Your super, your investment property back home, the savings account you left open “just in case” — every Australian asset you own becomes a more complicated decision the moment you become a US tax resident. We sat down with John Versace, Director and Head of Expat Services at Apt Wealth Partners, to unpack what actually changes, what to watch out for, and what most people get wrong.
John has been a financial advisor for over 20 years and now leads a team that focuses specifically on cross-border financial planning for Australians living in the US. Over 80% of his client base are US-based Australians, and he sees the same questions and the same expensive mistakes come up over and over again.
General advice disclaimer: The information in this article is provided for general information purposes only and does not constitute financial product advice. It is of a general nature only and does not take into account your individual objectives, financial situation, or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121, ABN 49 159 583 847), Apt Wealth Home Loans powered by Smartline (ACL 385325), and America Josh LLC recommend that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.
How Does the IRS Treat Australian Superannuation?
This is where John says most of the confusion in the US-Australian community starts, and it's also where he can give the least definitive answer — because the answer doesn't really exist.
The double tax treaty between Australia and the US doesn't address superannuation at all. The IRS has never come out with a clear ruling on how Australian super should be treated for US tax purposes. So what happens in practice is that specialist US-Australian accountants look at other parts of US tax law and make their best interpretation of how to handle it.
The safe assumption: super is not treated the same way in the US as it is in Australia. The IRS will likely want to tax the investment earnings at some point — either each year as the fund grows, or when you start drawing down in retirement. For most people, it ends up being income tax on the way out.
The takeaway: anything you do with your super while you're a US tax resident, run it past your US accountant first. Even simple-sounding strategies can trigger US tax complications.
Should I Contribute to My Super While I'm in the US?
Generally, no.
The IRS won't recognize super contributions as a tax-effective strategy in the US, so contributing while you're a US tax resident gives you zero benefit on your US income tax return. Worse, personal contributions (above what your employer puts in) can change how the IRS classifies your super fund — potentially turning it into a Foreign Grantor Trust, which means extra filing, extra costs, and unintended consequences on your US return.
If you're in the US for the short term, wait until you get back to Australia. Australian super rules let you put a lot in quickly when you do return, and you'll get the Australian tax benefits at that point.
What About Self-Managed Super Funds (SMSFs)?
If you're going to be in the US long-term, your SMSF needs to be reviewed.
The IRS may treat your SMSF as a Foreign Grantor Trust, which means they look through the structure and tax the earnings to you personally. That alone is a complication. But there's a second layer: the actual investments held inside the SMSF can be hit with PFIC treatment (more on that next), which compounds the tax and reporting complexity significantly.
For shorter US stays — one or two years — restructuring may not be worth the cost. For longer stays, you may need to look at the asset mix inside your SMSF or even reconsider the structure entirely.
What Are PFICs and Why Do They Matter?
PFIC stands for Passive Foreign Investment Company. It's a US tax classification that catches almost any non-US managed fund, ETF, listed investment company (LIC), or property trust.
In practice, PFICs are bad news. Each one carries an extra IRS filing requirement, which can be expensive if you have a portfolio of multiple Australian managed funds or ETFs. And the tax treatment itself can be punishing — in some cases you end up paying tax on unrealized gains each year at the highest US income tax rate.
What's typically safe: direct shares in major Australian companies (think Commonwealth Bank, BHP) and US-domiciled investments (US Vanguard funds, US-domiciled ETFs). What's typically problematic: Australian managed funds, Australian ETFs, A-REITs, LICs, stapled securities — anything indirect.
If you're investing while in the US, the strategy often shifts toward direct stock holdings rather than the ETF and managed fund approach you might have used in Australia.
What Do I Actually Have to Report to the IRS?
Everything.
If you're a US tax resident, you're assessed on your worldwide assets and income. That includes Australian bank accounts, super, investments, property, trusts — all of it. The FBAR (Foreign Bank Account Report) is the most common reporting requirement, and almost everyone watching this article will need to file one.
Important: even if an investment hasn't produced any income and you haven't sold it, it likely still needs to be on your FBAR.
Don't try to silo information or hope something gets missed. The IRS penalties for unreported foreign assets are substantial, and the cost of disclosing everything is almost always lower than the cost of being caught not disclosing.
Should I Contribute to a 401(k)?
Yes — and a lot of Australians get this wrong.
There's a common misconception that if you're only in the US for five years, contributing to a 401(k) is too complicated to bother with. The opposite is actually true. Australia treats your 401(k) more favorably than the US does, so it's not a tax problem when you return home.
More importantly, most US employers offer matching contributions. If you don't contribute, you're leaving free money on the table — money that's part of your compensation package. Negotiating a strong employer match is a legitimate part of US salary negotiations and shouldn't be ignored just because the structure feels foreign.
The 401(k) structure works in your favor while you're in the US: contributions go in pre-tax, earnings grow tax-free, and you only pay income tax when you withdraw in retirement.
What About IRAs and Roth IRAs?
Traditional IRAs operate similarly to 401(k)s — often you'll roll a 401(k) into an IRA when you leave an employer. Same general tax treatment.
Roth IRAs are different. You contribute with after-tax money, the investment grows tax-free, and withdrawals in retirement are also tax-free under US rules. The catch: Australia doesn't recognize the tax-free status of a Roth IRA. If you plan to return to Australia and draw from a Roth in retirement, Australia will tax those withdrawals.
If you're staying in the US long-term, a Roth IRA can be a great vehicle. If you're heading back to Australia, the math changes significantly.
Property: What Changes When I Sell My Australian Home as a Non-Resident?
This is where John says he sees some of the worst tax outcomes.
If you have an investment property in Australia, the moment you become a non-resident for Australian tax purposes:
- Rental income is taxed at non-resident rates (30% to 45%) from dollar one, with no tax-free threshold
- Capital gains accumulated while you're a non-resident don't get the 50% CGT discount, so gains are taxed at 30% to 45%
But the worst trap is the family home. If you owned a principal place of residence in Australia — your tax-free home under Australian law — and you sell it while you're a non-resident, the main residence exemption no longer applies. Australia will look back (often as far as 2012) and tax the gain. Even on the years you actually lived in the property as your home.
If you return to Australia and reestablish the property as your primary residence, the tax-free status can come back. But selling while non-resident is the trap that catches people.
And on the US Side?
Rental income from your Australian property is also assessable in the US, because you're taxed on your worldwide income. You'll get a credit for taxes paid in Australia, which helps offset the US bill.
But there are two extra layers to watch for:
NIIT (Net Investment Income Tax): A 3.8% federal surtax on investment income above certain thresholds. Critically, you can't use foreign tax credits to offset NIIT — so this can effectively be a double tax in some situations.
State taxes: Some US states (California is a notable example) don't have a tax treaty with Australia and don't care that you've already paid Australian tax. They'll tax you on the same income regardless. New York is similar. Combined with the Australian non-resident rates, you can end up with a brutal total tax bill on Australian rental income or capital gains.
Can I Still Get a Loan in Australia from the US?
Yes, but with some hurdles.
Australian banks will typically discount your USD income — often valuing it at around 70% — because they're factoring in currency exchange risk. This reduces your borrowing capacity.
If you have a US loan (like a US mortgage), Australian lenders will count the loan against your serviceability but won't recognize the equity in your US property as an asset, because they have no recourse over US property. You count the liability, but not the asset.
End result: you may be able to borrow less than you would as an Australian resident with similar income.
Will I Pay Extra Stamp Duty?
No. This is a common myth.
Australian citizens and Australian permanent residents living abroad do not pay extra stamp duty. The extra stamp duty applies to foreign nationals (non-citizens, non-residents without an Australian visa) buying property in Australia.
If your partner is not yet an Australian citizen or permanent resident, it can complicate the title. Most states allow you to add them later, once they qualify, especially if it's your primary residence.
What About Family Trusts?
Australian family trusts can be effective for Australian tax planning and asset protection. But the US won't recognize the structure. The IRS will look through the trust and treat the assets as belonging to whoever controls and funded it.
That means extra (and expensive) filing requirements on the US side. A family trust may still make sense for owning a single Australian property, but for shares and other investments, the complexity often outweighs the benefit when you're a US tax resident.
Are There Any Issues With Just Holding Cash in an Australian Bank Account?
This is one of the simpler areas. Australian bank accounts won't typically cause major US tax issues — interest income is assessable in the US, but Australian withholding tax can be claimed as a credit against your US bill.
A few practical points:
- Tell your Australian bank you're a non-resident — they should automatically apply withholding tax, which simplifies things
- Keep at least one Australian bank account open if you can. Opening one from the US is significantly harder than maintaining an existing one
- Australia's tax year (July to June) doesn't match the US calendar year, so you may need to manually total your interest and tax for the US calendar year (a simple spreadsheet usually does the job)
What About Life Insurance Through Super?
Many Australians have life and total permanent disability insurance attached to their super. Two things to check:
Will they pay out if you're in the US? Some insurers cover overseas residents, some don't. If yours doesn't cover US residents, they'll keep charging you premiums but won't pay if you claim. Check the policy and ask the question directly.
Will the policy lapse? Standard rules require contributions to your super every 16 months to keep insurance active. If you're not contributing while in the US, you need to fill in a form to opt in to maintaining your cover. Otherwise the cover lapses without you realizing.
Same logic applies broadly to any insurance you hold in Australia: when you become a non-resident, ask the question in writing about whether your cover continues. Don't assume.
How Does Currency Risk Affect My Planning?
The IRS values everything in US dollars, so currency movements affect more than just your bank balance — they directly impact how capital gains and income are calculated on your US return.
If you bought an Australian asset for $100,000 AUD when the AUD/USD rate was 0.80, the US “cost basis” is $80,000 USD. If you sell it later for the same $100,000 AUD when the rate is 0.65, the US sees a capital loss in USD terms — even though nothing changed in AUD. It can also work the other way and create a gain you didn't expect.
The bigger strategic question: what currency will your future financial goals be denominated in? If you're staying in the US, you need US dollars for retirement — so your Australian assets are exposed to currency risk for your actual life plans. If you're going back to Australia, the reverse applies to any US assets you build.
John's advice on timing currency conversions: don't try. Long-term averages for AUD/USD sit somewhere between 70 and 75 US cents, but any given year can swing dramatically. If you can move money incrementally over time, you average out the entry points. If you need certainty for a specific goal (like a property settlement), just lock in the rate and move on.
When Should I Start Planning?
The earlier the better. At least a couple of years before you move if you can manage it.
There are far more levers to pull when you're planning ahead — restructuring assets, choosing the right investment vehicles, timing currency moves incrementally. If you walk in the door with a flight booked next week, options become limited very quickly. If you're already in the US and haven't done anything yet, you can still mitigate problems, but you can't always undo them.
The worst strategy is putting your head in the sand. Even if you don't act immediately, having the conversation early gives you the information to make decisions when the time comes.
Quickfire Myths
“You shouldn't invest in a US retirement account because of tax issues when you go back to Australia.” False. 401(k)s and IRAs are great retirement vehicles and aren't as much of a problem in Australia as people think.
“You can't invest in Australia while living in the US.” You can — you just need to do it differently. Direct Australian shares are typically better than Australian ETFs or managed funds for US tax residents.
“The US share market has better returns so just invest there.” Maybe, if you're staying in the US long-term. But don't ignore currency risk, and diversification across markets is always smart. No market is bulletproof.
“Australians pay extra stamp duty buying property in Australia while living in the US.” False. Australian citizens and permanent residents don't pay the foreign buyer stamp duty surcharge.
“My US accountant understands my Australian assets.” Probably not, unless they specifically specialize in expats. A generalist US accountant won't know to ask about super, family trusts, or PFICs — and you'll sign your tax return saying everything's accurate. Specialists matter.
“My Australian accountant said I don't need to report my investments to the IRS since I'm not selling them.” Get a second opinion from an Australian accountant who specializes in expats. As a US tax resident, your worldwide assets are assessable, and reporting requirements (like FBAR) don't depend on whether you've sold anything.
The Bottom Line
The recurring theme: this is incredibly personal and the right strategy for one person can be completely wrong for another. The single biggest risk is doing nothing — assuming what worked under Australian tax law continues to work, or assuming a generalist accountant on either side of the Pacific will catch the cross-border issues.
Get specialist help. If your situation has any cross-border complexity (and if you're an Australian living in the US, it does), the cost of good advice is almost always much smaller than the cost of getting it wrong.
Free Consultation with Apt Wealth Partners
John and the team at Apt Wealth Partners have offered America Josh readers a free 20-minute consultation to talk through your specific situation. It's a chance to figure out whether you have issues to address, whether you need ongoing advice, or whether you're already in good shape.
Book your free consultation with Apt Wealth Partners
You can also watch the full webinar on the America Josh YouTube channel or listen on the Moving to America podcast.
