finance – 21st Century Expat

Taxation for Digital Nomads – Questions to Ask Yourself

As a traveller flitting from one country to the other, how will I go about doing my taxes?

Even if you are travelling from country to country, you can still be subject to paying taxes so long as you are still a resident of your home country. There are a number of factors that taxation agencies will use to calculate if you are still considered a tax resident. Please check official documentation or consult with an advisor.

In addition you potentially still paying taxes in your home country, you may still be subject to paying taxes in the new country that you are residing in. This is dependent on whether or not you are considered a resident for taxation purposes. For example, if you are living in a country for 183 days or more you may then be considered a resident, for taxation purposes, of that country. If you are living in a country are your source of income is in that country, then that may also mean paying taxes for that income source.

If you are considering trying to get income ‘under the table’ make a note that eventually you may need to fold underneath some sort of business structure like an LLC, LTD, etc. You may also need to have a unique tax number to identify yourself. A number of businesses will require you to operate as a business, rather than as an individual for a number of reasons – for auditing purposes, for liability protection and so on. In addition, without further identifying yourself and your income activities, it may be difficult to do any further paperwork within that country should you need to – for example, in answering income related questions when applying for long term or permanent residency or citizenship.

The Two Main Stages Of Applying For Working Holiday Visas

If you are thinking of undertaking a working holiday visa, I’ve condensed the main essential stages and steps below. These are the steps that I usually take. And yes, these steps do revolve around budgeting.

A bit about me first…

I’m Australian and thanks to the reciprocal agreements made between Australia and numerous other countries, I have been able to live and work around the world. I am now on my 4th working holiday visa. This blog is my outlet for various tips and advice that I want to share to everyone. Enjoy!

A bit about the working holiday visas…

The main reason why they are called ‘working holiday visas’ is that essentially the main purpose is for travel. That’s it. It’s not a work visa nor is it a tourist visa.

Because of the name, there is a common assumption that this visa only relates to holiday/tourist work, that it’s only for unskilled work, and/or that there is no long-term opportunites from this. I’ve found the complete opposite. You can do all sorts of work, you can do work that is skilled and in your industry and you can also garner long-term opportunities – from opportunities for permanent residency to getting valuable experiences. Therefore, this blog functions as a way to rebrand these types of visas.

A bit about my approach…

My approach is that I only focus on doing a fact-finding mission and I focus on budgeting and meeting financial obligations. Unless I intend to move to that country, I do not want to spend too much time looking into subjective information online nor do I look into the fine grain details that is not related to the application process. Therefore, if it’s not related to any planning that I’m doing, then…it’s just wishful thinking.

Stage 1: Find out exactly what the requirements are for your nationality.

Obtain your visa requirements from the official government/immigration authority. Do not resort to blogs or forums.
From these visa requirements, make the plan on how you can meet the paperwork.
Date your findings in case of visa changes and if you don’t plan to go for some time (ie six months).
Find out any important dates or deadlines.
Make a note what you need to do to make an appointment – is there an online booking system, do you need to be in a certain city to apply, what is the minimum amount of time that you should apply, etc.

Stage 2: Do not look into any other details until you can meet the following financial obligations:

You meet the minimum financial requirements for the visa according to your situation.

For example, if you plan only purchase a one way ticket, you must be able to show additional funds equal to the amount of a return ticket.

You also have savings equal to six months at the minimum, bare-bones living expenses in the country in accordance to your situation.

Now, this is the part where doing a budget spreadsheet helps.

Calculate your minimum (and if applicable, your maximum) expenses for things like housing, food, clothing and so on for the month. Then following from that, multiply by 6 (or however months you want to be the threshold).

Example: If your minimum projected expense ends up averaging to $1000 per month, then you’ll need $6000 at your absolute minimum for six months coverage. If the maximum projected expense ends up averaging to $1500 per month, you will need $9000 savings. Therefore, the sweet spot for you in terms of savings could be $7500, however keep in mind that this doesn’t include upfront costs.

Why six months in savings?

It doesn’t have to be six months, but you get the gist – it should be long enough. I would honestly just for all the way to calculating and aiming for having savings liquidity of 12 months worth of living expenses.

Also do not focus on the actual amount itself. You should only be looking at your projected cost of living for that month and then simply multiply it by six (or however long) months.

The reason why is due to the following:

If you want to undertake skilled work, then you will need to take into account potential delays in obtaining that work.
If you plan to rent, then there is the initial cash deposit involved which can be 2-3 months rent in advance.
I find that knowing you have a certain x months amount saved up is a good source of comfort. It’s enough to live on, enough of a cushion in case something bad happens (ie your rental ends up being a scam..yes, this has happened!), you can budget for small trips in between and so on.

What do I do once I reach my minimum savings threshold?

In this case, if you already have $3000 in savings after you have met the paperwork expenses (see below), then what you can do is save until you reach your minimum projected expense (in the case above, that would be $6000). Once you reach that threshold, you can use that to start the rest of the visa application process and paperwork. The reason why is that obtaining the paperwork tends to be very quick, but then you have the application timeline which can vary immensely and is very much out of your control by the time you send your application through.

What about the up-front costs like flights, insurance, visa fees?

The reason why is that the upfront costs will be high. At this stage, you will need to purchase your flights, additional moving expenses, travel insurance, visa fees and anything else required for the visa. Each country will have different requirements, your home country may have certain agreements set up with the visa country and therefore the initial cost is going to vary.

For example, one country can be $2100 in upfront cost (flights, full-year insurance, visa fees), another country can be $1100 (shorter flights, visa fees, no full year insurance required), another one can be $3500 (flights, full year insurance, higher visa fees, higher up front costs). And so on. Your initial up front costs will be very high and they are things that you need to meet anyway to get the visa, which is why I’ve taken them out of the initial budget.

Stage 3 (optional): For those planning to move to another working holiday visa afterwards

If you are planning to move to another working holiday visa, your budgeting and planning skills are about to be taken to a whole new level.

Stay tuned since in another entry, I’ll be writing some tips on Stage 3.

If you enjoy this post, please take a look at the rest of my blog – https://www.hannahsuarez.me/blog/ – for more tips and advice!

Working with a professional coach for an investment learning plan

In one of my earlier posts, I wrote about expat coaches and the specialist areas and concerns that they can address when working with expats. Recently, I attended an investment day expo aimed at retail investors and with that still lingering in my mind, my next session with the professional coach was around structuring a three-month investment learning plan.

An investment learning plan will differ for individuals. I decided to incorporate within that learning plan to learn more about a) active management strategies, b) technical analysis (charting and patterns), c) research on two types of investment strategies – discretionary versus systematic and also d) research into a few investment vehicles that interest me. Looking back on early 2015, much of my time in this particular area (when I’m not learning Linux commands or figuring out the Canadian visa system..) had been delving into private banking and wealth management. Much of what I know had been on an eagle’s eye point of view or from the viewpoint of a marketer when my experiences within that career was still very recent in my mind. Therefore, my approach to this plan is going to be from a completely different viewpoint.

Another issue that I mentioned in the coaching session was sifting through large volumes of information, opinion, charts, patterns, products, tools and data. We ended up allocating a key task to do each week over the next three months so that I only focus on the one task per week. Part of the information overload was around dealing with distractions which seemed to go hand in hand. We then addressed that by allocating x hours per day on this learning plan. I finalized on 7 to 8 hours per day but I spread this out over a whole day. For day trading, the hours need to be changed to consider Sydney/London/New York (and possibly Tokyo) overlaps. New York and London (8:00 am — 12:00 noon EST), Sydney and Tokyo (7:00 pm — 2:00 am EST, London and Tokyo (3:00 am — 4:00am EST).

And last but not least, one of the issues that I had to address in the coaching session was that I was completely aware of what I don’t know. I know enough to begin to structure this plan, but I don’t know if it’s actually going to be effective compared to other potential plans that I could be structuring instead. It wasn’t like I was having a coaching session with a trader or an investor coach. I think it’s too early for that. Instead I didn’t want to be swayed by someone’s approach and instead wanted to do my ownresearch journey and try to find what works for me. I think that is when a non-specialist coach is very useful in that there is more freedom to make your own way, including finding out the mistakes and weaknesses.

I imagine that I’ll be spending three months virtual currency or paper trading before I move on to real currency. I will see if this plan changes, if the hours are correct, if I need more time in a few months!

Question for readers: Did you have an investment education plan when you first learn to trade? How long did you paper trade? What resources do you recommend? Comment below or comment via LinkedIn.