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Old Aug 31st 2013, 10:34 am   #1
ajw 
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Default Tax on relocation allowance

Hello,

My husband has accepted a new job in Melbourne and we will be relocating from Malaysia. The new company have said that they will pay a relocation allowance. Can anyone advise if we will have to pay FBT on this? Or if there is some allowance left over after all expenses are accounted for -- is this the portion subject to tax?

Many Thanks
Ajw
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Old Sep 1st 2013, 6:36 am   #2
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Default Re: Tax on relocation allowance

Hello ajw.

Individuals don't pay FBT - employers do, tho' some will then look to claw back the FBT from the employee's salary.

Best regards.
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Old Sep 1st 2013, 6:52 am   #3
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Default Re: Tax on relocation allowance

Hi Alan

Thank you for your response. I am assuming that if we were paid the allowance as a lump sum it would attract PAYG tax? If we pay upfront ourselves and claim reimbursement would it be tax free?

Many Thanks
Anna
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Old Sep 1st 2013, 8:47 am   #4
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Default Re: Tax on relocation allowance

Quote:
Originally Posted by ajw View Post
Hi Alan

Thank you for your response. I am assuming that if we were paid the allowance as a lump sum it would attract PAYG tax? If we pay upfront ourselves and claim reimbursement would it be tax free?

Many Thanks
Anna
Hello Anna.

What follows is purely from recollection - so please consider instructing a tax advisor and paying a fee if you want categoric advice on which you can rely.

I am assuming that if we were paid the allowance as a lump sum it would attract PAYG tax?

=> No, not necessarily. Relocation allowances paid by an employer can be a FBT free payment, particularly if you are heading to Australia as the holder of a subclass 457 visa.

The employer should be engaging the suppliers directly to ensure the FBT free treatment pertains.

There are a number of Private Rulings on the ATO website on this subject, but please remember that a Private Ruling is specific to the taxpayer that applied for it.

If we pay upfront ourselves and claim reimbursement would it be tax free?

=> No, I believe that the reimbursed amount would then be assessable as your personal income, with no tax deduction available to you personally.

Best regards.
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Old Sep 2nd 2013, 1:27 am   #5
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Default Re: Tax on relocation allowance

Reimbursement costs I paid and then claimed back from my employer weren't subject to tax. This was minimal though - taxi's, medicals, overbaggage allowance on the plane. I think that was about it.
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Old Sep 2nd 2013, 1:29 am   #6
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Default Re: Tax on relocation allowance

Quote:
Originally Posted by LeeWillo View Post
Reimbursement costs I paid and then claimed back from my employer weren't subject to tax. This was minimal though - taxi's, medicals, overbaggage allowance on the plane. I think that was about it.
What I think you might mean is that you didn't enter these items as assessable income on your tax return ... ?

Which is not the same thing as these items not being properly assessable as income.

Best regards.
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Chartered Accountant (UK and Australia). Registered Tax Agent (Australia)
http://www.gomatilda.com and http://www.gmtax.com.au
Offices in Southampton (England), and Melbourne (Australia)
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Old Sep 2nd 2013, 3:12 am   #7
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Default Re: Tax on relocation allowance

Quote:
Originally Posted by Alan Collett View Post
Hello Anna.

What follows is purely from recollection - so please consider instructing a tax advisor and paying a fee if you want categoric advice on which you can rely.

I am assuming that if we were paid the allowance as a lump sum it would attract PAYG tax?

=> No, not necessarily. Relocation allowances paid by an employer can be a FBT free payment, particularly if you are heading to Australia as the holder of a subclass 457 visa.

The employer should be engaging the suppliers directly to ensure the FBT free treatment pertains.

There are a number of Private Rulings on the ATO website on this subject, but please remember that a Private Ruling is specific to the taxpayer that applied for it.

If we pay upfront ourselves and claim reimbursement would it be tax free?

=> No, I believe that the reimbursed amount would then be assessable as your personal income, with no tax deduction available to you personally.

Best regards.

Hi Alan

We are heading to Australia as Aus citizens and we'll be engaging the suppliers ourselves.

Good idea on getting professional advice on this since the allowance is a decent amount.

Regards
Ajw
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Old Sep 2nd 2013, 4:29 am   #8
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Default Re: Tax on relocation allowance

Quote:
Originally Posted by ajw View Post
Hello,

My husband has accepted a new job in Melbourne and we will be relocating from Malaysia. The new company have said that they will pay a relocation allowance. Can anyone advise if we will have to pay FBT on this? Or if there is some allowance left over after all expenses are accounted for -- is this the portion subject to tax?

Many Thanks
Ajw
Isn't this like a normal incurred work expense? Like paying for a hotel, meal or taxi?

In my case I paid for some items and claimed as an expense. Other large items such as airfares and shipping were paid for by my company.

I didn't see any extra tax from it. Not sure if I should have. I hope not ... not sure why I should be out of pocket.
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