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Chapter 1: What should Australians consider before moving overseas?
Hello and welcome to the Australian's Money Puzzle podcast. I'm James Kirby. Welcome aboard, everybody. Now, you know, we have listeners scattered all around the world and we often get correspondence from Australians who are overseas, often planning to come back, I think sometime perhaps in the near future.
We also have people planning to go overseas, of course, and sometimes it's them, sometimes it's their sons or daughters who are are sort of harboring this exciting idea.
And I also feel, for what it's worth, a constant stream of queries on access to pensions overseas for those who are fortunate enough to find that they actually are due a pension in some other country because they worked there for a number of years. I worked in a couple of countries overseas and I checked out all my pensions and guess what? I didn't stay anywhere long enough to get any.
Having worked like an expat It's a fascinating area. I haven't done it on the show before, but I have the perfect person once more to talk about this issue. It's Brett Evans. He's from Atlas Wealth Management and he's based in Dubai. How are you, Brett? Good morning to James. How are you? Very good. Thank you.
It's interesting that I wanted to just introduce broadly to the listeners some of the key issues. And I thought we would talk about one of the things I wanted to actually open with was Where is hot, if you like? Hot might not be the right word, but where is most popular? There was a time, obviously, where Australians would naturally have gone. I worked in Hong Kong years ago.
It was full of Australians. Very easy to go there then. I worked a little bit in London, which was, of course, needless to say, absolutely loaded with Australians. But I believe that it's quite different now. That Singapore, for instance, outrates Hong Kong. It wouldn't surprise me, but you can test me on that one. Dubai and other parts of the world. Has it changed where people go?
Always. And it's either geopolitical change, which is what we've seen out of Hong Kong, you know, pre certainly the handover in 97. Yeah, it was pretty hard not to bump into an Aussie, even post handover. It was still an amazing place. Then we saw that geopolitical change.
Ructions with Yellow Umbrella Brigade and all that happened through COVID sort of took the shine off Hong Kong, certainly put the shine back on Singapore. But that as a result of Singapore certainly became very popular, became very expensive. And quite often it priced out a lot of expats and they also had the localization rules where You couldn't just hire an expat.
You had to try and hire a Singaporean first. And then if you couldn't hire a Singaporean, then you'd hire an expat. So it became a bit more difficult. So, but look, Hong Kong, Singapore is still popular. Certainly London has always been a rite of passage, pulling pints in the pubs and so forth. But we have seen a lot of changes in the last 12 months with respect to the nom-nom laws.
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Chapter 2: What are the hidden costs of being an expat?
As of the 28th of February, it hasn't really softened. It's just been put on pause, I guess you could say. So we're still talking to a lot of folks who are coming into the Middle East, whether it's Dubai, Abu Dhabi, Qatar, Riyadh. That's still popular, but people are just seeing how this Middle East conflict goes out and whether it settles down.
Was it something that you ever considered prior to the Iran crisis that the area which clearly was thriving for so long, and I've been to a lot of the Emirates and I've seen it in action, but did it surprise you what happened? And more likely, do you think it has disturbed the attractions of the Middle East in any way? Surprised everyone.
You know, expats, Emiratis alike, we're all shocked. You know, when we have twice the amount of missiles and drones compared to, say, Israel, you've got to ask that question. So I think there's something deeper behind there based on a jurisdictional issue there that I'm probably a bit too low a pay grade to understand.
You're flying in and out of Dubai all the time right now, yeah?
Yeah, that's right. Yeah, I'm in Zurich right now presenting to Australians.
Are the planes half empty?
No. Now I flew up to Geneva early this week and the plane was full. Business is getting back on with it. We had a brief period of alerts, but that sort of died down now. It's funny how they've changed the process. So actually they've embedded now these types of events into their systems. So they don't just suddenly stop and go, put their hands in their ears and say, well, stop.
They understand very important to keep going. So I talked to someone two weeks ago who is arriving next week into Dubai for a new job. So the appeals there, maybe not as big as it was, say, in January and February, but I think that'll kick up again because we do see a lot of people moving to the who are trying to get ahead.
And with the changes in tax laws, we may see more of that coming out as well soon. Okay, very interesting.
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Chapter 3: How can expats effectively bring their money back to Australia?
They removed the main resident exemption for non-residents, which means that if you are a non-resident for tax purposes and you sign a contract to sell your former principal place of residence in Australia, then you'll pay capital gains tax back to the day to purchase. There's a couple of exclusions called life events that not many people qualify for.
So generally the idea is, is before you move, you need to work out whether you intend to sell that property while you're away.
Okay. There's a terrific piece of information straight away. Worth having you on the show already just for that, Brett. Okay. Very good. Now, can I ask you something very, because I'm thinking back, personal experience, very broadly.
It seemed to me, having done it, and we were all expats as such, that my social circle were largely expats in Hong Kong, that you either stayed for a short time, like a year and a half, or you stayed for a long time, five years. But the worst thing was to stay for two or three years. This was kind of like a common precept at the time. But what's your view?
Look, I think there's the tax view and then there's the personal view. To me, you haven't really put down your roots until two years in. That's when you're sort of settled in. You know where to buy your Vegemite. You know how to navigate the system and you've got the bandwidth to enjoy where you live. Anything before that, it's crazy. You're trying to understand new systems and everything.
You also have the added complication too that in the ATO's eyes that if you do leave and come back then they view that as temporary so therefore you haven't severed ties with australia and therefore depending on what country you go to you might be double taxed so that's a consideration as well too so to me we've seen a change pre-covered everyone was in and out all the time
COVID changed everything for a lot of people. And now we're seeing people moving overseas and buying property and putting down roots. And that timeframe, instead of a two to four year average, now it's sort of sometimes a three to 10 year average for a lot of folks. Okay.
And would you say very broadly that it's much financially more rewarding to stay longer, like the three to 10 year rather than the one to three year?
Look, I think it is. I mean, in two years, the cost of moving your furniture, flights, just the chaos that goes around both relocating to and fro. You need an ROI on that investment, time and money to do it.
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Chapter 4: Is your bank providing the best deal for international transfers?
But the problem is because they have the comforts now, they're very expensive on the ground. And that's, I'm talking about the people who don't bring a family with them. There will be even more so when they do. Tell me about that side of things and how people can deal with that.
Look, Four years ago, Dubai was a bit of an oasis and a utopia because the prices hadn't changed, but it was becoming popular, more and more popular. And with that surge, I think a thousand people a day over the last 12 months have been moving to Dubai. So with that comes that inflation that builds everything up. So rent and school prices and everything came through. To me,
The popularity of Dubai also means that you're not going to get the big wages because there's 10 people competing for the same role. They're not begging James to move to Dubai. You know, there's 10 people who are happy to take James's spot for 10% less. So sometimes the world needs a bit of a reset and who knows this regional conflict might be good for Dubai in terms of just calming things down.
But what we see is those flows sort of go elsewhere. So if you're looking at Dubai, maybe you go, you know what? I wanted Dubai over, say, Riyadh, but Riyadh hasn't had the experience of what Dubai has had over the last couple of months. So maybe I'll try Riyadh. So people hunt around.
And if you're what I call a sort of a vanilla profession, like an engineer, an accountant, a lawyer, you have that luxury of being able to shop around those different jurisdictions.
some industries you can't do that so to me there has to be that reset and i think we've seen that happen with singapore as well just recently as well that's starting to calm down as well too because what happens is they price themselves out of the consumer's pocket and budget and then people just elect to leave so then things start to settle down now so it's sort of that self-moderation but as you say you know if you look at say scenarios of in europe for example
depending on where in france or depending on where in switzerland depending on which canton switzerland you are you'll have a completely different experience and you do need to go to that next level to see okay yes at a gross level i'm being paid this and my tax late's this my net is this okay how much does it cost to go to school what's the groceries like you have
just a vast difference of different countries with different experiences.
Okay. We'll have a break and we'll be back in a moment. And I'm going to talk, we're going to get deeper into this, which I think you'll find very interesting. Brett is an expert in the area and specialised in it very early in his career. And I think it's probably been a very fruitful specialisation. Back in a moment. Hello, welcome back to the Australian's Money Puzzle podcast.
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Chapter 5: What are the tax implications for Australians living abroad?
So there's places that you can make a lot of money. And from our client experience, that is the United States if you are in tech. The amount of people we meet who are young guys and girls, 20s and 30s, walking around with $50 million in their pocket is, I wouldn't say common, but it's not uncommon.
We're talking Silicon Valley, are we?
Yeah. Ending in AI or... Look, there's some of the roles we see that are the C-suite, very high-paying roles. There are a lot of Australians in those roles. It's amazing how if you... throw back a few rocks in some of the Fortune 500 companies, you'll find a lot of Aussies stacked up in the upper echelons there. It's quite amazing. So there's that.
I don't think the jurisdiction that you can make a lot of money and have a high paying salary exists anymore. And the reason being is what happens is the reason the jurisdiction is cheap is because the salaries are cheap. So you get that natural inflationary effect. That's what happened in Dubai. In Dubai, it was a lifestyle that was cheap.
You didn't need to be paid a lot to have a very comfortable life in Dubai. Obviously, the salaries went up, the cost of living went up, and that's what we've seen globally. And it's sort of, you know, with this digitization of the world, People are very clueless now in terms of I can go here.
And what we're now starting to see is people sort of work in one location and live in another, and they sort of commute in a digital sort of way to sort of get the best of both worlds. So we do see, for example, people living in Portugal under a very favorable visa for Australians, but working overseas in, say, Saudi, and they commute back and forth.
So people have to become more clever now to really try and get those ā There's true deals.
Let's talk about coming back to Australia, where I often get correspondence on this one too, where people are saying, we think you're coming back. What do we do? How do we do it? Are there any general rules that you think people should be aware of as they are listening to the show, sitting wherever they might be thinking?
And I know people listen to The Money Puzzle to keep in touch, you know, with things here and particularly financial affairs.
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Chapter 6: How do changing geopolitical climates affect expat choices?
Oh, really? So who's better?
Yeah, they make a killing. So we tend to use currency brokers. OFX in Australia, ASX listed is a good one. Wise, CurrencyFair, all those sort of third-party providers. You're getting 0.4% to 0.5% margins on your FX, which if you're transferring $1,000, we're not talking sheep stations, but if you are transferring $100,000 or $1 million, it could be a huge difference.
Sorry, and the big global banks, what are they charging? 3% to 5%. HSBC is probably one of the worst. Unless you're a premier client, you qualify for the upper echelons. Yeah, the big banks will rely on your laziness.
3% to 5% on an internal bank transaction?
Yep. They rely on your laziness of just being able to pick up an app and go, bang, the money's there, real time. People don't run the numbers. And when we run the numbers, they're quite staggering.
Very interesting. That is very interesting. Okay, we'll take a short break. Back in a moment. Hello, welcome back to the Australian's Money Puzzle podcast. James Kirby here with Brett Evans of Atlas Wealth Management, Dubai-based Australian expat affairs expert. We were just talking about, you mentioned at one stage about some pension systems don't let you take the pension.
So for instance, you might be owed, I'm guessing, a British pension and you can't get at that. Let's say you work there for 10 years, you're entitled to a British pension. You come back to Australia, but you can't bring it with you. You've got to waste money. until your retirement age in Britain to bring it back. Is that how it works?
55.
Yeah. Okay. And similarly, Australia is the same, right? You can't, let's say you go, let's say today you're 38 and you decide to go to Dubai and you end up living there the rest of your life, but you can't take your Australian super out till the day you retire at 65.
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Chapter 7: What financial strategies should expats implement for long-term success?
So for moving overseas, you've got two years virtually to wind it down. and clean it up. Either you amalgamate it with someone back in Australia or you wind it down, go to cash and go into a retail or a industry super fund.
Can I make contributions to my Australian SMSF when I work overseas?
No, you can't because that breaches the active members test. So what we do in those sort of situations is we'll set up a separate retail super account, which you can contribute into and And then when you move back to Australia, then you roll the retail super into an SMSF that you originally had. So SMSFs are very unpopular for expats.
Interesting, which goes to show folks on this sort of stuff, you really do need advice. I don't think I've had a show where I knew so little, right?
For a long time, certainly in the last couple of years, I don't think I've had a guest on where I knew so little about the questions I was asking or the answers were quite so surprising, which makes it all very interesting, I hope, for everybody involved, including the listeners. Thank you very much for talking to us today from Zurich, but more generally from Dubai. Great to have you on the show.
Thanks for coming on. Appreciate it, James. I appreciate the offer and hope everyone enjoyed the content. I'm sure they did. That was Brent Evans, folks, from Atlas Wealth Management, Dubai-based expert on expat financial affairs. So I hope you have learned something. I'm sure you have, whether you're thinking of coming or going.
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Chapter 8: How can expats prepare for returning to Australia?
Today's show was produced by Leah Samaglou. And do keep the correspondence up, themoneypuzzleattheaustralian.com.au. Talk to you soon.