5595andy

Hi folks
I'm emigrating to Oz next month on a 175 visa with my wife. I currently work for an IT company in the UK, and they will continue to employ me as normal after I've emigrated. This has brought about some interesting questions about taxation.

What I've found out thus far is that I will be required to pay income tax in Australia - not the UK. Although my employer is UK based, I will actually be perfoming all work activities in Australia, therefore Australia is where I pay the tax. I have been instructed to fill out a P85 form before I leave to state that I don't want to pay UK tax as well as Oz tax.

I wonder if anyone else is or has been in this situation, because there are a couple of questions on the P85 which have thrown me.

Firstly, section 5 states "Will you have any other source of income in the United Kingdom after you have left?". Do I reply 'yes' because my employer is in the UK, or 'no' because this won't be UK-taxable income (it will be taxed in Oz)?

Secondly, section 6 states "If you are being sent abroad by your present employer...etc...go to section 7". This part is not relevant, since I am not being sent abroad by my employer. So it then continues "I claim repayment of tax....etc....and enclose my P45". This part is also not relevant, since I won't be leaving work and won't have a P45. So neither part of section 6 is relevant to my situation!!

I really hope someone can shed some light on this for me. By now I should be preoccupied with sandy beaches and ice cold beer, not this tax nonsense!

hereshoping

How can you possibly not be with the same employer and also not leaving work? V confusing. Anyway you should think about reclaiming tax if you can.

As for the payment- are you being paid in Oz in AU Dollars? If so then you have no source of UK income even if your employer is UK based.

EvannTel

Ok, caveat first of all...... I;m not a tax expert! But having done a similar things 18 months ago here's my thoughts.

Q5. Income in UK. Unless you are renting your house or the like I would answer "no". Your income is now in Australia irrespective of of where the company is based.

Q6 I would have thought you would have got a P45. I did. Although you are working for the same employer, is it actually the same company is business legalese? i.e. does the Australian branch have their own ABN etc? For tax purposes I would have thought you are indeed stopping employment with your UK employer and starting with a new employer (albet the same) over here.

Best advice, as always on these things is seek professional advice - why not ring inland revenue - whenever I;ve spoken to them they've always been really helpful and not just trying to catch you out.

5595andy

Sorry to be confusing, this is all quite new to me.

There isn't actually an Australian branch of the company. It's just a UK company and that's it. I will stay on the payroll of the UK company and my salary will be paid gross into a UK bank account (which I will transfer to Australia via a currency expert).

If I stay on the payroll, then surely I wouldn't get a P45.

EvannTel

Ah thats quite different. Paid in UK but working overseas - there must be rules governing this. Id ring IR.

Sammy T

Hi

As said before, ring the tax office, I'm sure they'd be able to advise you.

I'd have thought as you are being paid in £ into a British bank account you would have to pay tax to the UK tax man and over here in Oz you'll have to declare that on your annual tax return but they shouldn't double tax you as there are reciprocal arrangements to avoid this happening.

But as said, get some advice soon. We found Alan Collett very helpful for accounting/tax issues, he is also a migration agent and posts on here.

Sam

Bermudashorts

I was going to agree with this poster. But you have since said that you will continue to be paid by a UK employer into a UK bank account and won't get a P45. In this case, I think you will be liable to UK tax as it is a UK source of income, that is a very odd set up IMO for both you and the company. I think you urgently need proper tax advice.

Alan Collett

This is a question of where the duties of the employment are performed.

Not a straightforward situation - you are unlikely to receive categoric advice on a discussion forum, nor indeed from HM Revenue. Professional advice is likely to be needed to ensure you are taxed properly.

Best regards.

oz bound

Not sure if this is of any use to you but we used these guys http://www.ips.com.au/ipsAboutUs.html for our complex taxation situation! can recommend them and you get the 1st hour free Not sure if you are heading to the Gold Coast or not but you could phone them, I think they have a web forum too not sure though. Hope that helps.

ob

5595andy

Thanks for all your help folks. The information that I have been given so far comes from our company accountant. We have since spoken to HM customs and revenues and they have told us a different story! My plan is to go to the local tax office in person and get something in writing.

Agree with you Bermudashorts, it's a very odd situation and there may be a better way of doing it. It really is frustrating though - I'm not trying to diddle anyone out of money, I just want to get it right.

Alan Collett

I understand the reticence to take professional advice in the present economic climate ... but I think it highly improbable you will get advice you can rely upon unless you and/or your employer decide to engage a suitably competent firm ...

Best regards.

5595andy

Okay, I think I've got to the bottom of it. I'll explain how for anyone who may find this useful in the future.

I rang the revenue and asked to speak to a technician regarding my situation. These guys seem to be a lot more savvy than the front-line people that you initially speak to (no offence to them).

The overriding impression he gave was that the P85 is designed for them to understand your residency circumstances for the purposes of paying tax, and the form is laid out to capture the majority of people's circumstances.

What frustrated me was that the P85 didn't capture my circumstances.

He just told me to fill out the bits of the form that were applicable to me, and put everything else into a covering letter. So as I said from my original post, the P85 asks you to choose whether you being sent abroad by your employer or alternatively attach your P45. As neither of these are applicable to me, I don't fill them in - I just explain my alternate circumstances in the covering letter.

To round off the story, I'll be sent an NT (non tax) code in the UK and will be paid gross. I then need to pick things up with the authorities in Australia and pay my tax there.

I guess some of you will think "well, duh!" to all this, but as someone who has never been required to deal directly with tax matters in the past, it caused me a bit of panic.

So thanks to everyone for your advice - I can now return my thoughts to that first ice-cold VB when I get off the plane!

saxtonj

Thanks 5595Andy,

That has also helped me out as I am doing something similar to you, except I will be resigning from the company, and contracting from Australia, invoicing monthly.

Cheers for the post.

Regards

James

EvannTel

Just out of interest, and maybe Alan can answer this, can/could you choose which country to choose to pay tax? I would guess tax in UK is less than Australia. If you did nothing and paid UK tax would you have to pay the difference (if there was any) when you did an Aus tax return (which I guess you would as I assume you'll be resident for tax purposes).

Alan Collett

Maybe have a look at Article 14 of the Tax Treaty between the UK and Australia:
http://www.austlii.edu.au/au/other/d...s/2003/22.html

Best regards.