Tax That Expat

24 July 2009

The Australian government's recent announcement that it plans to tax Australians working overseas 46% from the first dollar they earn when they come back to Australia is foolhardy at best and a bottom dwelling political stunt at worst.

Numerous Australian resources professionals work across the globe in various roles and come back to Australia during their leave periods. When they come back to Australia, they spend their money here, pay their taxes here and bring in valuable foreign currency. By taxing expats at such an exurbanite rate the government has little to gain, yet so much to loose. No doubt many will realise it is more effective to reside full time in Australia, adding further supply pressure to the fragile employment market. They will also spend less in Australia undoing all the much vaunted good work the Government's stimulus packages have allegedly done.

Perhaps worst of all, it will discourage young professionals from wanting to seek expatriate opportunities and realising the benefits they provide. Australians are represented in the upper management of numerous companies across the world and this gives Australia greater when negotiating on the international stage due to the soft power this translates into. Whilst Australians will no doubt continue to pursue international opportunities the rate at which they pursue them will surely be curtailed by this decision.

It is rather hypocritical that our Prime Minister -a former diplomat- who no doubt benefited from Australia's existing taxation arrangements for expatriates would look to extinguish the incentives which made his own career possible. It is also hypocritical for a prime minister who is rightly determined to have Australians learning second languages via the much publicised 'Education Revolution' to then restrict employment opportunities whereby these skills can be utilised.

For the minimal revenue this move will produce it is hard to view it as anything else then a politically motivated decision.