Financial Considerations for Australian Expats Working for the UN or Other NGOs

As global challenges grow in scale and complexity, many Australians are drawn to international roles with the United Nations (UN) or other non-governmental organisations (NGOs). These positions offer the chance to make a meaningful impact, travel the world, and work in multicultural teams. However, Australian Expats working for the UN often come up against financial and tax considerations that are unique to other expats, such as tax-exempt salaries.

In this blog, we explore these further and discuss how Australian Expats working for the UN can improve their long-term financial prosperity while living abroad.

Understanding Your Residency Status for Tax Purposes

One of the first steps for Australian Expats working for the UN is determining your tax residency status with the Australian Taxation Office (ATO). Your tax obligations hinge on whether you're classified as a resident or non-resident for tax purposes.

• Resident for tax purposes: You're taxed on your worldwide income.

• Non-resident: You're only taxed on Australian-sourced income, and different tax rates apply (typically no tax-free threshold).

Residency is determined by various factors such as the length and nature of your overseas posting, ties to Australia, and your intention to return. Since UN and NGO contracts are often temporary or renewable, your residency status might be less straightforward compared with other Australian Expats.

It’s encouraged to seek professional advice if your situation is unclear or obtain a private ruling, especially if you maintain property, bank accounts, or dependents in Australia.

Taxation of UN and NGO Income

The taxation of income earned by Australian Expats working for the UN can be complex and depends on both your residency status and the specific organisation.

United Nations Employment

• UN salaries are generally exempt from income tax in Australia, due to Australia's international obligations under the Convention on the Privileges and Immunities of the United Nations.

• However, this generally only applies if your role is directly with the UN and not with a contractor or partner NGO.

• Even if tax-free, you may still need to declare your income in your Australian tax return (typically for reporting purposes only if you're a tax resident).

NGOs and Other International Organisations

• Salaries earned from non-UN NGOs may not be tax-exempt.

• If you're still an Australian tax resident, this income may be taxed in Australia (after applying any relevant foreign income tax offsets).

• For non-residents, only income sourced from Australia is taxed.

Superannuation for Australian Expats working for the UN

UN employees are not subject to Australia's Superannuation Guarantee (SG) rules, which is when your employer pays a portion of your salary into your super fund. However, depending on the organisation, you may be enrolled in a pension scheme such as the UN Joint Staff Pension Fund (UNJSPF). Here are some key considerations:

• Contributions to the UNJSPF are not tax-deductible in Australia.

• Benefits may be taxed in Australia upon repatriation, depending on how they're received (lump sum vs. pension).

• Voluntary contributions to Australian super may be a tax-effective way to save for retirement if you're still a resident for tax purposes.

Keep in mind that transferring UN pension benefits directly into an Australian super fund is generally not possible. Funds must first be withdrawn, then contributed to a super fund while adhering to the contribution limits. This often requires specialist financial advice.

Banking, Currency, and International Transfers

Being paid in a foreign currency while maintaining Australian financial obligations can lead to currency risk and transfer issues.

• Consider maintaining both a local bank account and an Australian one.

• Use currency exchange services with lower fees and competitive rates for transfers.

• Monitor exchange rate trends—large fluctuations can significantly affect your Australian dollar income or savings.

Platforms like Wise (formerly TransferWise) or OFX are popular with expats for cost-effective international transfers.

Property Ownership and Capital Gains Tax (CGT)

If you own property in Australia, be mindful of the change in Australian tax laws that apply when holding and selling:

• Non-residents are no longer eligible for the CGT main residence exemption on property sold after 30 June 2020, unless strict criteria are met.

• Any entitlement to the 50% CGT discount is limited to the time you held the property as a resident for tax purposes. The period the property is held as a non-resident is ineligible.

• If you're renting out your property, rental income is taxed in Australia even if you're a non-resident.

Review your ownership strategy and consider whether to hold, rent, or sell property based on your expat duration and tax implications.

Investments and Wealth Planning

For Australian Expats working for the UN, managing Australian-based investments like shares, managed funds, or ETFs requires attention:

• Non-residents face different tax treatments on dividends, interest, and capital gains.

• Managed funds may become inefficient due to non-resident withholding taxes.

• Be wary of triggering deemed disposals or capital gains if your residency status changes.

Work with a Financial Adviser experienced in expat and international taxation to structure your investments for both growth and compliance.

Repatriation Planning

Eventually, most expats return home. The key is to prepare early:

• Review your global assets and pensions.

• Assess your tax residency re-entry timeline; returning partway through a financial year may split your residency status.

• Consider the impact of repatriation on superannuation, health insurance, and children's education.

Conclusion

Australian Expats working for the UN enjoy a rare and rewarding career experience. But this global lifestyle also comes with financial complexity. A proactive and informed approach can make a substantial difference to your long-term financial prosperity.

Before making any major financial decisions, consult professionals familiar with expatriate taxation and cross-border wealth management. What works for a typical Australian worker may not suit an expat UN employee in Geneva, Nairobi, or New York.

If you're an Australian Expat working with the UN or an international NGO and want tailored advice on your tax, investments, or retirement planning, consider speaking with a Financial Adviser who specialises in expat finances.

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.