important in your financial planning. Should you invest through a Discretionary Family Trust, Company structure or Partnership? Is a Self-Managed Superannuation Fund an important element of your financial plan?
When considering complex investment and financial structures, it’s important that you seek the right advice to ensure that you’re not simply paying unnecessary fees for vehicles that don’t add value for you and your family.
- Offshore Investments
If you’ve set up offshore investment vehicles, it’s important to consider what role they’ll play in your financial future? How will you continue to monitor these investments? Should you retain them or repatriate the funds and contribute to your superannuation funds or otherwise? What are the tax implications if you were to retain such investment vehicles?
It’s also important to review the costs and benefits of such offshore structures in comparison to vehicles such as superannuation or family trusts.
If you’ve set up insurance offshore, be sure to review whether you’ll continue to be covered as an Australian resident. Should you retain your existing cover or is it more cost effective to take out cover from a domestic provider in Australia? Should you hold cover through your super fund?
Ensure that you weigh up the pros and cons of all options available to you, including the definitions outlined in the various types of personal cover, before you pull the trigger on any changes.
Your Repatriation Action Plan
Returning home could be a sad or exciting time for you and your family. Whatever the case, ensure you have a considered plan in place so that you’re not faced with unnecessary financial burdens upon your return home.
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group, division of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to international and local professionals in Singapore.
To learn more about how we may be able to help you, please contact us:
✆ +65 8282 5702
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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.