The 23-year-old, the latest victim of Australia's current glut in world class number sevens, has not disclosed which Top League club he will be joining but said he had played his last game for the Melbourne Rebels in Super Rugby.
"We'll be done with the Rebels at the end of this season and all I can say is I won't be playing in Australia next year," he told reporters in Newcastle.
"It was a very big call to make. There were a few factors, a few personal ones and a few other issues I don't really want to go into but it obviously was a big decision for my career and my personal life as well.
"Pretty happy with my decision and so is my wife as well."
McMahon has played only 15 tests since making his debut against Wales in 2014, his chances limited by injury but mostly by David Pocock and Michael Hooper.
"'Poey' and 'Hoops' have taught me a hell of a lot, have pushed me to limits I probably haven't been before, which pushed me to be a better athlete," McMahon added.
"So, as much as it was I probably didn't get personally the run I wish I could've got, they're great players to have learnt and played with and I can't thank them enough for what they've taught me along the way."
Falling far short of the 60-cap threshold that would allow him to play for the Wallabies while overseas under the 'Giteau Rule', McMahon would have to signal his intention to return to Australia to be able to play in the 2019 World Cup.
McMahon was outstanding in the two matches he played at the last World Cup in England but appeared resigned to watching the next version, which will take place in Japan, from the sidelines.
"If I want to come back, it'll be a decision I'll have to come to at that time," he said.
"There's still a chance, maybe down the track I might change my mind (but) I'm pretty happy with my decision."
The Australian media have reported that McMahon will link up with fellow former Wallabies George Smith and Matt Giteau at Fuchu club Suntory Sungoliath.
Liam Gill, another outstanding flanker left in the test wilderness by the surfeit of quality Australian opensides, left the Queensland Reds for Toulon at the end of last year.
(Reporting by Nick Mulvenney; Editing by Sudipto Ganguly)
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