Expat Tax Tip #5 – Expat Tax Traps You Don’t Want to Miss

Living abroad can be exciting — but expat tax rules are full of hidden pitfalls that can cost you big if overlooked. From bank accounts to residency days, the little details matter. Here are five quick reminders every Aussie or Canadian expat should keep top of mind:

1. It’s Not Just About Interest

Even if your overseas account pays little (or no) interest, many tax offices require you to declare the balance itself.

 

• • Australia: The ATO expects you to report all worldwide income, including foreign bank interest. ATO – Foreign Income

• • Canada: Once your foreign holdings exceed CAD 100,000, you may need to file Form T1135. CRA – T1135

2. Reporting Thresholds Vary

Every country sets its own rules:

 

• • U.S. expats: FBAR (FinCEN Form 114) required if balances exceed USD 10,000. IRS – FBAR

• • Canada: Foreign income verification via T1135 (as above).

• • Australia: No threshold — everything is reportable.

3. Penalties Can Be Brutal

Failure to report can mean thousands in penalties per year. Some countries even impose criminal liability for repeated non-disclosure.

4. Tax Treaties Won’t Save You

Treaties help avoid double taxation, but they don’t excuse you from reporting obligations.

Bottom line: Don’t treat foreign bank accounts like “out of sight, out of mind.” Reporting is just as important as paying your tax.

Want the full lowdown on what counts as reportable income and how to avoid these traps? Check out my Australia Expat Tax Guide or my Canada Expat Tax Guide.

External Source: OECD – Automatic Exchange of Information (Common Reporting Standard)

Please refer to this page to see all my other expat tax tips.