Lowering tax while taking multiple working holidays

[jaysee]

I think I might have figured out a bit of a sneaky hack to get taxed less!

The idea is to take advantage of the tax-free threshold / personal allowance of two or more countries by working in each country for only 6 months in any given tax year.

For example, say I normally earn $100k per year.

If I work in the following dates / countries:

• June-December 2020 - Canada
• January-June 2021 - Ireland
• June-December 2021 - UK
etc.

Then I would actually be earning $50k in each country. So I could take advantage of each country's tax-free threshold.

For example, in Canada, federal income tax is 20.5% up to $47,629 of taxable income. So most of my income would be taxed at that rate. Similar rules would apply in Ireland, UK, etc.

Anyone else tried this or otherwise care to comment?

[mjr]

Unless you are cutting ties with Australia permanently, the domicile test will likely consider you an Australian resident for tax purposes.

Spending < 6 months in other countries will do to keep you out of their tax systems though.

https://www.ato.gov.au/Individuals/international-tax-for-individuals/work-out-your-tax-residency/

[marty998]

Conwy.... is this not totally exhausting for you to keep switching countries all the time based on tax?

Do you think the average person can do what you do and just upend their life and leave behind all their family and friends for six months at a time just to save a bit of tax?

Can't help but feel you are also basically trying to freeload in every country that is nice enough to host you too. If their non-resident rules are anything like ours, you might find yourself taxed at a higher rate anyway.

[Bloop Bloop]

The easier way to do this is to actually schedule holidays around work conferences (or vice versa), in which case at least part of your lodging and expenses can be deducted - depending on how brazen you want to be. This is the reason that work conferences are usually in some far off, enticing location.

Problem is most of those conferences are useless by themselves so I'd only ever do that if it happened to coincide with a location I really want to travel to.

[Lukim]

I agree with mjr.

It is now quite hard to become a non tax resident of Australia unless you have some permanent base and tax residence in another country.

I became a non tax resident of Australia many years ago but I am a tax resident of the country where I live (which does have lower tax rates than Australia - doesn't almost everywhere!!!).

[jaysee]

The easier way to do this is to actually schedule holidays around work conferences (or vice versa), in which case at least part of your lodging and expenses can be deducted - depending on how brazen you want to be. This is the reason that work conferences are usually in some far off, enticing location.

Problem is most of those conferences are useless by themselves so I'd only ever do that if it happened to coincide with a location I really want to travel to.

Not sure I understand. How would this reduce my tax burden by allowing me to take advantage of more than one tax-free threshold per calendar year?

Assuming the conference doesn't run for 6 months and doesn't involve me being paid from an overseas branch of the company during those 6 months, I don't see how this reduces my tax bill in the slightest.

[jaysee]

It is now quite hard to become a non tax resident of Australia unless you have some permanent base and tax residence in another country.

This is true.

I should preface this whole post be mentioning that I am a non-tax-resident.
Achieved this by moving to and working in a different country for 2+ years.

I became a non tax resident of Australia many years ago but I am a tax resident of the country where I live (which does have lower tax rates than Australia - doesn't almost everywhere!!!).

Nice! But I believe you'd still have to pay Australian tax on your Australian-domiciled investment income (dividends, interest, etc), no? I still haven't worked out a way around that.

[jaysee]

Conwy.... is this not totally exhausting for you to keep switching countries all the time based on tax?

No, it's a lot of fun.

I already planned to work-travel to many different places before I knew there might be tax advantages. I see it as a good use of time, basically saving and adding to my portfolio while also getting to experience different places and cultures.

Do you think the average person can do what you do and just upend their life and leave behind all their family and friends for six months at a time just to save a bit of tax?

Probably not, but the Mustachean community doesn't seem to be aimed at 'average' people.

I live minimally, so it's easy to just stuff everything in a backpack and move when needed.
I also have a fairly portable skill-set, so there are multiple countries I can work in.

Family and friends are already scattered all over the world anyway, so I have nothing to lose from travelling every few months.

Though it would be nice to eventually settle down somewhere. Maybe if/when houses start to become actually affordable.

Can't help but feel you are also basically trying to freeload in every country that is nice enough to host you too. If their non-resident rules are anything like ours, you might find yourself taxed at a higher rate anyway.

I don't think the government can just arbitrarily tax someone higher, resident or not. There are rules that govern whether you're considered tax resident or not and how much tax you have to pay given the relevant factors. As long as you're within the rules, you will get taxed accordingly. At least, that's my experience and that of everyone I know.

People hire accountants to help them operate in a tax efficient way. I'm just trying to keep my operations tax-efficient, not to out-and-out avoid tax.

You can call it freeloading if you want, but I don't see how that's the case.

I'm working the whole time I'm in the country, not popping out babies and claiming welfare like some...

Also not using corporate lawyers and lobbyists to get special tax treatment like some...

Also I'm healthy, young, avoid commuting and am not a criminal, so probably a minimal burden to the government in any case.