For many Australian expats in Singapore, the end of financial year in Australia is a time of the year that is largely forgotten about. This can be a costly oversight and put more of your hard-earned dollars in the pockets of the tax office. I’d like to share with you some key considerations for you to make the most of your finances at the end of financial year.
Before I outline my top 5 tips for Australian expats abroad, it’s important to highlight two key points to emphasize why the end of the Australian financial year is an important time and should not be overlooked.
- Non-Resident Tax Rates: As a non-resident of Australia, you will start paying tax on your Australian income at 5%, from the first dollar you earn. There is no tax-free threshold that you may have enjoyed while you resided in Australia.
- Taxable Australian Property: As a non-resident, you’ll pay tax on your Taxable Australian Property. For many, this means paying tax on the rental income you earn from your investment properties held in Australia.
Please note that I am not a tax adviser and that this is only general information. For specific tax advice, I recommend that you speak with your qualified tax agent or accountant.
As an Australian expat, you should be considering the following:
- Making Concessional Superannuation Contributions: Making a tax-deductible contribution to your superannuation fund can be an excellent strategy to reduce your taxable income in Australia. This also allows you to boost your retirement savings. Make sure that you’re aware of the contribution limits as penalties can apply if you exceed them.
- Prepaying Interest on Your Property Loans: If you have loans on your investment property/ies in Australia, it could also be a worthwhile strategy to consider prepaying your interest for the following financial year. This will allow you to create a deduction for this financial year, reducing your tax payable.
- Review Your Property Portfolio: If you have rental income on your investment properties in Australia that you are paying tax on, then it may very well be a worthwhile strategy to add a new investment property to your portfolio. Property has always been a very attractive asset class for Australians and continues to be. I suggest discussing this with a qualified professional to review your options and come up with the right strategy for you.
- Review Your Insurances in Superannuation: When was the last time you reviewed your insurance held within your superannuation? For many expats, there are many issues that are often overlooked such as duplicate insurance, expensive premiums, inappropriate cover and insufficient cover. It’s important to work with a professional adviser and ensure that your insurance is appropriate, accurate and at a competitive price for you.
- Review Your Withholding Tax Implications: As a non-resident for Australian tax purposes, you will pay withholding tax on your bank interest, unfranked dividends from your share portfolio and any royalties received. This is typically charged at 10% on your bank interest and 30% on your unfranked dividends. Is there are more tax-efficient way you can structure your investments? Can you reduce the tax implications of your investment strategy?
The end of financial year is fast approaching and it should not be forgotten. Speak with a qualified adviser today and find out if there are strategies you can be taking advantage of to reduce your Australian tax liabilities.
To Your Investing Success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Adviser with Australian Expatriate Group of Global Financial Consultants providing specialist financial advice and portfolio management services to international and local professionals in Singapore.
Book a complimentary consultation here.