QLD4061

We arrived here August 2004 and just recieved a combined amended assessment tax bill of $3000. I am sure I read that migrants were exempt from paying tax on interest gained on savings brought from UK and given a years exemption?

If not then beware, if you keep your finances in a bank account then prepare yourself for a big tax bill for interest on your savings.

They stated that the interest was earnings we never declared on our tax return.

Anyone been in the same situation or know the rules surrounding tax on interest of savings?

Thanks for any advice.

nev_n_angie

Hi

Worried now - we have transferred most of our savings to Com Bank because the exchange rate was good - we are not due to go to Australia until August/September?? How does this work with the 6% Interest that we gain from the savings??

Angie

sparkley23

So how did they find out about it if you didn't declare it? Was it a fine cos they found out about something you didn't declare?

Can the ATO find out about accounts you have in the UK earning interest if you don't tell them??

thebears

Standard question I would think when you try to repatriate the money into OZ.

QLD4061

The ATO has access to all Australian bank accounts, easy for them to search to get what interest people have been paid.

If you have UK accounts, unsure if they have access to them. However when you bring that money into Oz and put it into an Oz account you can be sure they will know of an overseas transaction happening. I believe the banks are obliged to inform the ATO of such transactions. They give you a years grace on bringing money in, but after that year I think they tax you on it.

Perhaps someone with good knowledge on tax affairs and accountancy might help here - is Alan Collett still and contributor ? if so can you help Alan ?

Ozzy dog

When we opened both out bank accounts they asked for TFN (Tax File Number). We got a bloody tax bill for the interest earned on our money from house sale in UK! Not happy, didn't declare it as didn't know had to, bank must have informed tax office!!!!!!! Beware considered to be un earned income!!!!!

T

QLD4061

Yes, exactly what happened to us - bloody banks tell ATO everything. You can get away with nothing!

However, I am sure there is a one year 'grace' period on incoming financials.

Ozzy dog

However, I am sure there is a one year 'grace' period on incoming financials.[/QUOTE]

If there was they didn't apply it to us -

sparkley23

So you just got taxed on the interest you earned overseas? What sort of % tax are we talking here?

nik04

you should not be taxed on monies earnt in interest in the UK unless you transfer it to AUS. You have to give the banks here your TFN or the bank deduct 45%(from memory) of interest earned as a withholding tax (ie non declared income) we had it while we waited for our TFN's to come through.When you do a tax return you have to declare interest earned from the bank and pay tax on it. From what i remember there is a grace period for bringing money into AUS not sure if it's six or twelve months you would need to check up with the ATO. If they have made a blunder you should be able to clain it back.
The banks have a big link to the ATO thats why your tax file number is linked to your account that is why this is very much a cash driven country.

Alan Collett

There is no 1 year exemption. At least not one that I know of.

From 1 July 2006 there is an exemption from the charge to Aussie tax in respect of overseas derived investment income and capital gains if you are a "temporary tax resident" (as defined), but I don't sense that is what you are thinking of ...

Best regards.

Alan Collett

Nonsense, I'm afraid.

If you are a tax resident of Australia you are subject to income tax on Australia on your worldwide income and capital gains wherever it arises, irrespective of whether or not you remit it to Australia.

By contrast, capital can generally be transferred to Australia on a free of tax basis.

There are special provisions applicable to foreign currency (ie non-A$'s) that is retained when you are a tax resident of Australia.

The 6 month window of opportunity applies to the transfer of overseas pension benefits into an Australian superannuation fund - fund benefits transferred after that date have an exposure to a tax charge.

There are some free tax factsheets here if anyone is interested:
http://www.collettandco.com/factsheet.cfm

Best regards.

Alan Collett

As a broad guide, in Australia all income and capital gains is pooled and this amount less allowable deductions and less your tax free threshold is (in essence) subject to the relevant tiered rates of tax, plus the Medicare Levy.

A Medicare Levy surcharge is also payable if your income is above a threshold and you have not maintained private health insurance for the income tax year.

Deduct the tax already suffered at source (eg under PAYG in respect of wages and salaries, tax credits/withholding taxes in respect of dividends and interest), and you end up with the tax that is payable or repayable following the submission of your Aussie Tax Return.

I hasten to add that this is a very brief summary of how tax is computed in Australia!

See the ATO website for details of tax rates in Australia: www.ato.gov.au

Best regards.

sparkley23

Thanks this is very helpful. Bit more than the 10% or so that is taken off interest earnt before you receive it in the UK then!

I'm hedging my bets that the Aus Govt isn't that fussed about encouraging people to save and there is no tax free savings over here e.g. similar to ISAs in UK?!

nik04

ok perhaps i did not make my point very clear i thought we were talking about moving capital from uk to aus. The bank told me if i shifted my money after a period of time(cant remember the amount of time) of entering the country, it would be classed as an earning and would be taxed on the full amount not just the interest.there is no tax free period on earnings.I am no tax expert i was just passing on info that i was given by the bank if it is incorrect my bad