After your working holiday: tax and financial tasks

When your working holiday comes to an end, your focus is likely on final goodbyes and packing your bags. Before you head home, however, there is a list of practical financial tasks to complete. Taking care of these administrative details, such as taxes and bank accounts, can help ensure a smooth transition back and prevent complications from arising months or even years later.

This guide outlines the key financial tasks to complete in both your host country and your home country. Planning these steps before you depart can make the entire process much more manageable.

Understanding your final tax obligations

Taxes are one of the most complex parts of finishing a work stint abroad. You will likely have tax responsibilities in both the country where you worked and your home country. Figuring out what you owe, and where, often comes down to your tax residency status during the period you were away.

Tax residency is a status that tax authorities use to determine how they will tax your income. It is possible to be a tax resident of more than one country at the same time, or of no country at all. Your status typically depends on factors like how much time you spent in a country and the nature of your ties there, such as having a permanent home. It is a separate concept from your citizenship or visa status. Understanding the tax residency basics for working abroad can help clarify your obligations.

Many countries have double taxation agreements, which are treaties designed to prevent you from being taxed twice on the same income. These agreements set out rules to determine which country has the primary right to tax your earnings. They do not eliminate your responsibility to file tax returns, but they do provide credits or exemptions to avoid double payment.

Your host country taxes

Before you leave your working holiday destination, you must settle your tax affairs there. This usually involves filing a final tax return for the income you earned in that country. Depending on how much you earned and how much tax was withheld by your employers, you might be due a tax refund or you may owe an additional payment.

Some countries have procedures for filing an early tax return if you are leaving the country permanently. Others require you to wait until the end of the standard tax year to file. Check the official website of the national tax authority for information on the process for people leaving the country. You may need to provide a forwarding address, which could be a digital one, to receive correspondence and any potential refund.

Your home country taxes

Your home country will also have rules about reporting income earned abroad. Even if you paid tax in another country, you may still be required to report that foreign income on your home country tax return. Whether you owe additional tax at home depends on your tax residency status, the amount you earned, and the terms of any double taxation agreement between the two countries.

Some tax systems exempt foreign-earned income up to a certain threshold if you meet specific criteria, while others provide a tax credit for the taxes you have already paid abroad. Because these rules are complex and specific to your situation, getting professional advice is often a wise decision.

Managing pensions and superannuation

During your working holiday, your employers may have been required to contribute to a retirement, pension, or superannuation fund on your behalf. These funds belong to you, and you need to decide what to do with them when you leave.

The rules for accessing these funds vary significantly by country. Some countries allow temporary residents who are leaving permanently to claim their accumulated retirement savings as a lump sum payment. This process often has a specific name, and the withdrawal is often subject to a specific tax.

In other countries, you may not be able to access the funds until you reach the legal retirement age. In this case, the money will remain in the fund. If this applies to you, make sure you have all the account details and keep your contact information updated with the fund administrator so you can access it in the future.

Investigating the process for claiming or managing your retirement funds should be done well before your departure date. The application can require certified documents and may take time to process. Check the official government websites that regulate retirement savings for details.

Closing your foreign bank accounts

Leaving a foreign bank account open after you depart might seem like the easiest option, but it can lead to problems. Inactive accounts can accumulate fees that erode your balance and could eventually put your account into debt. You may also miss important notifications from the bank if you are no longer at your registered address.

Closing your account provides a clean break and simplifies your financial life. It ensures you receive your final balance and prevents future administrative problems.

A checklist for closing your account

Follow these steps to close your foreign bank account smoothly. The exact process can differ between banks, so always confirm the specific requirements with your financial institution.

Check for outstanding payments. Before you initiate the closure, make sure all your final paychecks have been deposited and any automatic payments or direct debits have been canceled.
Transfer your remaining balance. Move the funds to your bank account back home. Be mindful of transfer fees and exchange rates. Compare different services based on their fee structures: some charge a flat fee, while others take a percentage of the transfer. Look for a service that clearly displays the exchange rate and total fees before you confirm the transaction.
Visit the bank in person if required. Many banks require you to visit a branch in person with identification to close an account. Plan to do this in your final days in the country, after you have received all your expected income.
Inquire about remote closure. If you must leave before your final paycheck clears, ask the bank if it is possible to close the account remotely from your home country. This is often more complicated and may require mailing notarized forms. It is best avoided if possible.
Get written confirmation. Once the account is closed, ask for a closing statement or some form of written confirmation. Keep this document for your records as proof that the account was properly terminated.

Finalizing other practical details

Beyond taxes and banking, several other small but important tasks need your attention before you head home. These tasks are easy to forget in the rush of departure but are worth handling to ensure you leave everything in good order.

Cancel subscriptions and utilities. Make a list of all recurring payments and services. This includes your phone number and mobile data plan, gym membership, streaming services, and any utilities like gas or electricity if they were in your name. Provide the required notice to avoid being charged after you have left.
Settle your accommodation. If you were renting, ensure you follow the correct procedure for ending your lease. This includes giving proper notice, arranging a final inspection, and providing a forwarding address for the return of your security deposit.
Collect official documents. Gather any important documents you might need later. This includes your final payslips, a statement of earnings or final tax certificate from your employers, and any letters of reference. These can be crucial for filing your taxes at home and for future job applications.
Update your contact information. For any accounts you must leave open, like a pension fund, update your address, email, and phone number to your new details back home. This ensures you will continue to receive important communications.

Check before you go

Rules regarding tax, banking, and pensions change and differ based on your citizenship and the countries involved. Always verify information with official sources before making decisions.

The tax authority of your host country: Check its official website for information on filing a final tax return, claiming refunds, and any special rules for people leaving the country.
The tax authority of your home country: Consult its resources to understand your obligation to report foreign income and to learn about credits or exemptions for taxes paid abroad.
Your bank in the host country: Confirm its specific procedure for closing your account, including any requirements to visit in person and the process for transferring your final balance.
A qualified tax adviser: Consider consulting a professional who specializes in expatriate or international tax issues for personalized advice on your tax residency and filing obligations.