Conventional employees can usually plan for their financial future knowing that certain fundamental parameters will not change: their regular income, their Australian tax residency, their banking arrangements, their superannuation contributions and their insurance needs.
But for digital nomads and remote workers, the picture is completely different. Their situation can impact how they pay tax, contribute to super, manage banking and investments, and ensure they are covered for health issues and income protection.
Tax residency
Remote workers and digital nomads who move around within Australia don’t need to worry about this one. However, for those working overseas — especially if moving between countries — it’s the most important consideration. The ATO uses several tests to determine whether you’re an Australian or foreign resident for tax purposes:
- Resides test — depends on family, business and employment ties, location and maintenance of assets, nationality, and other factors.
- Domicile test — considers whether Australia is your domicile by origin or choice, and whether it’s your permanent place of abode.
- 183-day test — whether you’ve been in Australia for more than half the income year.
- Superannuation test — applies mainly to government employees.
You cannot assume that leaving Australia automatically makes you a non-resident for tax purposes. If you remain an Australian resident, you’ll be taxed on your worldwide income. If you become a non-resident, you’ll still pay tax on Australian-sourced income, often at a higher marginal rate and without the tax-free threshold.
Income structure
If you’re an employee working remotely within Australia, your PAYG tax and super contributions will generally continue as normal.
Independent contractors and freelancers have additional responsibilities — including setting aside funds for tax, making their own super contributions, and potentially managing GST. This can be challenging when income is inconsistent.
Digital nomads with higher earnings may consider a company or trust structure, particularly for international work. While this can provide flexibility, it also increases compliance requirements and costs.
Superannuation
Even if you’re travelling or living overseas, you may still receive super contributions from an Australian employer, or need to contribute yourself if you’re self-employed and an Australian tax resident.
Personal contributions made while overseas may still be tax-deductible, depending on your residency status and whether you have Australian income to offset.
For those with fluctuating income, it can be beneficial to contribute more during higher-income years and take advantage of carry-forward concessional contribution rules.
Banking
If you’re working overseas long-term, your banking setup may need to change. It’s often useful to maintain at least one Australian transaction account, ideally with multi-currency capabilities to reduce foreign exchange costs.
Cash flow management
For self-employed individuals or those earning overseas income without PAYG withholding, it’s important to separate funds set aside for tax from everyday spending.
Irregular income also means you should maintain a larger emergency fund — ideally 6 to 12 months of expenses — preferably held in a stable currency if you’re overseas.
Insurance
Digital nomads working overseas may require specialised international health insurance rather than standard travel insurance. It’s also important to review any income protection policies to ensure they remain valid while living abroad.
Investing
Your investment strategy should remain aligned with your long-term goals, not your current location. However, you may need to consider access to Australian investment platforms, and potential tax implications such as capital gains tax if your residency status changes.
Keeping your investment approach simple — such as using fewer platforms and focusing on diversified investments like ETFs — can make managing your portfolio easier while travelling.
Tailored advice will help
Digital nomads and remote workers can benefit from tailored financial advice across areas such as tax residency, income structuring, superannuation, banking, insurance and investments.
If you’re working remotely or considering a digital nomad lifestyle, the financial implications can quickly become complex. A financial adviser can help you navigate these challenges and keep your plans on track. Speak with one of our financial advisers to learn more.
