Financial Planning for Expatriates

Don't Lose Your Expatriate Advantage

As an expat, your income is likely to be higher than what you received in your home country. If you come from a high tax country such as Canada or Australia, you could save up to three times more when you work here in Singapore.

 

Minimise the Tax Bite

~ Ask for your remuneration package to be designed to reimburse for benefits (e.g. car allowances and housing allowance), or to give benefits-in-kind. Cash allowances, as with your salary, are fully taxable.
~ You have the flexibility to choose between electing to be taxed as a Resident, Non-Resident or Not Ordinary Resident, depending on the varying factors. Assess the suitability of each tax scheme according to your circumstances.

 

Increase Your Investment Returns

The way you structure your investments will determine how much your investments will grow and how much of it you get to keep. Keep in mind the following:

~ Risk and returns go hand in hand. Readjust the risk tolerance of your portfolio in view of higher salary.
~ Taxes on investment gains can be especially complicated. You may end up being taxed twice for the same investment income - in Singapore and in your home country. Use an offshore investment account, offshore company or trust can help to hold your properties and investments.

 

Protect Your Financial Goals

For many expats, an overseas job is part of a long-term strategy, more of your income can be saved and invested to attain your future lifestyle.

~ Adjust your investment strategy from time to time according to the focus of your life at the time of planning, be it saving for retirement, or preparing for your children's further education.
~ Skew your investments towards the currency of the country that you intend to retire in and transfer all investments to that currency as you approach retirement. Otherwise you may end up with a big shortfall of funds when the foreign exchange moves against you.

 
Assess Your Insurance Needs

Unlike some countries where there is national health care, you would need to see to your family's and your own insurance needs in Singapore. Most employers would provide some form of medical insurance, but you should still assess if the coverage is sufficient.

You should have enough insurance for you or your loved ones to carry on life without significant change to the standard of living when misfortune strikes. Very importantly, be sure that your insurance plans are valid in Singapore and in your home country.

 
Put In Place an Estate Plan

Estate planning is trickier for expatriates. There are many differences in estate laws between countries. The often-complex administration of expatriate assets can result in legal costs and estate taxes payable in more than one location. This calls for a thorough understanding of the implications of the different laws and an estate plan that will help you retain more of your wealth for your loved ones.

In your plan, you can use simple instruments such as wills or trusts to reduce or eliminate estate taxes and protect your wealth from creditors and family disputes.

 

Plan for the Worst

Your attractive expat income stream may end abruptly due to organisational restructuring. Your financial plan must have a buffer to cater to such an event. You need to have liquid assets equivalent to at least six months of your income.

 
Make The Right Financial Decisions

As an expat, you probably have a host of questions such as should you buy or rent a house in Singapore and should you liquidate all your assets in your home country?

A competent financial planner can help you make better-informed financial decisions. He/she can advice you on how each major decision will affect other areas of your financial health. Besides, the financial planner can ensure that you have a plan that will help you to achieve your lifestyle goals in the most tax-advantaged way.

Start planning early in partnership with your financial adviser and you can maximise your expat advantage.

 

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