For Australians living in Europe during the coronavirus pandemic we know that for many this can be an even more difficult time, especially if you are feeling alone, and a long way from extended family. There are also the issues of work, schooling, your health in addition to your finance and investments.
There are 3 key issues that Australians living in Europe should be looking at right now as Europe moves to the next phase of eased lockdowns.
1. COVID-19 Australian Superannuation Access
Living in Europe you may find that you do not qualify for other forms of support. This is a resource open to Australian citizens and certain others that have superannuation in Australia. Under normal circumstances, your Australian super cannot be accessed until you reach your preservation age and have stopped working.
For a limited time, the Australian government has made available limited access to Australian superannuation for those suffering hardship due to COVID-19. There are requisites such as loss or substantial reduction in work or income, and in a practical sense, you need an Australian bank account in which to receive the funds.
You can apply to receive up to AUD$10,000 before 30 June 2020 and AUD$10,000 between 1 July and 30 September 2020.
But just because you can does not mean you should. Importantly, you need to carefully assess your situation and decide whether you need the funds and if it is a good idea to take from your retirement plan. If you are struggling with higher costs or reduced income, it might be the buffer you need, however, it does come at a price. That price is lost compounded growth in your superannuation between now and retirement. Make sure you get the right advice from a qualified and Australian licensed professional on the potential impact on your longer-term retirement planning before you decide to apply to access your superannuation in this way.
For more information go to the Australian Taxation Office website at www.ato.gov.au.
2. Capital Gains Tax changes back home
This is an important issue for all non-resident Australians and one that many people are not aware of. We wrote about this previously here and now this change has been put into law. From 1 July 2020, as a non-resident Australian you will, except in very few particular circumstances, lose your 6 year exemption from capital gains tax on your primary home in Australia.
What does this mean?
It means that from 1 July 2020, if you sell you house in Australia, even if it was your primary place of residence there, you will be liable to pay capital gains tax on the sale. There are important details to be aware of. A capital gains tax bill on the sale of your home in Australia after 1 July 2020 might be based on the growth from when you bought the house, not when you left Australia! That can have a huge impact. If you are planning to return to Australia, you should also look into whether you need to have your home revalued on the date you return. You also need to check whether you are considered an Australian resident for tax purposes now, even if you are living in Europe.
Our recommendation is to speak with an Australian tax accountant who can help you through these changes, how it might impact you in the future and the options available to you.
3. Manage your investments with the goal in mind
As an Australian in Europe, you may be juggling currencies and funds in different markets and different structures. It is important to maintain consistency across your assets in line with your goals. We recommend getting good advice in the country where you are living and to have a plan in place.
At times of increased volatility and uncertainty, don’t measure your investments and assets against volatile market movements or the latest news headlines, but measure against your goals. You need to check back to the core question of whether your current investments, pensions and superannuation are likely to get you to your goals or not. If you are unsure speak with us and we can guide you through the complexity of currencies, markets and structures and help you to get to your targets.