Earning an opportunity to compete overseas isn’t an automatic win for your finances. It takes work to get a financial game plan in place.
At BDO, we know tax planning isn’t at the top of your to-do list. That’s why we’re here with the vision, knowledge and strategy to assess your situation, put plans in place and best position you to capitalise on your opportunities abroad.
Our team at BDO have advised many professional athletes on the international tax issues they need to consider when working overseas during their career. From residency tests to tax structures, we’ve outlined below the three key tax implications impacting athletes competing aboard – be they individual competitors or team players.
Shifts in residency rules
Documenting your intentions when moving abroad to compete on the international stage is possibly one of the most important steps in financial planning.
For better or worse, it’s becoming more likely that Australian athletes competing overseas will remain Australian residents for tax purposes. In the 2021-22 Federal Budget, the Australian Government announced modernisation of the tax rules for determining individual tax residency. Proposed to start on 1 July 2022, the proposed law change would result in any Australian who spends 183 days or more in Australia in an income year would be considered an Australian resident. Ceasing residency would require several steps, chief among them spending no more than 45 days in Australia (these changes need to be confirmed once the proposed law is enacted).
Why does residency matter? The answer is tax rates. Australia is a fairly high tax environment for individual taxpayers, so tax implications are always a consideration. Residency is also important when considering the tax implications on property sales here, so it’s essential to carefully think through your plans.
Tax structures
Australia is a well-regulated country, great for investing. Some of these regulations can have tax implications though, so it’s essential to learn the rules of the game and plan ahead. As there are various types of business structures (i.e. sole trader, partnership, company or trust) in which you can hold your investments, it’s important to understand the specific legal requirements of each as well as the tax consequences of being a resident verse a non-resident for tax purposes.
Finding the FOREX through the trees
Losing money to financial transaction fees should be minimised wherever possible. We always recommend our clients set up an overseas bank or multi-currency account to decrease money lost in bank charges and exchange fees.
Another key to managing foreign currency is knowing its fluctuations. Tracking which part of the market cycle you’re in and waiting for shifts to go your way can help maximise your earnings as well as any investments you make abroad.
BDO can help navigate your tax implications while competing abroad
Our team of experienced advisers works with professional athletes regularly and are happy to stay in touch with you while you’re overseas. We’ll help guide you through the process to ensure your earning abroad is maximised and taxed appropriately, no matter your situation.