When moving from one country to another, there are several factors you need to consider. One of these is financial and tax planning, as this can help you grow and boost your finances over the medium to long term.

As a working expat, staying up to date with the latest tax reliefs and allowances will allow you to invest your money in tax-efficient products and ensure you don’t pay any more tax than you need to. This should, however, be an ongoing process as taxes change regularly.

As an Australian expat living abroad, you have the opportunity to enjoy some generous tax advantages when investing offshore. This can help you increase and preserve your wealth in a secure and reliable way, while remaining tax-efficient. Like many Australian expatriates, you may choose to return to Australia to live for a period or even permanently. It is important that your financial plans are flexible enough to meet changes in your lifestyle, such as becoming tax resident in Australia.

OFFSHORE INVESTMENT BONDS

Offshore Investment bonds are a good choice to achieve this. They work best in the long-term, provided you comply with the right rules and processes along the way.

Investment bonds give you a range of assets to invest your money in, from currencies, fixed interest, ETFs, managed funds, and direct shares which can be used to structure a portfolio suited to your risk profile. As ever, the value of your investment will rise or fall based on the performance of its underlying investments; however, results can be optimised by appointing a trusted and reliable investment advisor such as Bluestar AMG.

THE 10-YEAR RULE: INVALUABLE FOR AUSSIE EXPATS

As an Australian expat, looking to utilise an offshore investment portfolio, it’s well worth understanding and leveraging the 10-year rule. Basically, this rule dictates that certain life assurance investment bonds which have been held for 10 years can be withdrawn back to Australia tax-free. Two-thirds of the income drawn from the investment in year 8 is assessable for income tax; however, this drops to one third being assessable in year 9, and then all withdrawals from year 10 onwards are tax-free.

Expats specifically can enjoy the flexibility of accessing international products in a tax-efficient portfolio by setting life assurance investment plans in offshore jurisdictions outside of Australia.

These products will subsequently not be subject to Australian corporate tax leaving you 25% better off (rate applied to most Australia-based investment bonds), in terms of the money you are able to withdraw when you require the funds.

Typically, this is structured via a Personal Portfolio Bond (PPB) which works well for people with a lump sum of cash ready to invest; or a regular savings plan which is better suited to those looking to pay a fixed monthly or quarterly amount on an ongoing basis for the long term. Regular savings plans are popular and commonly used in conjunction with superannuation
to bolster retirement assets.

Using an offshore investment vehicle gives you the reassurance that you are investing your hard-earned savings in the most tax-efficient way possible. The above is just a general overview of offshore investments and the workings of the 10-year rule. For further details, please feel free to get in touch.

This post contributed by Morgan Grice, Senior Investment Adviser at Bluestar AMG. He has been working as an adviser in Australia and Malaysia for over 15 years. If you would like to find out more about tax-efficient investing, please contact him via the below methods:

Email: [email protected]
Telephone: +6017.622 1814
WhatsApp +6017.269 2246