We see many Australians living overseas unaware that they can use their super to fund their cash flow and asset protection. Buying Life Insurance through super can be a convenient and affordable way to get the cover you need.
Further, Australian life products are often more affordable compared to the local options and the definitions are world leading.
There are, however, a number of things you need to consider before you decide how you want to structure your Life Insurance.
What type of insurance can you access through super?
Through super, you have access to three important types of insurance cover:
- Income Protection which provides an income stream for a specified period if you can’t work due to temporary disability or illness.
- Total and Permanent Disability (TPD) which provides a lump sum benefit if you become seriously disabled and are unable to ever work again.
- Life Insurance provides your beneficiaries with a lump sum benefit if you die.
What are the advantages of taking out Life Insurance through super?
Using your superannuation to pay for your Life Insurance can be a good way to help you afford the cover you need, without eating into your budget.
You also have the opportunity to make before-tax contributions to super to pay for your insurance (e.g. through salary sacrifice), which may help reduce the amount of tax you pay.
What are the disadvantages of taking out Life Insurance through super?
If you don’t make additional super contributions to pay your insurance premiums, your retirement savings will reduce. Also, there are different rules around Life Insurance policies owned through super that may make benefit payments less tax-effective for your beneficiaries.
What else should expats consider?
Buying insurance through super may seem like the perfect solution, but there are some things you should consider first:
Keep track of your insurances through super
If you have more than one super fund you may be paying for more than one policy.
Not all benefits are tax-free
Tax may be payable on some benefits, depending on who receives the benefit and when it is paid out. If your beneficiary is not a dependant, there may be tax implications.
There can be delays in benefit payment
Insurers will pay the benefit to your fund’s Trustee, who will then distribute onto you or your beneficiaries.
Consider your beneficiaries
If you do not make a binding beneficiary nomination, or your fund does not offer binding nominations, the super trustee will decide who receives your benefits when you die. Usually, benefits are paid to dependents, after taking your wishes into consideration.
Using your super to fund your life insurance is a perfectly viable strategy but being aware of the various considerations is critical. Seeking advice from an Australian Life insurance Specialist key.
Written by: IMFG
So you’ve settled in Singapore and decided it’s time to buy a home rather than rent. With a reputation of having some of the most expensive real estate in the world, how much do you need to have saved before this is even possible?
To work this out, lets take a look at a hypothetical scenario of two British Expats purchasing a condo for $1.5m in Katong on the east coast.
Under the most recently revised Monetary Authority of Singapore (MAS) regulations, for your first property purchase as a foreigner you should be able to borrow up to 75% of the proposed property purchase price.
On our scenario of $1.5m above, you will need to have 25% as an initial deposit which would come to $325,000.
As a foreigner, you are subject to two levels of Stamp Duty.
The first is called Buyers Stamp Duty (BSD) and is paid by all purchasers of property in Singapore.
The amount charged is progressive and the rates as of Feb 2018 are:
- 1% on the first $180,000
- 2% on the next $180,000
- 3% on the next $640,000
- 4% on the remaining amount
The second, and most significant, cost for foreigners purchasing property is the Additional Buyer Stamp Duty (ABSD).
This rate is a flat 20% against the whole purchase price of the property and can be the biggest inhibitor to purchase property in Singapore.
PLEASE NOTE: Expats from the United States, Switzerland, Liechtenstein, Norway and Iceland are exempt from the 20% additional stamp duty charge due to the Free Trade Agreements Singapore has with these countries.
So for our British expats looking to buy, their stamp duty costs would come to:
BSD – $44,600
ABSD – $300,000
Total – $344,600
So the total up-front cash our couple would need to purchase their $1.5m condo would come to $669,600.
This can be a significant amount of money for any couple. Depending on your long-term plans and personal situation though, buying can still make sense as the Singapore property has a long-term history of strong returns.
Also, if you apply and are successful in obtaining Singapore Permanent Resident Status (PR), this can bring the ABSD rate down to 5%.
If you’d like to review your borrowing options and see what is possible, don’t hesitate to get in contact with us through www.aexphl.com
Tim Raes, Founder and Managing Director
Aussie Expat Home Loans – Singapore
* This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statements and seek personalised advice
The 2016 NSW Budget introduced a four per cent surcharge purchaser duty (surcharge) on the purchase of residential real estate by foreign persons from 21 June 2016. Further to this, the 2017 NSW Budget, increased the surcharge rate from four per cent to eight per cent for agreements entered into on or after 1 July 2017.
The surcharge is in addition to the duty payable on the purchase of residential property. The surcharge does not apply to Permanent visa holders, New Zealand citizens who hold a special category visa (subclass 444) or Partner (provisional) visa holders (subclass 309 or 820).
However, it does apply to persons who are, the three types of individuals listed above, who do not meet the 200 day rule (200 days or more in Australia immediately prior to the contract date) or temporary visa holders, who are persons who hold Australian temporary visas which are subject to limitation, such as an end date, and are considered to be foreign persons, regardless of whether they meet the 200 day rule. Unfortunately, this cannot be overcome by the incorporation of a company or establishment of a trust.
A corporation and a trustee of a trust can be a foreign person in the following circumstances:
- a corporation in which is an individual not ordinarily resident in Australia; or
- a foreign corporation or a foreign government holds a substantial interest; or
- a corporation in which two or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate substantial interest; or
- the trustee of a trust in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest; or the trustee of a trust in which two or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate substantial interest; or
- a foreign government; or
- a general partner of a limited partnership where:
- an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds at least 20 per cent in the limited partnership, or
- two or more persons each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate interest of at least 40 per cent in the limited partnership.
Should you be considering purchasing property in NSW and are unsure if the Surcharge Purchaser Duty applies to you, feel free to call Nicole on 9328 6917 for a consultation.
Article by: Nicole Leggat
Whether you’ve just started your new life in Expatland or are looking to move back to your country of origin, the need will undoubtedly arise to exchange foreign currency.
Your personal circumstances will determine why you need to exchange currency, the frequency by which you transact and the volume. A currency need will typically arise from:
- Transferring life savings
- Selling and/or buying a property in your country of origin and/or Expatland
- Pensions transfers
- Repatriating income
- Investing in assets domiciled in Expatland
- Sending money home to friends and/or family
So what should you be aware of when converting your currency and sending or receiving cross-border payments?
- Are you really getting the best rate?
You trust your bank with your day-to-day banking needs so surely they must be the best option for your foreign currency and international payments needs? The reality is however, that for retail clients the daily buy/sell rates set by the banks often include a cost to transact plus additional sending and receiving fees.
By doing your research and venturing beyond the banking relationship to an alternative foreign exchange provider like XE Money Transfer, you’ll find that you will be able to take advantage of a much higher rate of exchange and no transfer fees – saving you thousands of dollars on your international money transfers.
- Protect yourself from currency risk on high value transactions
When making high value transactions that occur over a longer period of time, you may want to mitigate currency risk by locking in a favourable rate of exchange.
Currency risk refers to the uncertainties faced by fluctuating exchange rates and can have a significant effect on the outcome you achieve when it comes to executing your currency conversion.
Contrary to what you may think, you are not restricted to simply accepting the spot rate you are given on the day.
At XE, we provide a range of risk management transactions from Market Orders to Forward Exchange Contracts (FECs) and more complex structure options and our team will be able to advise you on the right strategy to ensure you are getting the best rate of exchange and are not left at the mercy of exchange rate movements.
It is highly recommended that any Expat whose business involves overseas travel, should effect a Corporate Travel Insurance Policy.
A Corporate Travel Policy will provide coverage for overseas trips up to a duration of 26 weeks.
The scope of cover provided under this type of policy include Medical Expenses, Death & Capital Benefits, Loss or damage to Baggage, Electronic Equipment, Loss of Credit Cards, Theft of Money, Hire Car Excess Expenses, Loss of Deposits and Cancellation Charges, Kidnap, Extortion and Ransom.
Below are actual case studies of recent Medical Expenses Travel Insurance losses incurred whilst claimants were overseas. This reinforces the absolute necessity to protect yourself and your business from these exposures whilst undertaking business and associated leisure travel.
David (an Australian Resident) was insured under a Corporate Travel Insurance Policy while he was on a short-term working assignment in the Solomon Islands. On 12/09/2017 he started feeling unwell with abdominal pain and presented himself to a local clinic.
Provisional diagnosis was infectious Gastroenteritis, acute abdominal rupture and appendicitis. There were no clinics available for the claimant to undergo diagnostic imaging and hence he was placed in an air ambulance and evacuated back to Australia. The total amount of the claim was $57,527.37.
Edward attended an international business conference in the Philippines. At the conclusion of the conference he stayed on for an additional week’s holiday.
During that holiday he was struck by a motorcycle and sustained multiple soft tissue and musculoskeletal injuries including left clavicle fracture, multiple fractures to left and right ribs, crush fracture of the 12th thoracic vertebrae and right shoulder ligament ruptures. The total amount of the claim was $23,428.57.
Gerard, a 73-year-old director of an IT company, planned a 6-week overseas trip with his wife, to the USA commencing June 2017. Unbeknown to him, at the time of embarking on the journey, he was developing what would become a significant cardiac infection – “bacterial endocarditis”.
By the time he landed in the USA his cardiac symptoms fully manifested resulting in cardiac infection, multiple body organ sepsis and several strokes secondary to the above.
Gerard was admitted to high dependency specialist care. The claimant’s wife and Insurers were advised that Gerard most likely would not survive. Gerard was transferred to palliative care where he eventually passed away some two months later. The total amount of the claim was $1,300,000.
Although this case had a sad outcome, it highlights the importance of having travel insurance to protect against what can be substantial and significant costs.
By: Michael McMahon
Gibson Insurance Brokers
Expat service providers are excellent at helping those moving abroad to get ready for their first adventure.
At Expatland, we have a team of industry professionals primed and ready to help with finances, visas, and the all important logistics. But what if you are already an expat? Can the Expatland Global Network still help you?
The answer is yes.
Once you settle in to your new life you’ll continue to handle your finances, taxes and mortgages. You may also have investments or properties back in your home country that need managing. You may even consider returning home at some point. Our E-Teams are here to help with all aspects of being an expat.
Let’s talk about moving back home and some of the pitfalls that can occur.
Introducing The Smiths
The Smith family have been expats for over 10 years. They relocated from Melbourne and have lived in both Singapore and Hong Kong with their two children.
The Smiths kept their apartment in Melbourne worth circa $800K and they had a residential investment home loan secured against it for $450k.
They’ve decided to return home in the next two years to purchase a family home, so started the process of applying for a new home loan with an Australian Offshore Bank that they had used previously. They started their application for a home loan of $1.2m. They signed the contracts with a finance clause and they expected to secure approval within two weeks.
Signed, Sealed, Delivered?
Unfortunately the two week deadline came and passed and the Smith’s were informed that their loan was declined after an excruciating four week process.
Initially the bank processed the application as an investment home loan, not a home loan. This meant they would have had a much higher interest rate. Not only that, they discounted both the bonus income of Mr & Mrs Smith and their salary entitlements by 20%, which can be typical of Australian lenders.
How did this happen?
Well, the bank didn’t truly know their client. They didn’t understand the needs of an expat trying to return home. They didn’t understand the expenses an expat incurs and much of their time was wasted trying to understand their customer after it was too late.
Unfortunately, The Smith family had already committed to their purchase and were due to settle within 6 weeks, which resulted in a variety of panic applications with online lenders, which were not fit for purpose.
Understanding is key
The Smiths were then recommended to Aus Finance Group, part of the Melbourne E-Team in Expatland’s Global Network. Aus Finance Group (AFG) has spent significant amounts of time working with lenders to understand the policies and procedures relevant to expats. AFG immediately understood the Smith’s needs and prepared to match them with lenders who understood their requirements.
Within 24 hours all information matter was canvassed to two Australian banks that took into account their bonus income. The Smiths were identified via Skype and executed documents in Singapore. The loan approval was granted within four business days at the terms they wanted.
This only goes to prove that expats needn’t be disadvantaged by their circumstances if they are connected with the most relevant service providers.
How AUS Finance Group can help you
One of the largest challenges as an expat is dealing with your Australian Bank & Financier whilst earning income offshore.
Lenders will typically discount the attributable value of salary & bonus income by 20-100% depending on the source and contractual arrangements behind them. AFG has already identified suitable Lenders who best recognise expat’s offshore income.
Furthermore, Lender’s debt servicing has become rules based and more stringent. This means it will now typically sensitize a borrower’s servicing ability by discounting foreign income sources, i.e.:
- Discount contractual base salary by 20%;
- Discount bonus income by up to 100%; and
- Assess net income (adjusted for above) at Australian tax rates.
AFG will assess your requirements and identify a Lender who will best recognise offshore income.
It will then submit full loan applications together with supporting documentation, manage a Lenders loan application, identification & security process on the expat’s behalf and proactively keep the expat informed of developments.
by: AUS Finance Group
This month, we look at the Singapore system for Goods and Services Tax (“GST”) which was introduced in Singapore in 1994 and has a current rate of 7%.
In Singapore, GST is levied on the supply of goods and services in Singapore, and on the importation of goods into Singapore. In the case of a supply of goods and services, the applicable GST is collected by the supplier / seller and remitted to the Inland Revenue Authority of Singapore (“IRAS”). Where goods are imported into Singapore, the GST is collected by Singapore Customs at the point of importation.
GST can only be levied and collected if your business is registered for GST. GST registration is mandatory if your business has a taxable turnover of SGD1M and above for the next 12 months.
Taxable turnover refers to the supply of goods or services which are subject to GST. If you can show that the taxable turnover over the next 12 months for your business will be less than SGD1M, then you will not need to register for GST. If the turnover for the next 12 months is expected to exceed SGD1M, then you have 30 days to register for GST from the end of the month in which the SGD1M threshold has been exceeded.
Failure to register for GST when your business meets the threshold turnover amount may result in a fine and penalty. Where you are late with the registration, you will also have the registration commencement date backdated to the point in time that the business did exceed the SGD1M threshold. If this is the case, you will then be assessed GST during the reporting period commencing from the backdated commencement date.
If you do not exceed the taxable income threshold, you can still register voluntarily for GST if you can show that 90% of your business supplies are zero-rated. A zero-rated supply is an export of goods from Singapore or the provision of international services.
In this situation, your business will be allowed to register for GST and then claim the GST incurred on expenses in relation to the exported goods – in this situation you are typically expected to be paid a refund from IRAS as your GST collected on sales will be less than any GST paid on paid on purchases.
In Singapore, GST is customarily reported and remitted to IRAS on an invoice basis. This means that GST is payable even though the GST may not have been paid by the customer . Notwithstanding the above, if your business is registered for GST voluntarily (i.e., taxable turnover is less than SGD1M), you can apply the Cash Accounting Scheme – this Scheme allows you to report GST on a cash basis.
GST reporting is done electronically on a quarterly on monthly period, with the GST quarter determined by the financial year end for your business. The GST report is due for lodgement with IRAS within one month of the end of the reporting period.
In the return, you report all the GST collected, and GST spent in the business. The net GST is what is payable or due to you as a refund. The amount owed is taken via direct debit by IRAS from your business bank account on the 15th day after the due date for the lodgement of the GST report. Refunds are processed by IRAS and paid directly into your nominate business bank account with 7 days after the lodgement of the GST report.
Personal insurance relates to the insurances which protect you against sickness or injury to cover your costs of living and lump sums. Coming from another country to Australia, you are then exposed to a whole lot of new risks, issues, costs and lifestyle.
One of the key things you should be protecting is your personal well-being.
As you are in a new country, you don’t want to be put in a position where you have moved (and your family) and you can’t fund or support yourself.
In Australia, the rules are quite different and the insurances you may have had from another country could be invalid. This is the first thing you should check preferably before you leave the country of origin. Our biggest asset is usually the least insured, that is our ability to earn an income.
Our guide on personal insurances, written by Scott Douglas from IMFG will equip you with all the information you need to make informed decisions regarding your insurances.
It’s very important to seek appropriate advice by a fully licensed Adviser who can provide you with what is necessary. The adviser will do a full needs analysis and make a recommendation on the products that are appropriate to you and your needs. With this guide, you can familiarise yourself with all your options and get a clear understanding as soon as you get to Sydney.
To read our guide please click here
As an Expat, choosing health care providers can be a daunting activity and one that can have a big impact on the entire family. Many people have anxiety and fears related to visiting doctors and dentists and this becomes compounded when in a new country where everything seems so strange. Luckily, Singapore has a very high standard of health care.
It can be just as important to have regular check-ups with a dentist as it is with a doctor; however, globally adults are neglecting to visit the dentist. So how do you find a new dentist in your Expatland City?
Lydia Astill from Expat Dental has written a guide with all information you need to find a new service provider. It’s important to choose a great dentist before you’re in pain and to have a dental practice you can trust to care for you and your family.
This publication will provide you with helpful tips to assist you in finding the right dentist for you and your family.
To read this publication, click here.
Constant travel for business and leisure is a familiar feature of expat life in Singapore. Some of us with families even feel exhausted after the summer holiday.
With time zone differences and constant sleep interruption it’s easy to feel you are not getting enough sleep. Emerging research is abundant and spells out how sleep is important for adults and especially for teenagers.
The research has been clear that lack of sleep can cause a variety of problems. In adults some of these issues include hypertension, heart disease, fatigue, anxiety, stress, and a lack of mental clarity.
In children, attention deficit disorder, hyperactivity, bedwetting, allergies, and stunted growth and development have been associated with a lack of sleep and disordered breathing. And these problems may go on to affect school performance.
Related to this, dental ‘bruxism’ is the medical term used to describe habitual clenching or grinding of the teeth and jaw. Stiff or fatigued jaw muscles when you wake in the morning, headaches, neck aches, sensitive teeth, jaw pain, noises when opening or closing your mouth; all of these can be signs of dental bruxism and TMJ disorder.
Previously dentists were trained to think that grinding issues were just stress related and that the ultimate fix was to wear a night-guard for the rest of your life. Now practitioners believe that by retraining habits like tongue position, breathing techniques, and swallowing techniques, we can stop grinding and help patients sleep better. But, depending on the individual circumstances, oral appliances, medication or surgery may be required.
Oral Appliance Therapy can often be used to treat both snoring and obstructive sleep apnea in adults.
An oral appliance is a device similar to orthodontic retainers joined by a flexible connector and worn while asleep. The device allows your airway to remain open by supporting the lower jaw in a slightly forward position and providing forced air through flexible tubes. These devices are best designed and fitted by experienced dentists trained in sleep disorder therapy. In some severe cases, surgery may be an option for treatment.
When treating children, if caught early enough, providers may be able to prevent the need for braces and allow them to live a healthier life without a grinding habit and a sleep disorder in adulthood.
If you feel you or someone in your family may have sleep disordered breathing or sleep apnea, the sooner you can fix the problem the sooner you will be on the path to a much fuller life, free of the health issues that come with poor sleep. Ask yourself these questions and if you answer yes to a few you may want to find out more.
- feel irritable or sleepy during the day?
- have difficulty staying awake when sitting still, watching television or reading?
- fall asleep or feel very tired while driving?
- have difficulty concentrating?
- often get told by others that you look tired?
- react slowly?
- have trouble controlling your emotions?
- feel like you have to take a nap almost every day?
- require caffeinated beverages to keep yourself going
Written by: Lydia Astill from Expat Dental