However, it is very easy to slip into bad habits and fail to exploit it all.
Australian tax advisor Steve Douglas from SMATS Group addresses are some common blunders expats don’t realise they’re making.
If you’re an Aussie living overseas, you will still be required to lodge a tax return if you collect any Australian property rental. Even if you don’t have any taxable Australian income, you will still need to inform the Australian Taxation Office that a return is not necessary so it doesn’t assume you are a taxpayer. Failing to lodge your return, or to let the Office know it isn’t required will result in a fine of A$1,050 per person, per year.
There is no real advantage to paying off the mortgage on any Australian property if it is being rented out. In fact, paying off a property that you may not live in later may cause great cost, as the funds could have been better served going towards the purchase of – or paying off the mortgage on – your eventual home. Use an Offset Account instead, if you are determined to reduce the cost of the interest.
Your buying budget will likely be far greater while abroad than when you’re living in Australia, thanks to your property rental income and often lower taxes. Try and buy your future home as early as possible, as it could save you thousands of dollars and boost your savings, as the money will go towards debt reduction rather than funding higher property cost.
Holidays, dinners and trinkets are all nice, but spend on these items in moderation and never lose sight of the most important objective: being able to pay off or significantly reduce your private home mortgage upon returning to Australia. Enjoy yourself, but take full advantage of the savings time while abroad because saving capacity may diminish or disappear when you’re home.
Many Australians get caught in overseas savings plans with high costs and long investment periods. which can be costly, especially when you try and get the funds back on your return to Australia. Always read the fine print, and be clear about the surrender and commission costs on any savings plan you may consider.
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From The Finder (Issue 297), March 2019
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