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Thinking of moving to Australia? Bear these numbers in mind

Posted On: Friday, March 3, 2023

Thinking of moving to Australia? Bear these numbers in mind

As the adage goes, the grass is always greener on the other side. Right now, Australia may seem like the pot of gold at the end of the rainbow. But don’t make any rash decisions until you’ve digested the facts and figures below.

The perils of perception

Before we start, let’s talk about The Misperception Index. This global ranking measures the average citizen’s perception of their country against its actual statistical reality. To compile the Index, Ipsos conducted more than 29,000 interviews across 38 countries, obtaining opinions on myriad social metrics. And guess what? South Africa emerged as the country with the highest level of misperception when it comes to the local social scenario. In other words, we were the most wrong about life in our country!

Now that we’ve got that out of the way, let’s compare South Africa and Australia across a broad spectrum of statistical metrics….

Mortgage interest rates

South African mortgage rates are high, with standard interest rates at around 10%.

Mortgage rates in Australia are around 6.07%.

What it means: Even though the Australian mortgage rate is far lower than ours, it’s usually harder to pay off a mortgage there as house prices are much higher in Australia and in general, people allocate a higher percentage of their salary to housing.

That said, house prices do finally seem to be falling in Australia as the banks are considering increasing interest rates. It looks like the property bubble is beginning to burst, especially in the inner-city areas of Melbourne and Sydney.

Income tax

Data from the OECD shows that the South African average tax rate is 22.4% and the Australian average is 22.23%. In Australia there is also a 2% Medical Levy.

What it means: Although the tax rates seem pretty similar, in Australia the public transport is excellent, public spaces are clean and state hospitals provide a very good service. In Australia, there is good use of the fiscus.

South Africans tend to seek all possible ways to reduce their tax as they don’t believe that their payments will be used for the betterment of society.

Capital gains tax

The South African Capital gains inclusion rate remains at 40% for individuals.

The Australian Capital gains inclusion rate for individuals is 50%. Read more about Australian CGT here.

What it means: You’ll pay heavily for capital gains in both countries. Don’t forget to read the fine print, though. In SA you get a R40,000 annual general exemption, and when you sell your primary residence, the first R2 million is exempt.

Estate duty

Estate duty applies when you pass away. In South Africa, estate duty is levied on the dutiable value of an estate at a rate of 20% for the first R30 million and 25% thereafter. (This is similar to the donations tax rates in South Africa.)

In Australia, there’s generally no estate duty. Read more on Australian estate duty here.

What it means: This makes sense. Estate duty is a form of wealth tax as the income is needed to assist in the transfer of wealth to underprivileged South Africans. There’s not such a large wealth discrepancy in Australia so the government there doesn’t need to raise income by charging estate duty.

Minimum wage

In South Africa the minimum wage is R3,500 per month.

In Australia the minimum wage is R30,307 per month.

What it means: In Australia, you can afford to live on the minimum wage. In South Africa, you cannot.

Some other stats worth noting…

To go or not to go?

Before jumping on a plane, remember that all countries have problems and that most economic factors are beyond any one nation’s control. While the metrics do look better for Australia, privileged South Africans still enjoy a very high standard of living. They can easily afford to buy property – something which is very tough for first-time buyers in Australia. We’ve got significant issues here like crime, corruption, and load shedding … But at least we live colorful lives. (Australians really do get worked up about the wool price.)

In Australia, there are many natural disasters in some areas, including fires and flooding caused by climate change. What’s more, despite B-BBEE there are many job opportunities for young professionals in Mzansi, and there’s virtually no red tape required to start a business. Australia, on the other hand is a closed market for many professionals. Australia has a massive middle class, but very few Australians are super wealthy.

Note: The figures above were obtained from various online sources in February 2023 and this article is intended for general comparison only.

To discuss your investment strategy, speak to a professional.

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