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Oz Taxes too high

Oz Taxes too high

Old Jun 29th 2002, 12:32 am
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Default Oz Taxes too high

Somebody on another thread stated that taxes in Oz are lower than UK. It's tax time here in Oz and had just completed this analysis so thought it worth posting here :

Oz Inc Tax & Med ExchangeUK equiv Tax&NI Diff in Oz$
care 1% Rate Income
$10,000 $680 2.5 £4,000 £0 $680
$20,000 $2,580 2.5 £8,000 £786 $615
$30,000 $5,680 2.5 £12,000 £2,016 $640
$40,000 $8,780 2.5 £16,000 £3,247 $663
$50,000 $11,880 2.5 £20,000 £4,478 $685
$60,000 $16,180 2.5 £24,000 £5,709 $1,908
$70,000 $20,980 2.5 £28,000 £6,938 $3,635
$80,000 $25,780 2.5 £32,000 £8,084 $5,570
$90,000 $30,580 2.5 £36,000 £9,052 $7,950
$100,000 $35,380 2.5 £40,000 £10,591 $8,903

Could'nt fit all the columns in but hopefully it makes a point. Hope it posts OK. The final column is the extra tax & ni you pay in oz compared to Uk.

There is little in it until you get up the scale but anybody earning in excess of $60,000 (£24,000 equiv) is liable for highest rate of tax. N.B only used 1% medicare which can be higher for higher income earners in oz unless you have private medical insurance and also hav'nt factored in recent 1% NI increases in UK for higher earners.

The difference is sensitive to exchange rate but have tried to use a good recent average. If you change to $3 to £1 then it reduces the difference. Consequently, if you use a lower rate the difference is even higher.

This is'nt the full story as VAT is higher in UK by approx. 7.5% although fresh food kiddy clothes etc is likewise exempt and certain excise duties such as petrol would be markedly higher in UK. But undoubtedly in my opinion for the average (particularly middle income) PAYE tax payer the direct taxes are higher here and kick in at lower rates.

There are ways to reduce paying tax here such as negatively gearing investment properties although similar opportunities are also available UK. It is also fair to say that at this time present Oz govt over the longer term is trying to reduce taxes whereas UK govt is only going to increase unless Brits come to their senses and kick out labour. However, there remains this attitude in Oz that middle income earners should be taxed highly and unless the senate make up changes think that likely to remain.

Expat US boss recently returned to US and when asked what were the things that stood out in his mind about Oz the reply was great country but too much bureaucracy and too high taxes ! I second that.

I have noticed a tendancy on the board in recent weeks of certain posters to fantasize about the wonders of antipodean life when compared to UK. Can't blame them unless they have lived and worked here for a while particularly as the view from the UK is so distorted by the media.
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Old Jun 29th 2002, 12:33 am
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Default Re: Oz Taxes too high

table did'nt work, never mind. Final column is the difference.
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Old Jun 29th 2002, 5:20 am
  #3  
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Default Re: Oz Taxes too high

Well you have gone to some trouble but as you say the VAT is considerably different
and then there is the cost of living which in Australia is only 70% of that of the
UK............guess there is a message there somewhere hidden in all that maze, of
course with the land size of Australia the relative cost per capita of capital
projects is undoubtedly higher too to hence taxes need to be higher........then there
is the variation in population, only 19.5 million in Australia...... Rob Edwards
www.australianaustralia.com

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Old Jun 29th 2002, 7:53 am
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Default Re: Oz Taxes too high

Taxes are not the whole story. The more important question is what one can afford with what left after taxes. A$60K is a decent salary even in Sydney, while ₤24K is absolute peanats in London and means very modest living in other places (this is the opinion from internet boards where immigration to Britain is discussed).
So comparison of prices of everyday goods would be more appropriate.
For example for A$300-320 you can rent nice two-bedroom flat in Bondi area (10-15 minutes walk to the ocean, 15-25 minutes trip to the city, safe, good schools etc.) What one can rent in similarly situated area of London for equivalent money ₤120-130? (BTW talking about rent - I've heard that tenant also pays local council taxes - is it true? In OZ it's all in rent, then you pay only what can be measured i.e. electricity, gas, sometimes water - if you rent a house, it has water meter and water charges will go on top of a rent, in flats there is no water meters, so it included in rent).

So, to make any comparison it is necessary to bring thing on comparable terms.

And also it would be nice to compare "social safety network" - what happens with person if he loses his job (have no slightest idea about what is in place in Britain).
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Old Jun 29th 2002, 12:36 pm
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Default Re: Oz Taxes too high

I'd also like to chip in here.

Don't mind paying higher tax if the pension system is better and by that I mean, can I buy more for my pension so brings in lower cost of living etc.

I think this would be better in Aus but if any expert has a view, i'd love to hear it.

Nigel db
 
Old Jun 29th 2002, 3:40 pm
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Default Re: Oz Taxes too high

Originally posted by Tatiana
(BTW talking about rent - I've heard that tenant also pays local council taxes - is it true?
Yep, that's usual. They used to be called "rates" and were paid by the landlord. Then the "Poll tax" and it's follow-ons gave them the chance to pass the 500-1500 pounds per year bill (depends on area) on.

So now you usually pay metered stuff (phone, gas,elec, cable TV), the non-metered Council Tax and rent. Water is usually paid by the landlord though - unless you're on a meter - then they bung it your way...

Ah, the fond memories of renting....All those lost deposits and claims for "professional cleaning".
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Old Jun 30th 2002, 7:20 am
  #7  
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Default Re: Oz Taxes too high

    >On 29 Jun 2002 03:20:05 GMT, dugongs <[email protected]> wrote:

    >Somebody on another thread stated that taxes in Oz are lower than UK.

That was me. But I was only referring to the overall tax burden, not direct taxes.

    >It's tax time here in Oz and had just completed this analysis so thought it worth
    >posting here :
    >
    >
    >Could'nt fit all the columns in but hopefully it makes a point. Hope it posts OK.
    >The final column is the extra tax & ni you pay in oz compared to Uk.

I'm afraid I couldn't read it.

    >
    >There is little in it until you get up the scale but anybody earning in excess of
    >$60,000 (£24,000 equiv) is liable for highest rate of tax.

48.5%, if my memory is correct. Fair enough, it's higher than the 40% (or 41% from
2003) that kicks in at about GBP34k or so in the UK. But the average wage earner
in the UK will from 2003 be paying tax at a rate of 33% (22% income tax, plus 11%
national insurance). The majority of Australians pay tax at no more than 31.5%.

So as you say, in terms of direct taxes there's little in it. Which leaves the
Australians better off as indirect taxes are a lot lower.

Here's something from the OECD on the tax bite faced by average earners:
http://www.oecd.org/pdf/M00017000/M00017606.pdf

    >N.B only used 1% medicare which can be higher for higher income earners in oz unless
    > you have private medical insurance

You don't get a surcharge in the UK if you don't have private medical insurance,
but the alternative is relying on the NHS and hoping they have a good day when
you're in there.

    > and also hav'nt factored in recent 1% NI increases in UK for higher earners.
    >
    >The difference is sensitive to exchange rate but have tried to use a good recent
    >average. If you change to $3 to £1 then it reduces the difference. Consequently, if
    >you use a lower rate the difference is even higher.
    >
    >This is'nt the full story as VAT is higher in UK by approx. 7.5%

Australia: 10%, UK 17.5%. The difference is seventy-five percent, not 7.5%.

    >although fresh food kiddy clothes etc is likewise exempt and certain excise duties
    >such as petrol would be markedly higher in UK.

Petrol tax is an enormous burden on families in the UK today, after the tax
hikes since 1997. Remember the fuel protests almost two years ago, for all the
good that did.

Plus, there are other tax differences:
- payroll tax in Australia is less than half that of the UK (compared to
emoloyers NI)
- there's no inheritance tax in Australia
- council taxes in the UK are I think on average higher than in Australia
- on the other hand, stamp duties are still a bit lower in the UK, although they've
gone up a lot since Labour got in.

    >But undoubtedly in my opinion for the average (particularly middle income) PAYE tax
    >payer the direct taxes are higher here and kick in at lower rates.

I would agree that direct taxes for higher income people are higher in Australia than
the UK. But for those on average incomes they are not.

Plus, the lower cost of living in general, and the lower indirect taxes make up a lot
of the difference even for those on higher incomes.

    >
    >There are ways to reduce paying tax here such as negatively gearing investment
    >properties

Which is a dangerous and in my opinion over-used strategy in Australia. Especially
when stock and/or real-estate markets turn downwards.

    >although similar opportunities are also available UK. It is also fair to say that at
    >this time present Oz govt over the longer term is trying to reduce taxes whereas UK
    >govt is only going to increase unless Brits come to their senses and kick out
    >labour. However, there remains this attitude in Oz that middle income earners should
    >be taxed highly and unless the senate make up changes think that likely to remain.

I think it's fair to say that the average Australian is not clamouring for a lower
income tax. I could post at length about how the tax structure could be radically
reformed in Australia (or the UK) and how the Senate could be over-ridden, but that's
not on-topic for this group.

Leaving that point aside, I don't believe that the average Australian is grossly
over-taxed in comparison to the average Briton.

    >
    >Expat US boss recently returned to US and when asked what were the things that stood
    >out in his mind about Oz the reply was great country but too much bureaucracy and
    >too high taxes ! I second that.

Possibly there may be some truth in that, but there are plenty of other countries
where he could have said the same thing, including the UK, Canada, New Zealand and
most of continental Europe. Maybe he'd like Singapore

    >
    >I have noticed a tendancy on the board in recent weeks of certain posters to
    >fantasize about the wonders of antipodean life when compared to UK. Can't blame them
    >unless they have lived and worked here for a while particularly as the view from the
    >UK is so distorted by the media.
    >

Quite right. The UK is actually a much better country than its media make out. It has
its problems, but so do other countries. How come so many young Australians and New
Zealanders want to spend a number of years working there?

Ironically, one of the things you don't miss about the UK is the constant whining and
moaning in the media about how terrible Britain is and how wonderful everywhere else
is. If the British media could start being positive for once, any measure quality of
life in the UK would improve by a few points overnight.

Going back the original question, if tax is your primary motivation for moving from
the UK, then you should think again. You need other reasons, otherwise you risk being
disappointed in Australia. On the other hand, if tax *is* your primary motivation,
the Isle of Man offers a substantially lower tax regime than the UK, and as long as
you're reasonably employable, I've heard the IOM government is still keen for new
settlers. Or there's always the Falkland Islands

Jeremy
 
Old Jun 30th 2002, 9:07 am
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Default Re: Oz Taxes too high

[QUOTE]Originally posted by Jaj
[B]Â Â Â Â <i><font size=-2 color=darkgreen>>On 29 Jun 2002 03:20:05 GMT, dugongs <[email protected]> wrote:</font></i>

    - there's no inheritance tax in Australia

JAJ, that may be true for those born in Australia but I seem to remember that inheritance tax is a very thorny subject. Eg I believe that, say, a UK citizen may acquire Aus citizenship and spend the rest of his life in Aus (maybe more years than he lived in UK) but would still be liable for inheritance tax in the UK upon his death. True? Isn't it something to do with domicile?

Any clarification welcome!

All the best
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Old Jun 30th 2002, 9:27 am
  #9  
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Default Re: Oz Taxes too high

I believe that inheritance tax can be claimed by the UK government for a period of 18 years after leaving the UK.

Mike.
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Old Jun 30th 2002, 10:20 pm
  #10  
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Default Re: Oz Taxes too high

What you say is true in theory. Inheritance tax under UK law is based on domicile.
However - if someone from the UK moves to Australia, and more importantly, moves all
his assets to Australia, I can't see how the UK Inland Revenue could hope to collect
UK Inheritance Tax following that person's death. Unless the Australian Tax Office
acted as a tax collector for them.

Perhaps Alan Collett could add something to this thread?

Jeremy

    >On 30 Jun 2002 12:20:11 GMT, newstartnz <[email protected]> wrote: Originally
    >posted by Jaj     <i><font size=-2 color=darkgreen>>On 29 Jun 2002 03:20:05 GMT,
    >dugongs <[email protected]> wrote:</font></i>
    >
    >Â Â Â Â - there's no inheritance tax in Australia
    >
    >JAJ, that may be true for those born in Australia but I seem to remember that
    >inheritance tax is a very thorny subject. Eg I believe that, say, a UK citizen may
    >acquire Aus citizenship and spend the rest of his life in Aus (maybe more years than
    >he lived in UK) but would still be liable for inheritance tax in the UK upon his
    >death. True? Isn't it something to do with domicile?
    >
    >Any clarification welcome!
    >
    >All the best
    >
    >
    >
    >--
    >Yvonne
    >
    >Posted via http://britishexpats.com
 
Old Jul 1st 2002, 8:20 pm
  #11  
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Default Re: Oz Taxes too high

    > Quite right. The UK is actually a much better country than its media make out. It
    > has its problems, but so do other countries. How come so many young Australians and
    > New Zealanders want to spend a number of years working there?

This Kiwi found it convenient to live in an English speaking country while visiting
Europe - I have never had any intention of staying, as do the majority of
Antipodeans, and I certainly didn't come here for 'a better quality of life'. Most
Antipodeans come here because they have distant relatives or ancestral connections to
Britain, but most return with the view that NZ (or Oz) is a better place to live.

    > Ironically, one of the things you don't miss about the UK is the constant whining
    > and moaning in the media about how terrible Britain is and how wonderful everywhere
    > else is. If the British media could start being positive for once, any measure
    > quality of life in the UK would improve by a few points overnight.

For once I would defend the media - they are simply reflecting the masses. England
is the only place I have found a culture of well off 'average people' who strive
to acquire material things while slagging off those who already have them. To
improve the quality of life would require a complete mindset change in Mr & Mrs
Average Briton.

--
Regards -Terry
 
Old Jul 2nd 2002, 8:04 am
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Default Re: Oz Taxes too high

I found this info on http://www.inlandrevenue.gov.uk/pdfs/iht18.htm.

<

You or your personal representatives may be liable to inheritance tax if you transfer anything of value, such as

a lifetime gift, or
the deemed transfer to your personal representatives on your death. Liability to UK inheritance tax depends on your domicile at the time you make the transfer.
What is ‘domicile’?

Domicile is a concept of UK general law. It is outside the scope of this leaflet to do more than explain its meaning briefly. Nor is it practical to list all the factors that are used to decide whether or not a person is domiciled in a particular country.

Broadly speaking, we consider that you are domiciled in the country of your permanent home. Domicile is distinct from nationality or residence. You may be resident in more than one country, but at any given time you can only be domiciled in one (see below).

At birth, you have what is known as a domicile of origin. This is normally your father’s domicile and may not necessarily be your country of birth. You keep this domicile until you acquire a different domicile, such as

a domicile of dependence, or
a domicile of choice.
What is a ‘domicile of dependence’?

If you are a married woman and you married before 1 January 1974, you will have taken your husband’s domicile, by dependence. You keep that domicile until you acquire a domicile of choice or revive your domicile of origin.

Since 1 January 1974, however, everyone who is aged 16 or over in England, Wales or Northern Ireland (in Scotland a girl aged 12 or over or a boy aged 14 or over) is capable of acquiring an independent domicile.

How do I acquire a ‘domicile of choice’?

To acquire a domicile of choice you must sever all ties with the country of your domicile of origin and settle in another country, with the clear intention of making your permanent home there.

Residing in another country for a long time is not proof that you have acquired a domicile of choice, unless it can be regarded as indicating your intention to do so. There has to be evidence of a firm intention to live there permanently.

Can I still be domiciled in the UK for tax purposes after I have acquired a new domicile under general law?

Yes. For inheritance tax purposes, there is a concept of ‘deemed domicile’. Even if you are not domiciled in the UK under general law you will be treated as domiciled in the UK at the time of a transfer if

you were domiciled in the UK within the three years immediately before the transfer, or
you were ‘resident’ in the UK in at least 17 of the 20 income tax years of assessment ending with the year in which you make a transfer.
Resident has the same meaning as for income tax purposes. The rules for determining residence are set out in our booklet IR20 ‘Residents and non-residents. Liability to tax in the United Kingdom’. You can get a copy of this from any Inland Revenue Enquiry Centre or Tax Office.

The deemed domicile rules do not affect your domicile on death if there was a death duties double taxation agreement or Convention in place before 1975 and it continues to apply (s. 267( 2)). Nor do these rules apply for the purpose of determining the domicile of a settlor who made a settlement before 10 December 1974.>

All the best
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Old Jul 2nd 2002, 8:20 am
  #13  
Graham Day
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Default Re: Oz Taxes too high

Hi All

Who would like to chip in with the low down on stamp duty and state taxes rather than
just federal tax??

Gday

"Terry R Brooking" <[email protected]> wrote in message
news:[email protected]...
    > > Quite right. The UK is actually a much better country than its media make out. It
    > > has its problems, but so do other countries. How come so many young Australians
    > > and New Zealanders want to spend a number of years working there?
    >
    > This Kiwi found it convenient to live in an English speaking country while visiting
    > Europe - I have never had any intention of staying, as do the majority of
    > Antipodeans, and I certainly didn't come here for 'a better quality of life'. Most
    > Antipodeans come here because they have distant relatives or ancestral connections
    > to Britain, but most return with the
view
    > that NZ (or Oz) is a better place to live.
    >
    > > Ironically, one of the things you don't miss about the UK is the constant whining
    > > and moaning in the media about how terrible Britain is and how wonderful
    > > everywhere else is. If the British media could start being positive for once, any
    > > measure quality of life in the UK would improve by a few points overnight.
    >
    > For once I would defend the media - they are simply reflecting the masses. England
    > is the only place I have found a culture of well off 'average people' who strive
    > to acquire material things while slagging off those who already have them. To
    > improve the quality of life would require a complete mindset change in Mr & Mrs
    > Average Briton.
    >
    > --
    > Regards -Terry
 
Old Jul 3rd 2002, 12:39 am
  #14  
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Default Re: Oz Taxes too high

I would like to add some points here.

Average Incomes

According to stats published by UK & Oz govts the average incomes in 2001 :

UK
Men F/T £490 All £445
Women F/T £366 All £260
Combined F/T £444 All £355

Convert at a currently generous to Oz 2.50 (40 c to £) but fairer long terms average and you get Ozzie dollar equivs :

Men F/T $1,225 All $1,112
Women F/T $915 All $650
Combined F/T $1,110 All $887

Compare this to average incomes in Oz :

Oz
Men F/T $923 All $789
Women F/T $750 All $524
Combined F/T $861 All $662

You need this information when talking about averages and quoting OECD stats. The average man and women in UK is earning overall a 34% higher income than in Oz. The latest figures I can find says overall cost of living in Uk is 27% higher than Oz mainly due to cost of housing and if you strip that out that makes a huge difference as with consumer prices there is little in it and you have in my humble opinion more choice and range in UK.

That is also why average tax bite stats are distorted as the average income is so much higher in UK than Oz. I have used a generous longer term exchange rate which favours Oz - if I used the current exchange rate the % would be far higher. I think from earlier there was little in direct taxes at average salaries.

Average salaries are also a little pointless to a brit who is considering moving here as most tend to be higher earners. Unfortunately, those are the people who will be hit with the full brunt of the higher taxes here in Oz. One friend of mine recently moved to Sydney to take up a fairly high powered bank marketing role which is identicial to the one she left in London. She had to take a 20% pay cut and because of her visa is unable to avoid paying the full rate of tax. She thinks she is worse off here financially.

A couple of other points I have picked up on this thread.

I do not think you can easily compare a City like Sydney, comparatively small in world terms, to a major City like London. I know it may be difficult for Australians to compare as Sydney is such a major Australian City but it is dwarfed by London on every measure including I accept the higher cost of living. However, that is also why when you move to Sydney from London you generally have to accept a pay cut !

If you think the media in Australia compares to the media in UK you are quite frankly dreaming. The "free" press here is a joke. The breadth of the media and the range of coverage in Uk is probably 5 times Oz. I have to read papers in the UK on the internet just to find out what is happening not only in the world but also in Australia as the coverage is so much better and fairer. I also support the tabloid press in UK which although sometimes scandalous and sensational serves to uncover hypocrisy which is certainly also rife in Oz and would benefit from a press which is less in the pocket generally of politicians and big business.
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Old Jul 3rd 2002, 9:24 am
  #15  
Robert Edwards
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Default Re: Oz Taxes too high

This can go back and forth for ever of course, you are very close with the cost of
living variation, the current figure in Australia is very close to 70% of what it
would cost in the UK.....GST/VAT of course is considerably different.......I think it
is reasonable though to accept that positions of a similar nature will generally be
higher paid in the UK......the question I ask though is why do people want to come to
Australia?...quality of life "dugongs" <[email protected]> wrote in message
news:[email protected]...
    > I would like to add some points here.
 

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