Nix and Mike

I have a question for those tax boffs out there....

If we have investments outside of Australia that deliver an income. And if we pay taxes on that income in the country that they are in then bring it into Aus to help support our expenses.......do we pay tax on that income in Aus?

Nix

Grayling

Yes

If you are a permanent resident then you pay Australian tax on ALL your worldwide income.

If the investment is in the UK then you do not need to pay UK tax but will need to arrange this.

G

Nix and Mike

MMMmmmm. That is not good news.

On a related issue then......how do immigrants arrange to have their "wordly funds" transferred to Aus and avoid being taxed on it? It is obviously after tax income....?

Nix

MartinLuther

If you're PR then you pay tax on the income but you get a credit for the tax already paid in the other country (assuming it's a country like the UK that has a double taxation agreement with Aus).

So, if the Aus tax is higher than the tax already paid then you pay the difference.

Grayling

This really is an area that warrants specialist advice.....whether you opt (or indeed are able to opt) to pay tax in any particular country depends very much on your individual circumstances.

For instance: endowments are tax free in the Uk but are not in australia...nor are any FIF's beyond a certain limit.

G

MartinLuther

I disagree that you need specialist advice. It doesn't take much to get up to speed on FIFs and Endowments.

Grayling

....but it does to get up to speed on the tax rules.

For instance.......your tax free allowance in the UK means bugger all as far as the ATO is concerned.....

Yet people still think they can 'hide' their ATO tax liabilities within their UK tax allowance.

G

MartinLuther

And some people think that the tiered tax rates in Aus are strange (despite the UK doing the same thing). Just because there are some numpties out there doesn't mean everyone should go running to the tax advisor.

Grayling

.....but most of the posters on this forum will have vastly different circumstances from each other....therefore an answer which is relevant to some is unlikely to be relevant for all.

The OP did not reveal the source or nature of their investments so a 'catch all' answer is not possible.

G

MartinLuther

So which bit of my answer do you think is wrong?

Grayling

Which bit of mine is?

MartinLuther

Depending on the income then these could be wrong:

• "If the investment is in the UK then you do not need to pay UK tax but will need to arrange this."
• "This really is an area that warrants specialist advice"

Don't you just hate it when you bat back the same question instead of an answer and the other person answers it

Grayling

Depending on the income then you could be wrong as well

You can not pay tax on ISA's etc in the UK as they are Tax free there but are not in Australia.......touche'.

Rental income from UK property will be taxed in Australia...despite your UK tax allowance.

Credits are only available for tax actually paid.....you can not opt to claim your tax free allowance in both countries.

This discussion demonstrates that specialist advice is necessary in some (many/most) cases.

G

MartinLuther

Give me an example then!

I said that you pay tax in Aus on the income but you get credit for tax already paid. In this case you have to pay Aus tax on the income and you get no credit as you've paid no UK tax. I got that right then!

If you want to cross swords, at least argue against what I said not what you make up!

This proves your point ("If the investment is in the UK then you do not need to pay UK tax but will need to arrange this") wrong, however it does not prove my point wrong. If the Aus tax on the UK rental income is greater than the UK tax already paid then you pay the difference. If your UK allowance means that you pay no UK tax then you still pay Aus tax on the income and have no UK tax credit. The UK allowance affects how much UK tax you pay (and thus how much credit you get) but does not affect how much the Aus tax is. I got that right then!

The first part is exactly what I said – no need to repeat it back to me. I made no allusion to the second part – that’s just your misinterpretation. I got that right then!

This clearly demonstrates that you may need specialist advice. It does not prove that everyone needs specialist tax advice.

For the cases you have given (ISAs and Rental income) specialist advice would only be required in a limited number of cases. And unfortunately in these limited cases there's a large possibility that the specialist will get it wrong too.

Grayling

How many angels can dance on a pinhead?

G