Australian Expats on Secondment: Avoiding the Pitfalls of Temporary Assignments

Temporary overseas assignments can seem like a golden ticket for career advancement, personal growth, and global exposure. But for Australian Expats on secondment, the reality can be far more complex than simply packing a bag and embracing a new time zone.

Without the right planning and awareness, temporary assignments can create long-lasting financial and tax consequences. In this blog post, we’ll explore the key pitfalls Aussie expats should avoid and how to better navigate the secondment experience.

Tax Traps and Dual Residency

One of the most common (and costly) pitfalls for Australian expats on secondment is misunderstanding their tax obligations.

Even if you're living and working overseas, you may still be considered an Australian resident for tax purposes. This means your global income (including your foreign salary) might be taxed by the ATO. On the other hand, your host country may also expect tax on the same income. Without the proper employment and tax arrangement in place, you could end up paying tax twice or being fined for non-compliance. Here’s how to get a better handle on it:

• Get professional tax advice from someone who specialises in working with Expats before you leave.

• Get familiar with the Double Tax Agreement (DTA) between Australia and your host country.

• Ensure your secondment contract clearly outlines who is responsible for tax liabilities, and whether any ‘tax equalisation’ agreement exists.

Tax equalisation is a policy to ensure that an employee is neither better nor worse off financially, from a tax perspective, for having accepted an international assignment.

Don’t forget about Superannuation

While you're overseas, your Australian superannuation might quietly be neglected. Many Aussie expats on secondment forget to contribute to or monitor their fund, potentially missing out on long-term retirement growth. How to avoid it:

• Check if your employer will make super contributions during your secondment.

• Keep track of your super contributions, even while abroad.

• Consider making voluntary contributions if it aligns with your broader retirement strategy.

Visa and Work Rights Complexities

Temporary assignments are often fast-tracked by corporate HR departments, but they don’t always take your visa status into account fully. You might be working under a visa that limits the length of your stay abroad, or find that your rights in the host country are more restricted than expected. How to avoid it:

• Review your visa conditions thoroughly.

• Ensure your secondment contract aligns with the immigration regulations in the host country.

• Don’t assume everything will be handled for you – ask questions.

  
  

Lack of Clarity in Employment Terms

Many Australian expats on secondment assume that their home-country employment conditions automatically carry over. But secondment contracts often differ significantly from domestic ones. Issues around leave entitlements, health insurance, salary packaging, and end-of-assignment obligations can be murky or even overlooked entirely. Here are some areas to consider:

• Request a clear, written secondment agreement.

• Clarify whether you'll remain employed by the Australian entity or be transferred to a local branch.

• Understand what happens when the secondment ends. Is your old job still guaranteed?

Family and Personal Considerations

The romantic idea of living abroad often fades under the pressure of relocation, family disruption, and cultural adaptation. Spouses might struggle to find work. Children may face educational hurdles. Even seasoned professionals can experience isolation and stress. Here are some tips to help you manage:

• Involve your family in planning discussions early on.

• Explore support options for partners (e.g., spousal work rights, networking groups).

• Seek cultural training or expat networks to ease the transition.

Repatriation – The Forgotten Phase

Many Aussie expats on secondment don’t consider what happens after the assignment ends. Re-entering the Australian workplace can be harder than expected. Skills gained overseas may not be recognised. And sometimes, the role promised on return no longer exists. Here’s how to plan ahead:

• Stay connected with your home office throughout the assignment.

• Where possible, include a repatriation plan in your secondment agreement.

• Advocate for recognition of your international experience upon return.

  
  

Mismanaging Investments While Abroad

A commonly overlooked issue for Australian Expats on secondment is how their investments are managed during the assignment. Holding Australian shares, property, or other assets while living abroad can complicate your tax position, especially if you become a non-resident for tax purposes.

For example, capital gains tax (CGT) rules differ significantly for residents and non-residents. If you're deemed a non-resident, you could lose access to the CGT main residence exemption or face higher tax rates on investment gains. Similarly, income from Australian rental properties or dividends may still be taxed in Australia,  and potentially in your host country too. Here are some areas to consider:

• Review your investments with a Financial and Tax Adviser familiar with cross-border issues before your move.

• Consider timing asset sales carefully to reduce CGT liabilities.

• Understand withholding tax rules for dividends and interest.

• Avoid making major investment decisions while overseas without understanding cross-border tax implications.

By proactively managing your investments, you can avoid nasty surprises and structure your assets in a way that supports long-term financial health, both at home and abroad.

Conclusion:

Being on secondment offers a fantastic opportunity to grow your career and experience life overseas. But for Aussie Expats on secondment, success isn’t just about embracing the adventure; it’s about planning strategically. Don’t assume your company or government will handle everything for you. Understand your obligations, ask the hard questions, and prepare for every stage of the journey, not just the departure.

Runway Wealth Management is the trusted Financial Adviser to the Australian Expat community. Our tailored advice is backed by expertise, education and experience, which allows us to be at the forefront of Australian Expat Financial Planning.

If you would like to speak to one of our Expat Financial Advisers about this blog or if you have other queries, we would be more than happy to speak with you. Feel free to send us an enquiry through the ‘Contact Us’ tab provided in the below link:

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General Advice Disclaimer: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.