bakedbean

I wanted to search on this but the search button not working for me, so apologies if this is covered elsewhere.

I am not resident in Aus but have bank accounts there. I am told by HSBC that, if I were to do a term deposit with them, as,a non resident withholding tax would be just 10 percent. I have no reason to disbelieve HSBC....however a relative who is also non resident insists that their bank is taxing at 37 percent.

Anyone have any thoughts on this? I am assuming that bank interest is treated same all,over Aus. Or....am I wrong?

OzTennis

(From Melbourne, living in UK, still have a property and bank accounts in Australia). NRWT (Non resident withholding tax) is indeed 10%. We were paying that for a long time (20 years) but recently when we notified the CBA of a change in address for correspondence they started taxing our term deposit interest at nearer to 49%. They seem to be regarding us as residents without a TFN rather than the non-residents we used to be.

I've made countless phone calls, they say our TD's are marked non-resident but their computer keeps deducting 49% each time one of our 4 TD's matures. I phone up, they eventually rectify it and say it won't happen again but it does. We've got another one maturing next month so memo to self to make sure they get it right this time!

rammygirl

You must inform the bank you are not resident and indeed it is 10%. The higher rate is for people who are resident but have not provided the bank with a tax file number. Banks do seem to get this wrong a lot, when my son recently changed his address in Australia the bank system defaulted and started taking tax from his interest ( there should be no tax deducted). He will need to declare it on his next tax return for a rebate!

If the only income you have in Australia is bank interest you do not need to do an Australian tax return, but you should keep records as it needs to be declared for UK tax, although the 10% already deducted will be set off against any UK tax owing.

OzTennis

You are quite right about the banks getting it wrong! Our problem arose when we changed our address for correspondence from my parents (now deceased and the house sold) to our own townhouse which happens to be next door. They also have our Scotland address on file and despite all the term deposits being marked non-resident the CBA computer does not apply the 10% rate on maturity date. When I speak to a CBA operator they always say it is marked NRWT, I don't know why it's coming up as TFN not supplied and applying a 49% rate!

Yes, non-residents should declare Australian bank interest (and any other income earned) to HMRC and you will pay UK tax on the income after it has been converted to £'s using the official HMRC exchange rate for the current tax year. There is increasing cross referencing of information between HMRC and ATO so you can be caught easily for not declaring.

bakedbean

But why? I'm probably being thick but why does interest earned in australia deem to be taxed in UK? UK does not tax on worldwide income of UK citizens...or have I missed some news ?((gulp))

OzTennis

https://www.gov.uk/tax-foreign-income/overview

Domiciled in UK = pay tax on foreign income; main residence abroad = you don't have to pay UK tax on foreign (Australian) income in simple terms.

bakedbean

Thanks Oz tennis. I actually just Googled in trepidation LOL

I'm in the clear. I have not been resident in the UK for more than a decade and have no home there. Phew ....