No matter whether its the cost of living, the lifestyle, or just to be close to family – if you are thinking that you will retire abroad from Australia then here are some things you should consider before moving overseas.
1. Tax Implications
Moving overseas has numerous tax and financial implications for any Australian, but for Australians that plan to retire abroad these can be even greater. Since many retirees will have accumulated a multitude of investments (managed funds, shares, property, and other financial products promoted by financial advisors), retirees who plan on moving abroad need to carefully consider the tax implications that will apply to these investments.
The first question, you will need to consider is whether or not you will remain an Australian resident for Australian tax purposes. In our Special Tax Report we discuss many of the more common tax implications of moving abroad, however if you plan to retire abroad you should discuss all the tax implications with your tax and financial advisor.
2. Self Managed Super Fund (SMSF) Compliance
If you have established a self managed superannuation fund, you will need to discuss with your financial advisor how you will manage your compliance obligations for the self managed super fund (SMSF) whilst you are living abroad. If you fail to meet the compliance obligations for your SMSF, then the superfund is liable to pay tax at the top marginal tax rate.
For many people, meeting the government requirements can be difficult. There are some limited solutions to ensure a self managed super fund meets its compliance requirements when its members move overseas. We discuss the compliance obligations and possible solutions in our article, SMSF Nightmare for Australian Expats.
Living in Australia we all take healthcare for granted. Whilst Medicare can always be improved, and waiting lists can always be shortened, Australian public healthcare is probably one of the best in the world. In addition, if you want or can afford private health insurance, private health insurance is available to everyone, and health insurers cannot deny you insurance based on age or pre-existing illnesses (other than needing to serve waiting periods).
However when moving overseas, the quality and cost of healthcare can vary greatly. For some countries, Australia has reciprocal health agreements whereby Australians can access limited or emergency medical treatment. For peace of mind, you will generally want to obtain some form of international health insurance to ensure you can get appropriate medical treatment, cheaply and quickly, when you need it. However, as your healthcare costs are higher if you have a pre-existing illness and as you get older, the international health insurers may charge you a higher premium, refuse to insure you, or exclude certain treatments from your policy.
Before leaving Australia, you should be sure to obtain a quote for international health insurance from a reputable company like Cigna Global to understand how much the insurance will cost, and whether they will be willing to insure you.
You should also understand that your entitlement to use Medicare in Australia is linked to your residency in Australia. You may think you can just hop on a plane back to your home state and get treatment, but it is not that simple. As an Australian living abroad you are generally only entitled to treatment under Medicare for the first five years after moving abroad.
4. Access to Australian Pension
If you retire abroad, it is still possible (subject to normal eligibility rules) that you can receive an Australian pension. Unless there is an international social security agreement in place, you will generally need to reside in Australia for at least two years before you will be able to continue receiving the Australian pension from abroad. More information on Australian pension rules for those that retire abroad and relevant government websites is found in our article Am I entitled to an Australian pension if I retire overseas?
5. International Money Transfers
When you retire abroad, you will no doubt want to establish a cost effective way to transfer money from Australia to your new country. In my experience what works well for most people is to first open a local bank account, and then secondly open an international money transfer account with an online currency exchange broker. The online currency exchange brokers will enable you to transfer your Australian dollars cheaply and easily from your Australian bank account into your local bank account, ensuring you save thousands of dollars on fees and poor exchange rates. I have found OFX and HiFx to be reputable companies and support most currencies and countries. I have written more about this in my article Why I don’t use my bank for international money transfers.
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Disclaimer : This information is for educational purposes only and does not constitute financial or taxation advice. As this information is not advice and has been prepared without taking into account your objectives, financial situation or needs you should, before acting on this information, consider its appropriateness for your circumstances. Independent advice should be obtained from an Australian financial services licensee before making investment decisions, and a registered (tax) financial advisor/accountant in relation to taxation decisions. We may receive referral commissions from companies mentioned on this website. To the extent permitted by law, we exclude all liability for any loss or damage arising in any way.