Financial planning for expats in Singapore

Question: “How do I plan my finances when I don’t know how long I’ll be in Singapore?” 

They say the average time for an expatriate to plan to relocate to Singapore is two years, but they end up staying for seven years. With such a variance in time, this makes it hard for expats to plan their financial affairs. Many find that they just default to letting any kind of financial planning from Singapore slide.

But it is possible to get a tax strategy in place says Tristan Perry, Head of Tax, Australia at Select Investors Australia. As an expatriate tax advisor based in the Lion City himself, here he shares some financial planning for expats in Singapore which provide flexibility for those with an unknown exit date.

Place your investments in a tax effective structure

Setting up your investments in a tax efficient account which allows you to still enjoy capital gains tax free growth during your time in Singapore, and upon return to Australia, provides you with tax deferral if its pre-10 years of being set up, and tax-free access after 10 years. As far as financial planning for expats goes, these accounts are also recognised by the ATO and can further assist with asset succession planning.

Acquire a future home from afar

Consider acquiring your future family home while you’re still an expatriate and renting it out with a tax-deductible mortgage. Allow the tenants to assist you to cover the expenses, pay part of your mortgage and build up some tax losses. When you return to Australia you’ll  be able to claim some expenses to restore the property to a pre-renting condition and claim a deduction for this.

Don’t forget superannuation

You can still make contributions to your superannuation without upsetting your tax residency position. However, it’s important to note that once you make a contribution, this is taxed at 15% on the contribution if you’re claiming a deduction for it, as well as 15% on annual earnings (10% on capital gains), and it’s locked up until you’re 60 and retired, or 65. Superannuation is a popular strategy for those with positively geared investment properties.

Consider an Australian family trust

A family trust follows the tax residency of its trustees. Accordingly, any investments placed in it (providing that they’re not Taxable Australian Real Property) will retain their capital gains tax-free status until you return to Australia, just like any other investment you’d hold in Singapore when you’re a Singapore tax resident. There are several other considerations with setting up an Australian trust, so please do request a consultation before executing this strategy.

Don’t just send cash back home

It’s important to have a plan before you send money back to Australia. An offset account against your mortgage provides flexibility with drawing the funds back if needs be, however, this also reduces your tax-deductible interest which in turn could result in a tax bill for you in Australia. Remember that in Singapore, personal investments are capital gains and generally income tax free.

Most importantly, the above advice for financial planning for expats is a general overview and individual circumstances are unique. We highly recommend contacting us for an obligation free consultation to allow us to tailor the right advice for you. Tristan.perry@selectinvestorsaustralia.sg / +65 9108 6398 (WhatsApp/Call)

The levels and bases of taxation, and relief from taxation, can change at any time. The value of any tax relief depends on individual circumstances.