Reducing Your Taxable Income before 30 June as an Australian Expat

As the Australian financial year draws to a close on 30 June, many Australian Expats are looking for legitimate strategies to manage their tax obligations and reduce their taxable income. If you’re an Australian Expat receiving income in Australia subject to taxation (e.g. rental income), understanding how to legally reduce your taxable income before 30 June can save you a significant amount in tax.

In this article, we’ll discuss the key strategies for reducing your taxable income before 30 June as an Australian Expat, taking into account common deductions, superannuation opportunities, and residency considerations.

1. Understand Your Residency Status for Tax Purposes

It’s essential to first determine your Australian tax residency status. Most Australian Expats are considered non-residents for tax purposes, though in some cases, even if you're living overseas, you can still be considered a resident for tax purposes if you maintain strong ties to Australia.

Australian tax laws treat non-residents and residents very differently, so it’s important to seek advice from a tax agent to understand your tax status.

If you are deemed a non-resident for tax purposes, only your Australian-sourced income is taxed. However, the tax rates that apply to Australian-sourced income for non-residents are more punitive than for residents. There is no tax-free threshold, and the first $1 of Australian-sourced income is subject to a tax rate of 30%. This makes reducing your taxable income before 30 June as an Australian expat even more important.

2. Maximise Superannuation Contributions

Making certain voluntary contributions to your Australian superannuation fund before 30 June can significantly lower your taxable income. Concessional contributions to your super fund, such as a personal deductible contribution, are taxed at 15%. This is lower than the marginal tax rate as a non-resident, which is 30%. Hence, the right contribution strategy to your super fund can save you up to 15% in taxes.

For the 2024–25 financial year, the concessional contributions cap is $30,000. If you haven't used your full cap in the previous five years, you may be able to contribute more using the “carry-forward rule”, available if your total super balance is under $500,000.

3. Claim Eligible Deductions for Investment Properties

If you own property in Australia, you can claim a range of deductions that help with reducing your taxable income before 30 June as an Australian expat. These include (not exhaustive):

• Interest on investment loans

• Council rates and land tax

• Depreciation on buildings and fixtures (if eligible)

• Repairs and maintenance

Even if you are a non-resident, tax deductions are still available for Australian Expats to reduce your taxable income in Australia.

4. Manage Capital Gains and Losses

Capital Gains Tax (CGT) still applies to certain Australian assets, such as real estate. CGT can also apply to other digital assets such as Shares, Exchange-Traded Funds (ETFs), or Cryptocurrencies, where the deemed disposal rules have not been applied. While non-residents no longer receive the CGT main residence exemption (since 2020), you may still be able to reduce your tax by offsetting capital gains with capital losses.

If you’re planning to sell an asset that has made a profit, consider whether you can also sell a poorly performing investment to offset the gain.

5. Prepay Deductible Expenses

Prepaying expenses for the upcoming financial year can be an effective strategy for reducing your taxable income before 30 June as an Australian Expat. These may include:

• Income protection insurance

• Interest on investment loans

• Subscriptions to professional or financial journals

  
  

This strategy works well for Expats who derive larger amounts of Australian income during the year, such as those with multiple investment properties or commercial real estate assets. By prepaying eligible expenses before 30 June, you can bring forward those deductions into the current financial year.

Conclusion

Reducing your taxable income before 30 June as an Australian expat is not just about saving money; it’s about making informed decisions that support your long-term financial prosperity. The complexity of international tax law means it's easy to overlook deductions or misinterpret obligations. Engaging a tax agent and Financial Adviser who specialises in expat taxation can help ensure compliance while also reducing your taxable income before 30 June as an Australian expat.

With the right strategies, you can take control of your tax outcomes and stay compliant with Australian tax laws, no matter where in the world you live. If you're unsure about your situation, now is the time to seek professional advice.

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 link below:

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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.