Tax on relocation allowance
#1
Thread Starter
Joined: May 2006
Location: Melbourne - London - Bangkok - Melbourne - Kuala Lumpur - Melbourne
Posts: 658
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
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
#2
Migration Agent
Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,459
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.
Individuals don't pay FBT - employers do, tho' some will then look to claw back the FBT from the employee's salary.
Best regards.
#3
Thread Starter
Joined: May 2006
Location: Melbourne - London - Bangkok - Melbourne - Kuala Lumpur - Melbourne
Posts: 658
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
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
#4
Migration Agent
Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,459
Re: Tax on relocation allowance
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.
#5
Forum Regular
Joined: Dec 2011
Location: Whyalla, SA. From Wakefield, UK.
Posts: 237
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.
#6
Migration Agent
Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,459
Re: Tax on relocation allowance
Which is not the same thing as these items not being properly assessable as income.
Best regards.
#7
Thread Starter
Joined: May 2006
Location: Melbourne - London - Bangkok - Melbourne - Kuala Lumpur - Melbourne
Posts: 658
Re: Tax on relocation allowance
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.
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
#8
Lost in BE Cyberspace
Joined: Dec 2010
Posts: 14,040
Re: 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
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
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.