Does the country you are born in determine the tax you pay?

The short answer: no. The long answer is more complicated than that.

If you earn more than the income threshold ($18,500 in Australia), you will have to start paying personal income taxes. The rate you pay will be low at first but increases as you earn more money.

Why does the government take your money? Well, for starters, infrastructure doesn’t build itself. You can't rely on the private sector to build roads, parks, and hospitals. Otherwise, your hospital bill may become too high, and companies could charge as much as they want.

Therefore, paying taxes is not necessarily a bad thing, provided you pay a fair amount. This means you should claim any tax deductions available to you. I suggest speaking to a tax advisor about this to get the most out of it.

What determines whether you pay tax depends on your tax residency status. This is not based on your passport but on how the government views your residency (the ATO in Australia and the IRS in the US).

Generally, the ATO considers multiple factors. Broadly, the main factors are:

• Where do you earn income?

• Where is your family?

• Where do you spend most of your time?

• Where is your home?

  
  

However, tax residency rules are more complicated than they seem, so you will need to do further research or consult a tax accountant or tax lawyer.

Once you establish your residency, you can move to a country with a lower income tax threshold. Popular choices include Singapore, Hong Kong, and the Middle East. If you have significant wealth, Monaco may be your option. This due to no personal income tax.

Take Formula 1 drivers as an example (as of 2025)—9 out of 20 drivers have tax residency in Monaco. That’s almost 50% of all drivers. However, not all the Formula 1 team headquarters are in Monaco; most F1 headquarters are in England.

If you can’t afford the high cost of real estate and living expenses in Monaco, countries like Thailand or Costa Rica may be viable options. If you don’t have enough capital to retirement and need to continue working. You can still set up an online business and run it from these countries while still earning a decent income. However, you will need a valid visa and ensure you have ceased tax residency in the country you plan to leave.

If you choose to live in countries like Thailand, you must accept that some infrastructure may not be as advanced as in Australia or Singapore. However, with proper planning, you can still have a great quality of life. Thailand have international schools, excellent properties, and access to major international airports. Everything comes down to researching and planning. It’s crucial to have a proper team in place or at least people you can rely on for guidance. These team could be tax accountants and financial planning to begin with.

Retirement Considerations

An important aspect people tend to overlook is retirement. If you leave Australia, you stop contributing to your retirement account (being superannuation in Australia). This could mean you won’t have enough money for retirement (after 65). Additionally, you are responsible for not putting compounding interest to work in your favor. Therefore, you should plan for retirement, either by pay down your debt or start investing now or contributing to a retirement account.

You also won’t know how long you’ll stay in each country. Unexpected factors, such as family emergencies or global events like COVID-19, may force you to return home or relocate again. Therefore, having access to cash is vital.

Some people take it a step further by obtaining permanent residency or a second passport. Some countries make this easier than others. I suggest consulting a professional or a specialized firm to find the best option for you. It won’t be cheap, but it gives you flexibility and security.

Conclusion

The country you are born in does not determine the taxes you pay. You can choose to leave (as long as you do so correctly) and select a country with lower tax rates, but also provide you with good infrastructure. This is a complicated process to ensure all the legal requirement is satisfied. Therefore, you should seek quality advice. Lastly, ensure you have a retirement plan in place and seek options to obtain permanent residency or passport.