Having a Foreign Affair

If you’re considering re-locating overseas for the adventure or for the financial benefits, the odds are good that if you have children enrolling in an international school, they’re probably going to enjoy the experience.

But ensuring that they do, you’ll probably want to stay for more than a couple of years. Children adapt well, but they also like to establish rooted friendships.

To benefit financially, you’ll probably want to stay more than just a couple of years as well.

Canadians Overseas

Canadians who make an effort to cut their residential ties don’t have to worry about Revenue Canada knocking on their door at tax time. Doing this isn’t for everyone because you’ll essentially be saying, “OK, I’m moving overseas, and I probably won’t be coming back”

Officially, it has to be a permanent move. It doesn’t mean that you’ll never move back to Canada, but you’ll be making some significant long term changes to cut ties: closing bank accounts, selling your investments, canceling medical coverage, canceling your driver’s license and probably selling your home.

Americans might look to expatriate Canadians with pity…until it’s tax time.

A couple I’ll call Jim and Betty live in a 12,000 person expatriate community in Saudi Arabia. Betty goes for 20 kilometer runs within the compound, and Jim joins a group of cyclists who ride up to 80km within the boundaries of the gate. There are no taxes to pay. As non residents of Canada, they save well over $120,000 a year—as school teachers at Saudi Aramco. And they probably spend more money on “non-essentials” than you and three of your neighbors put together.

Given the magnitude of the facility, the company hires professionals from a variety of vocations. And despite the eye-popping teacher salaries, teachers tend to be closer to the bottom of the pay pyramid, rather than the top.

During breaks, employees venture off into Europe, Africa, and cruise the Mediterranean. It’s not an exaggeration to suggest that most of them are swimming in cash.

But it’s not without risks

Saudi Arabia doesn’t generally find itself in direct, violent altercations with its neighbors, but that’s what many people thought about Kuwait, before the first Gulf War. A friend of mine was one of the last to leave “occupied” Kuwait. At a sentry stop, a young Iraqi guard with a machine gun questioned him with a foam-caked, dehydrated look. Passing the soldier a Pepsi from a 6 pack he had on the front seat of his car may have saved him from more than just a long wait. My friend was leaving his post as the Kuwaiti National Team Swim Coach, and after news of his “Pepsi Escape” got out, he was a guest on Larry King Live.

On the overseas work circuit, you’ll hear your fair share of adrenaline-filled stories.

Expatriate disconnection

Of course, there are multiple overseas options for adventurous people—beyond just corralling yourself in the Middle East. And many of them pay extraordinarily well. Overseas Canadians generally pay much lower taxes, they enjoy higher standards of living, and can usually invest their money in accounts that rival RSP efficiency. My investment accounts in Singapore, for example, are free from capital gains taxes.

But there are strange disconnections with many of the “business world” types. It’s not uncommon for companies to pay for schooling, country club memberships, business class tickets home for holidays, housing allowances…and even car allowances.

Reality can get blurred for many. One of my friends working for a company in Korea, making and distributing sunglasses, was going to give his 18 year old son $120,000 U.S. because his son earned a full university scholarship.

“He earned the scholarship,” he said. “And I was going to spend that money on his education anyway.”

“It’s only $120,000,” he stated, with honesty that nearly knocked me off my chair.

Can working overseas be that intoxicating?

Or is it a level of drunkenness you’d welcome.

What about you? Do you think my friend is delusional? And has an overseas life ever enticed you?