The end of the Australian financial year is rapidly approaching and it’s important to explore your options to reduce your taxable income in Australia sooner rather than later. Many Australian expats will ignore their tax position in Australia assuming that either there is nothing that can be done, or they simply don’t have the time to explore the options in any reasonable level of detail.
This week we explore the top tax deduction strategies for Australian expats. Whether you’re an Australian property investor, have superannuation accounts in Australia or other tax liabilities there, this is not something that you should ignore.
First of all, let’s consider the top tips for Australian Expat Property Investors.
- Consider Any Repairs and Maintenance
You may have been considering making minor repairs or covering some of the maintenance jobs on your property. By making repairs this financial year, you could elect to claim the deduction in this financial year and therefore reduce your overall tax liability. You need to be sure that they are repairs and meet the requirements of allowable deductions, rather than renovations or upgrades to your property, which would in most cases simply be added to the overall cost base for tax purposes.
- Call Your Mortgage Broker and Pre-Pay Interest
You may wish to look at pre-paying up to 12 months of interest on your investment property loans prior to the end of the financial year and claim the full deduction in this financial year. In order to pre-pay interest, speak to an investment-savvy mortgage broker and ensure that the strategy is right for you. They can work with you to lock in a reasonable rate for such a strategy.
- A Good Chance to Review your Interest Rates
The end of the financial year in Australia can be an excellent time to review the interest rates and features of your existing loans. When was the last time you reviewed your interest rates? Do you even know exactly what you’re currently paying? As an Australian expat, you can still look at refinancing strategies with a range of Australian lenders.
With the RBA recently cutting the cash rate to a record low level of 1.25%, you may find that you can obtain a much better interest rate by simply enquiring. It’s important to speak to a savvy mortgage broker that is familiar with the Australian expat lending landscape, as you will often find that the lender has a different set of criteria when assessing Australian expats.
Let’s consider strategies for Superannuation for Australian expats
- Explore Contributions for your Spouse
Has your partner or significant other earned less than $13,800 this financial year? If this is the case then you could explore the option of contributing up to $3,000 into their superannuation fund and look to claim a tax offset of 18%. While this money would be locked in superannuation until you reached a condition of release, such as your retirement, this is an excellent return on your investment by any benchmark.
- Consider making a Concessional Contribution to Superannuation
With the end of the financial year approaching, you may want to consider the option of making a concessional contribution into your superannuation portfolio to claim the deduction in this financial year. It’s important to review what your taxable income in Australia is likely to be this financial year before making a contribution and ensure that the strategy is right for you. It’s important that you notify your superannuation fund of your intent to claim the deduction and ensure that the right documentation is completed for your tax return. Your accountant or financial planner should be able to assist you with this.
You will still be liable to pay 15% contributions tax for transferring the funds into your superannuation account, but the tax deduction will likely save you a minimum of 32.5% on your tax bill. For example, if you had a positively geared property generating a taxable income of $20,000 this financial year, by contributing $20,000 to your superannuation fund and claiming the tax deduction, you could find yourself saving $3,500, and keeping more of your funds outside of the hands of the Australian Tax Office (ATO).
- Review Your Risk Profile for Your Investments
The end of the financial year is a great time to review the asset allocations of your investment portfolios, including your superannuation and non-super investments. When was the last time that you rebalanced your portfolio? Are your investments still appropriate for your risk profile? Speak to your financial planner and make any changes that are necessary to ensure your portfolio remains aligned to your risk profile and financial goals.
With just a few days before we’ll reach the end of the financial year, ensure that you’re speaking to your financial planner and accountant to start planning for the new financial year and ensure that you’re not missing out on opportunities available to you.
To your financial success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
Australian Expatriate Group is a division of Global Financial Consultants in Singapore providing specialist advice to Australians living abroad.
To learn more about how we may be able to help you, please contact us:
✆ +65 8282 5702
To discuss how these changes affect you, click here to book a complimentary consultation: http://bit.ly/Book-Your-Consultation
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.
*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.