Australia is one of the major immigration nations. Did you know that 30% of our population are overseas-born and nearly 50% have a parent born overseas? We are all part of Australia’s rich cultural fabric, bringing diverse cultures, skills and of course, delicious food.
Navigating a new country can be difficult. Moving over here from NZ, I was lucky that cultural difference wasn’t a shock to the system, but there are still differences in many financial aspects so I can’t imagine how difficult it would be for people with language barriers. So here are the top financial considerations for an immigrant like myself:
- Pensions – if you’re planning to stay in Australia long term, then it is worthwhile to understand how Australia’s superannuation can support your retirement. Because this is mandatory in Australia, employers must contribute to your super account. There are a few countries, like UK and NZ, allow you to transfer your foreign pension into your Australia super account. But not all funds accept them and there are rules around how you can actually use the money and tax implications too.
- Assets – what assets do you have back in your home country? Should you hold onto them or is it better to sell? If you do sell, how would you access the funds? There is also a difference between being an Australian for tax purposes, to what Department of Home Affairs considers as an Australian resident. For example, if you’re here on a temporary visa, then you may not be liable for capital gains tax (CGT) given your visa status as CGT applies to taxable Australian assets.
- Foreign income – Australian has specific rules for foreign income. You may need to declare and pay taxes on it. But it does have agreements with many countries to prevent you being taxed twice on the same income.
- Transferring money to Australia – I know I may be stating the obvious but do watch for those little hidden pesky fees when you’re transferring money. Sometimes an exchange rate on a platform may look quite attractive until add up all the fees they add right at the end.
- Insurances – the big one for me was healthcare because your health is your number 1 asset! If your home country doesn’t have a reciprocal healthcare agreement with Australia, then you are may not be eligible for medical care under Medicare. It may be a good idea to get private health insurance to ensure you do have the same level of care as what you would get with Medicare because you want to protect your number 1 asset – yourself! There are some other insurances to consider like home and content insurance, car insurance and lie insurance.
- Beneficiaries – if you have overseas beneficiaries as part of your estate planning, what are the implications? For example, if your beneficiary lives in UK, then they might be subject to inheritance tax on the assets over a threshold. Or if that country doesn’t have a double taxation agreement with Australia, then what are the tax repercussions?
- Buying a property – the fees for buying a home to live is going to be higher. Chances are, you will need to have a larger deposit and pay higher stamp duty fees. Financial lenders also have specific policies for temporary and non-residents. This means the interest rates, loan terms, and the size of deposit you will need. You also generally need approval from the Foreign Investment Review Board for approval when you are buying a residential property, which can add time and complexity to the purchasing time.
So here we go, navigating this landscape can be a little challenging, but with the right information and professional advice, you can plan properly and make informed decisions for your unique circumstances.