Avoiding Double UK & AU Taxation
 

I am now a permanent resident in Australia but I continue to have a pension paid in the UK.

I completed a P85 when I left the UK and I have been sent another form (Form Australia – Individual 2003) to fill in to claim relief from UK tax. However, I cannot understand question 9:-

“Is Australian tax on the income that is included in this form calculated by reference to the amount remitted to or received in Australia?”
“If yes, give full details on a separate sheet.”

Help please, has anyone understood this?

Best wishes

Charlie
:confused:

Re: Avoiding Double UK & AU Taxation
 

:confused:

I would be tempted to explain it like this....

“Is Australian tax on the income that is included in this form calculated by reference to the amount remitted to or received in Australia?”
“If yes, give full details on a separate sheet.”

Details are: that the Australian Tax Office tax me on what you send me, based on the amount that you send me, and the amount that I receive in Australia.

Not sure how they would react to it though, but it does seem like the truth.

I do hate this official stuff !

Re: Avoiding Double UK & AU Taxation
 

Thanks, that seems reasonable but what is the "provide details"?

Charlie

Re: Avoiding Double UK & AU Taxation
 

Write what ABCD said. Then you could add this: "It is a similar tax system to the UK in that there is a tax-free threshold. My world-wide income (which includes the amount you pay to me) is then taxed at progressively higher tax rates)."

The point of the form (and this question) is that the UK authorities want to be sure you will be taxed on this somehow. If you lived somewhere where it would not be taxed, the UK taxman would tax it for you.

So, when they ask for "details" write what ABCD recommended and if you feel like it at my sentences above. Then send it off.

Re: Avoiding Double UK & AU Taxation
 

The question is about establishing whether you are taxed on the full pension or are taxed in Australia on a "remittance basis", i.e. only the amount that is remitted / sent to your bank in Australia.

For you perhaps this is the same thing, in that you receive all the pension in Australia. But it is not necessarily the same for everyone, some people might have kept a little house or flat in the UK and thus keep some pension money back to pay for bills and only partially remit to Australia.

So if you have arranged for the entire pension to be sent to you in AUstralia and are taxed on it then I would say :

- the full pension is remitted to Australia and tax is paid on the full pension

If you keep any of the pension in the UK for any reason but do pay Australian tax on the full amount you would say:

- no the tax is not calculated on a remittance basis, the tax is on the entire pension, including those amounts which I do not remit to Australia.

If you keep some of the pension in UK and send only part of it to Australia and are taxed on a remittance basis i.e. just the amounts you send to Australia, then "the details" they are requesting is how much you send to Australia (and hence pay tax on) and how much you do not remit to Australia.

Re: Avoiding Double UK & AU Taxation
 

Thanks. At the moment my pension is taxed in the UK and paid into a UK bank.

I will transfer the money at some time in the future when hopefully the exchange rate improves.

So it is somewhat difficult to answer the question about details.

Charlie

Re: Avoiding Double UK & AU Taxation
 

I thought the point of this exercise was to get your UK pension paid into your UK bank account gross, i.e. without UK tax being deducted? (If you are living in Oz that's the sensible course of action).

As for explaining it on the form: no it''s not difficult. It makes no difference to your Australian tax return whether you keep the money in the UK or whether you bring it out to Oz.

It's exactlt as Bermudashorts tried to explain it to you: "no the tax is not calculated on a remittance basis, the tax is on the entire pension, including those amounts which I do not remit to Australia."

Re: Avoiding Double UK & AU Taxation
 

Yes of course you pay Uk tax at the moment, but that is what you are trying to change.

You are clearly new to Australia and have not yet done a tax return, but when you do, I believe you will be required to disclose the full amount of UK pension. That is due to Australian rules. In other countries, for example the UK, UK resident but non-UK domiciled people who do not remit their foregin income to the UK do not necessarily pay tax on it. The form is trying to establish if this is the case for you.

So as you are keeping the money in the UK you would go with my answer that Ozhappy highlighted. Perhaps if you want to allude that you have not so far paid any tax in Australia on it you want to add to the wording a little bit.

"the UK pension will be declared in full on the Australian tax return and not on a remittance basis"