Superannuation for Expats
With assets totalling over $2 TRILLION, Australian superannuation is one of, if not the, most tax-efficient way for Australians to save and invest for their retirement. Unfortunately, for many previous residents of Australia, it becomes one of the many facets of life down under that expats simply wave goodbye to…an issue that can become a costly mistake.
Firstly, let’s dispel some of the common myths that we hear all too often from expats in Singapore and abroad:
- “You can’t contribute to superannuation once you leave the country and no longer work there”
This is quite simply, rubbish! Superannuation contributions can be made by an individual with an Australian tax file number, whether an Australian resident or non-resident. The specific rules with regard to your eligibility to make contributions to superannuation remain unchanged.
- “There are no tax advantages to contributing to superannuation as a non-resident of Australia”
Wrong again! There could be many cases where contributing to your Australian superannuation could be far more tax effective than your options offshore. It could be the case that your superannuation is simply taxed more favourably on the capital growth and income than your offshore options. It could be the case that a concessional (tax-deductible) contribution to superannuation could be a tax-effective investment strategy for you.
- “I can’t make tax-deductible (concessional) contributions to superannuation as a non-resident, so what’s the point..?”
Non-residents can make both concessional and non-concessional contributions to their superannuation funds. It is important that you discuss with your adviser and tax agent to ensure that it is an appropriate strategy for you.
As an Australian-trained and qualified Adviser in Singapore, there is a general rule of thumb for expatriates looking to return to Australia – that is that you should aim to repatriate with the maximum allowable investments inside the tax-efficient superannuation vehicle as is appropriate for your own financial goals.
Now that I’ve dispelled some of the common myths that I hear from Australian expats in Singapore, what should you do if you have superannuation in Australia:
1. Find a recent superannuation statement/s
If you don’t have one, contact your superannuation provider and request one. You may also be able to access your statements online if you have your access set up correctly.
2. Review how many superannuation funds you have
If you’re like many people, you’ll have multiple funds. It’s time to stop paying unnecessary administrative fees and speak to a qualified Adviser who can help you to consolidate these funds and ensure your investment strategy is appropriate for you.
3. Review your superannuation investments
If you’re currently approaching retirement, it may not be an appropriate strategy to have all of your superannuation invested in high-risk equities. Speak to an Adviser and review your investment strategy and ensure that it’s aligned to your own personal financial goals.
4. Review your particulars
Have you nominated beneficiaries for your superannuation fund? Are they binding? Have you updated your address with your superannuation provider? These housekeeping matters are important and can save you a great deal of time and money further down the track.
5. Review your insurance inside superannuation
Are you paying for insurance that you don’t need inside superannuation? Are you paying for insurance outside of superannuation that is simply duplicating what you already have in place? It’s important to review your insurance policies within superannuation and work with an Adviser to determine an appropriate level of cover for you.
6. Analyse a range of contribution strategies
With non-resident tax rates starting at 32.5% from the first dollar you earn, contributing to superannuation could save you a considerable sum. I recommend that you discuss with an experienced Adviser whether a contribution strategy would add value to your own financial situation.
Don’t ignore your superannuation like many other expats, take advantage of the tax-efficient structure provided to you and ensure that you’re on track to achieve your own financial goals.
To Your Financial 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.
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