International retirement checklist

International Retirement Shortlist

The idea of leaving Australia for good – or for at least a very long time – is daunting. When mulling it over, the prospect can be broken down into two hurdles: first, there’s the emotional side – why would you leave? Then there are the logistics. What’s to become of your home? Your finances? Thanks to Exfin, we have a checklist for Australians looking to expatriate in retirement.


POSSESSIONS AND TAX

  • Determine which of your personal effects are to be:
  • Carried with you as personal baggage
  • Sent as airfreight or unaccompanied baggage
  • Shipped
  • Stored, or
  • Sold

Take digital photos of the main items included in your shipment to assist in any later insurance claims – these photos should be backed up and kept in a secure and accessible online location. Select a relocation agent or removals firm – arrange for a minimum three quotations. Check that all firms are basing quotes on similar shipping volumes and similar services (e.g. “door to door” or “door to port”) and are appropriately accredited. Refer to the Australian International Movers Association website for list of accredited removalists. Arrange insurance for items being stored and shipped. Storage firms and removalists will offer insurance cover as a percentage of total value. Compare coverage and premiums from third party insurers – it will often be much cheaper although you may not get coverage for “self-packed” items. Rent out or sell your current house if you own it – provide “adequate” notice of your intention to vacate if you are renting. Discuss retaining exposure to the Australian property market with your financial planner. If renting your house out while you are away, carefully select the appropriate property agent and agree the rental level and any discretion you provide the agent to pay for repairs.

Tax losses made while renting out the property can normally be carried forward indefinitely and used when you return to Australia. You must continue to lodge tax returns in Australia if you rent out your property and it is normally advisable to appoint a taxation agent to prepare your Australian tax return. In the UK and US, there are Australian-based tax advisors who can provide tax briefings and complete both your Australian and UK/ US returns. If you retain a property in Australia which you rent out, arrange for your accountant/advisor to explain the capital gains tax rules applying to real estate, both in terms of main residences and investment properties. Capital gains tax with respect to property continues to apply regardless of whether you are resident, or non-resident, for tax purposes – but non-residents are now not able to claim the 50 per cent tax discount which normally applies to property sold after 12 months. As a result you may be advised to have any investment property professionally valued at the time you leave Australia.

RESIDENT STATUS
For tax purposes, it will be crucial to understand whether you are resident or non-resident for Australian tax purposes while overseas. This can have a fundamental impact on your income overseas, and needs to be determined with absolute clarity. Tax advice should be sought before proceeding overseas or accepting a contract of employment – the terms of the contract may have an impact on your tax status.

SUPERANNUATION
If you have a self-managed superannuation scheme (SMSF) and intend to remain overseas for a prolonged period and possibly work, you must discuss the tax impact of your non-residency with your accountant or tax advisor – the financial impact could be very serious unless managed properly. If you choose to work, you can continue, even if non-resident, to make contributions to Australian superannuation except in relation to an SMSF. But this is not necessarily the best approach to take – you should also seek tax/financial planning advice to determine the best approach in your particular circumstances, including participation in local pension schemes.

TRAVEL INSURANCE
Arrange travel insurance – carefully consider the coverage available against the likelihood that there will/might be delays in your outbound journey and in terms of potential medical costs. This should be done early – so that you are covered for any personal events that may cause delays or cancellation.

Discuss your planned absence overseas with your current private health insurer and understand the impact (if any) this will have upon your coverage on arrival back in Australia – particularly in terms of premiums payable and any waiting periods for coverage. Arrange to “suspend” your existing health cover rather than cancel it while outside Australia – this should enable you to avoid waiting periods if you return to Australia within a reasonable period. If you are likely to be outside Australia for a prolonged period consider the potential impact of the Lifetime Health Cover loading on your future private health insurance premiums.

Arrange international health insurance – there are some countries which have reciprocal health agreements with Australia but they are relatively few and cover is limited. Pay particular attention to whether your policy allows for re-entry into an Australian health fund without waiting periods on your return.

Take copies of your family medical and dental records with you – including any optical prescriptions and inoculation records. Note that any medical prescriptions you might have will not be valid overseas or vice versa in Australia. You will need to obtain “certificates of need” from a local, prescribing physician in order to (possibly) have the prescription filled overseas.

Visit a travel clinic well ahead of your trip to ensure that your family has received all appropriate inoculations for the countries you are going to live in and probably visit. Keep the record of inoculations with you while travelling.

LIFE INSURANCE
Review your life insurance cover for you and any spouse prior to commencing an assignment overseas to ensure it is adequate; and ensure that any life insurance coverage (new or old) covers you while overseas. Australian insurers will often provide life insurance cover to Australian expatriates, subject to a number of exceptions and limitations, and this can include TPD and possibly income protection. This is often more cost efficient than trying to access life insurance cover locally or through international insurers.

Store tickets, passports and other travel documentation securely and ensure they do not get packed into the shipped personal effects. Surprisingly, it happens (regularly).

OVERSEAS BANKING
Arrange for the payment of any ongoing invoices, such as insurance, while you are absent. Retain an internet bank account in Australia to administer any Australian transactions while overseas. Note that you will pay withholding tax of 10 per cent on any interest income while non-resident, and withholding tax also applies to dividend payments at different levels depending upon the level of franking.

If possible, set up a local bank account in your new country and forward some living funds in lieu of relying on debit /credit cards and carrying traveller’s cheques. This may be difficult due to local regulations and anti-money laundering requirements, but it is possible to open an account in the some countries prior to your arrival. Also consider establishing an offshore account. Prepare a list of companies and individuals that need to be notified of your change of address and provide a forwarding address. This should include your bank(s) and share registrar or broker.

WILLS
Ensure you have a valid will and that it is securely stored, with the nominated executor knowing the location. If you build up assets overseas, then you need to review how these are best covered – it may be preferable to have separate wills covering assets in Australia and the foreign country and you should address the custody of children. A local will may also be desirable in certain countries.

Consider arranging an enduring power of attorney to allow a nominated person(s) to look after your affairs in Australia.

DRIVING
Obtain an international licence so that you can drive in your new country. Note, however, that while an international licence may last a year, many countries require “residents” to obtain local licences within three to 12 months. Do not be tempted to drive beyond these periods without registration. Approach your local car insurer to provide you with a no claim certificate, or letter, giving details of your claim history. Depending on your new country, and your record, this can reduce premiums substantially.

MONEY TRANSFERS
In terms of transferring money, and particularly if you are going to be regularly transferring money back to Australia to meet mortgage or other obligations, establish an account with an ASX listed specialist foreign currency transfer company as an alternative to dealing with Australian banks – or simply as a means of comparing exchange rates on transfers into or out of Australia. Cost savings in this area can be very significant over the course of a long term assignment.

You might wish to retain a postal address in Australia for a few months after you leave – or during the entire duration you are away. You could also use a mail redirection service which allows you to remotely read, forward, retain or shred your physical mail online.

This checklist was originally published by Exfin International, and has been altered for the Retiree. Exfin International are experts on providing advice to migrants to Australia and Australian expatriates regarding the best, most reliable professional and financial services.

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Alana Lowes
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