Five financial & tax considerations before moving to Fiji from Australia
This is a guest post by Craig Joslin. Craig is an Aussie expat and founder of The Australian Expat Investor, where you can get heaps of tips on saving money and building wealth while living in Fiji or anywhere else in the world. Check out his blog or get his free e book ("9 Painful Financial Surprises That Could Cost Australian Expats Thousands of Dollars") at The Australian Expat Investor.
It’s easy to get excited when moving to Fiji from Australia. Beautiful beaches, palm trees, sipping cocktails by the pool. But before you get too comfortable, take some time out to make sure you consider the tax and financial implications – it can be quite significant.
Here we provide a quick overview of some of the Australian tax and financial considerations of moving to fiji from Australia.
1. You Will Need to Determine Whether You Will Be Considered A Resident Or Non Resident For Australian Tax Purposes
The ATO use a number of different tests to determine whether you are a resident or non resident for Australian tax purposes. There are however no conclusive rules, and your residency will be based on the facts of your specific personal situation.
For most expats, the most relevant test is the domicile and permanent place of abode test. Under this test, to be considered a non-resident for Australian tax purposes, you need to demonstrate you have established a permanent place of abode overseas. This will, among other things, require you to demonstrate that you have severed your social and economic ties with Australia, plan to live overseas for at least two years, establish a permanent home overseas, and abandon your residence in Australia (ie. selling or renting out your house).
It is important to get your tax residency determination right, so you should discuss your tax residency with your Australian tax advisor before leaving Australia.
There is also a double taxation agreement between Australia and Fiji, and so although you may be deemed to be an Australian resident for Australian taxation purposes according to Australian law, the double taxation agreement may over-ride this.
2. Implications of Being a Resident or Non Resident For Tax Purposes If you are considered to be an Australian resident for tax purposes, then you will need to declare all of your global income to the Australian Tax Office. In the event you have paid tax on your income in Fiji, then you may be entitled to a tax offset in Australia.
If you are considered to be a non-resident for Australian tax purposes, then your overseas income will generally not be taxed in Australia. How each source of income will be taxed will ultimately be determined in accordance with the double taxation agreement between Fiji and Australia to ensure your income is not taxed by both countries.
3. International Money Transfers
Sending money to and from Australia will be expensive if you use the traditional international money transfer options with your bank. To ensure you pay minimal fees and get the best exchange rate, you can consider two options.
You could open a multi-currency bank account with a company like ANZ. Often multi-currency bank accounts offer competitive exchange rates, however they make up for it with higher account keeping and transaction fees. So make sure to check the fees and exchange rates.
Your second option is to open a local currency bank account and use an online currency broker like OFX to transfer money between Australian dollars and the Fijian dollar. Unlike an international money transfer with your bank, OFX will tell you the exchange rate they are offering upfront along with all the fees involved.
I’ve included healthcare in the list of financial considerations because there are a number of things to consider that could cost you a considerable amount of money.
Firstly, access to Medicare in Australia. Healthcare in Fiji is not generally to the standard most Australians are used to, and for certain medical treatments you may want to return to Australia for treatment.
Australians that move abroad are generally entitled to continue using Medicare services in Australia for up to five years from the time they leave the country. Be aware that you will find it hard to get clear advice from Centrelink on this (I definitely did). So you will want to make sure that your medicare card doesn’t expire, and you check in advance of any medical procedure that you are covered.
Secondly, Medicare Levy. If you remain an Australian resident for tax purposes, then you will remain liable for the medicare levy in Australia. Even worse, if your income exceeds the relevant threshold, then you will also be liable for the medicare levy surcharge if you do not maintain private health insurance in Australia.
5. You May Still Need to Complete an Australian Tax Return
Although, the ATO may consider you to be a non resident for Australian tax purposes, you may still be required to complete an Australian tax return. There are a number of situations where you may need to continue filing a tax return, including if:
· You have rental income from Australian properties
· You have employment income in Australia during the tax year
· You have not paid withholding tax on bank interest or share dividends.
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.