daddyoconnor

My husband receives a monthly UK army pension which is paid into UK bank account. He was paying a bit more tax on this in UK as it was a second income and took him over the higher taxable threshold.

However when we declared this to Australian tax office when we moved here 2 years ago he was told he would pay the tax on this here in Australia and not in UK (which we were aware of).

The pension is not a great amount (about 8000 pounds a year) - he was being taxed approx. 1500 pounds in UK.

He has just been sent a new PAYG instalment letter and they are quoting his instalment rate as 33.04% they are requesting $1000 a quarter ($4000) extra tax payments from him......

I just wondered if anyone else is in same boat i.e. getting UK income (pension) as a second income and paying the tax over here on it......Any advise would be appreciated

NickyC

If he's paying in instalments, then it's provisional tax. If it turns out at the end of the tax year that he's paid too much then he'll get the excess back. 33.04% is probably your husband's current marginal rate so the ATO is covering themselves. They might reduce the rate next year if it was way out this year.

I've paid tax in instalments (in addition to PAYE) for years due to rental income. It's just the ATO getting their cut of your extra income during the tax year instead of as a lump at the end of it.

Scotty1

Yes - we get OH pension paid gross of uk tax, he pays PAYG tax on his part time job earnings and we also have to pay tax on his pension to ATO in installments.Key is to get the installments right so that you do not overpay, and ensure the PAYG are not underestimating either! There is no way round this I'm afraid. Suggest you do a draft tax calculation to make sure you are not overpaying the installment.
If he made any contributions to his army pension (can remember if it was contributory or not) then you could claim a bit of a tax offset for it, but its a bit of a faff and you will need a value for the UK pension and a private ruling from ATO.

daddyoconnor

Thanks for both your answers - I will pass it on to him. We were paying PAYG instalments last year, but that was a quarter of what they now want from him. This is their calculations from his tax return this year ......

He is going to call them (ATO) tomorrow - as the 33% of the UK income seems pretty high, when he was only being taxed 22% on it in UK....... I think we assumed it would work out about the same - didn't think that he would be worse off with his pension being taxed over here on it than in UK.....Thanks again for your replies

ROMFT_WO2RN

And you don't have to pay in installments as you can elect to pay a lump sum after the end of the tax year but before you submit your tax return. As long as you pay the ATO assessed figure you're good to go. He can also choose what exchange rate suits best from the ATO site is the day the pension is paid for each month, the monthly rate for each month or the average annual rate. There was a 500aud difference for me last year.