Aus tax on rental income from UK - help??
Nov 1st 2003, 5:32 pm
#1
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Thread Starter
Joined: Aug 2002
Location: East Grinstead
Posts: 279
Aus tax on rental income from UK - help??
Just wondering whether to sell or rent out our property in sunny East Grinstead, does anyone have any experience of the the tax within oz when you transfer rental income from the UK into OZ? Any advice would be appreciated
Nov 2nd 2003, 3:22 am
#2
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Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
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Re: Aus tax on rental income from UK - help??
The income tax liability in Australia isn't dependent on the monies being transferred to Australia - once you are tax resident in Australia your tax liability is based on income arising anywhere in the world, even if you don't transfer the income to Australia.
See also the attached factsheet.
There are a lot of other practical and tax issues (eg CGT, Inheritance Tax in the UK, choice of managing agent, whether to use a managing agent, etc) to consider if you decide to rent out the house, and I'll leave others to comment on these ...
Also, please feel able to send me an email if you want some further formal advice on this issue.
Best regards.
See also the attached factsheet.
There are a lot of other practical and tax issues (eg CGT, Inheritance Tax in the UK, choice of managing agent, whether to use a managing agent, etc) to consider if you decide to rent out the house, and I'll leave others to comment on these ...
Also, please feel able to send me an email if you want some further formal advice on this issue.
Best regards.
Originally posted by Jamesy
Just wondering whether to sell or rent out our property in sunny East Grinstead, does anyone have any experience of the the tax within oz when you transfer rental income from the UK into OZ? Any advice would be appreciated
Just wondering whether to sell or rent out our property in sunny East Grinstead, does anyone have any experience of the the tax within oz when you transfer rental income from the UK into OZ? Any advice would be appreciated
Nov 2nd 2003, 6:40 am
#3
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Joined: Nov 2003
Location: North London
Posts: 7
Re: Aus tax on rental income from UK - help??
Fantastic information sheet Alan!
Can't quite get my head around the 10% tax withholding thing though. Could you possibly explain this with an example?
Many thanks
L
Can't quite get my head around the 10% tax withholding thing though. Could you possibly explain this with an example?
Many thanks
L
Nov 2nd 2003, 11:22 pm
#4
Forum Regular
Joined: Mar 2003
Location: Mount Colah, Upper North Shore, Sydney
Posts: 124
Re: Aus tax on rental income from UK - help??
Originally posted by LBUK
Fantastic information sheet Alan!
Can't quite get my head around the 10% tax withholding thing though. Could you possibly explain this with an example?
Many thanks
L
Fantastic information sheet Alan!
Can't quite get my head around the 10% tax withholding thing though. Could you possibly explain this with an example?
Many thanks
L
If your mortgage interest payment in the UK is £1000 per month, you are theoretically supposed to pay £900 to your lender, and £100 to the Aus Govt.
Now most lenders won't be very happy about the missing £100, so in practice you will end up paying £1000 to your lender, and still pay the extra £100 to the Aus Govt. So you're £100 out of pocket.
Before you reply with the "but but but that's not fair..." and so on, don't bother. It doesn't seem fair to me either. But that's the way it is. If you have an endowment policy that rises in value each year, you get taxed on the increase on that, too... there's plenty of 'unfair' taxes to trip you up. Just remember you're not moving for the income, you're moving for the lifestyle. Call it a "sunshine tax" and don't get stressed over it.
If anyone knows a way (legitimate or otherwise!) to aviod this tax, then please post away.
Hope that helps.
Nov 2nd 2003, 11:25 pm
#5
Migration Agent
Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,459
The withholding tax provisions will cease to apply if the new UK-Australia Tax Treaty becomes law ... all being as from the 1st of July 2004 if the new Treaty passes the Parliamentary processes in the UK and Australia in the next few months.
Best regards.
Best regards.
Nov 3rd 2003, 6:44 am
#6
Just Joined
Joined: Nov 2003
Location: North London
Posts: 7
Re: Aus tax on rental income from UK - help??
Thanks Alan
That's clear then.... if not unjust!
Cheers
Lisa
That's clear then.... if not unjust!
Cheers
Lisa
Nov 3rd 2003, 11:23 am
#7
Happy Daddy
Joined: Aug 2003
Location: Dodgey West Midlands , UK
Posts: 1,312
Re: Aus tax on rental income from UK - help??
Hi LBUK,
it lookls nice and complex.
Wait untill July next year and save 10% sounds good.
There must be a simpler way.
Bye
Markeh
it lookls nice and complex.
Wait untill July next year and save 10% sounds good.
There must be a simpler way.
Bye
Markeh
Nov 3rd 2003, 4:16 pm
#8
Forum Regular
Joined: Aug 2003
Location: Wiltshire
Posts: 45
Re: Aus tax on rental income from UK - help??
Originally posted by mrladyboy
Maybe I can.
If your mortgage interest payment in the UK is £1000 per month, you are theoretically supposed to pay £900 to your lender, and £100 to the Aus Govt.
Now most lenders won't be very happy about the missing £100, so in practice you will end up paying £1000 to your lender, and still pay the extra £100 to the Aus Govt. So you're £100 out of pocket.
Before you reply with the "but but but that's not fair..." and so on, don't bother. It doesn't seem fair to me either. But that's the way it is. If you have an endowment policy that rises in value each year, you get taxed on the increase on that, too... there's plenty of 'unfair' taxes to trip you up. Just remember you're not moving for the income, you're moving for the lifestyle. Call it a "sunshine tax" and don't get stressed over it.
If anyone knows a way (legitimate or otherwise!) to aviod this tax, then please post away.
Hope that helps.
Maybe I can.
If your mortgage interest payment in the UK is £1000 per month, you are theoretically supposed to pay £900 to your lender, and £100 to the Aus Govt.
Now most lenders won't be very happy about the missing £100, so in practice you will end up paying £1000 to your lender, and still pay the extra £100 to the Aus Govt. So you're £100 out of pocket.
Before you reply with the "but but but that's not fair..." and so on, don't bother. It doesn't seem fair to me either. But that's the way it is. If you have an endowment policy that rises in value each year, you get taxed on the increase on that, too... there's plenty of 'unfair' taxes to trip you up. Just remember you're not moving for the income, you're moving for the lifestyle. Call it a "sunshine tax" and don't get stressed over it.
If anyone knows a way (legitimate or otherwise!) to aviod this tax, then please post away.
Hope that helps.
So If you've got no mortgage on your property in the UK, then you have no additional Australian Tax to pay ?
Does the UK annual CGT Exemption Accrue each year, or does it just apply in the year of disposal ?
I have heard that if you are non-resident for 5years, there is no CGT to pay on property sold, can anyone confirm this.
Thanks,
R
Nov 3rd 2003, 9:33 pm
#9
Migration Agent
Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,459
Re: Aus tax on rental income from UK - help??
Answers below.
Best regards.
Best regards.
Originally posted by sydneybound
So If you've got no mortgage on your property in the UK, then you have no additional Australian Tax to pay ?
=> Correct, there is no withholding tax to pay in Australia as you are not paying interest to a lender located outside Australia.
Does the UK annual CGT Exemption Accrue each year, or does it just apply in the year of disposal ?
=> Only in the year of disposal.
I have heard that if you are non-resident for 5years, there is no CGT to pay on property sold, can anyone confirm this.
=> Not correct. There is no CGT to pay in the UK if you are neither resident nor non-resident in the UK in the tax year in which you dispose of the asset.
By the same token if you return to the UK within 5 complete tax years of your departure any capital gains arising on assets owned on departure and sold in the interim period can be subject to tax in the UK in the tax year in which you return to the UK.
Thanks,
R
So If you've got no mortgage on your property in the UK, then you have no additional Australian Tax to pay ?
=> Correct, there is no withholding tax to pay in Australia as you are not paying interest to a lender located outside Australia.
Does the UK annual CGT Exemption Accrue each year, or does it just apply in the year of disposal ?
=> Only in the year of disposal.
I have heard that if you are non-resident for 5years, there is no CGT to pay on property sold, can anyone confirm this.
=> Not correct. There is no CGT to pay in the UK if you are neither resident nor non-resident in the UK in the tax year in which you dispose of the asset.
By the same token if you return to the UK within 5 complete tax years of your departure any capital gains arising on assets owned on departure and sold in the interim period can be subject to tax in the UK in the tax year in which you return to the UK.
Thanks,
R
