tax liability
 

Hello All,

I have moved to Australia ( first time) on 01/04/2015 (on PR visa which was
granted last year July) and started new role on 23/04/2015 as a contractor on daily rate of $525/day. Before moving here I was working as contractor in England too via my ltd company. I use to give myself dividend on top of minimum salary.

Last week I took $17k as dividend and closed my British ltd company.

1. Would I need to pay tax on the income I earned in UK prior moving here ?
2. and any tax liability on the last week dividend ?

Please advise on my tax liabilities and any reference to good accountant in Sydney area will be really helpful.

Re: tax liability
 

I dont know the answer, but I can recommend an expert Financial Adviser for people moving from UK to Australia. I have had nightmare with my pension transfer before finally coming across a gentleman called Geraint Davies at Montford International - MIPLC.co.uk. He has been offering financial advice to expats for about 30 years and I dont think there is anything he doesnt know. I just wish I had found him sooner and saved myself a lot of cost and stress. Check him out. He is a really nice guy as well as being incredibly knowledgeable.

Re: tax liability
 

Yes, you would pay tax in the UK only, not in Australia.

Yes, if you were paid this in the UK then you would pay tax on it in the UK and declare the income and the UK tax paid on your Australian tax return.

BB

Re: tax liability
 

Hi willhill.

This is a tax question, and IMHO isn't one for a financial planner.

You can reasonably expect the grossed up dividend to be taxable in Australia - unfortunately. The upside is that there is a 10% tax credit available in respect of the notional amount deemed to have been already suffered on the divi.

Best regards.

Re: tax liability
 

Not everyone is a fan - do your due diligence before using Montford. We decided against after speaking to them and doing some research.

Re: tax liability
 

My situation is very similar, except I left the UK on 01/04/2015 and arrived in Australia on 27/04/2015 (PR). I was on vacation in Dubai between these dates and whilst in Dubai declared a dividend from my UK company.

Anyone any idea where that dividend is taxable, which return it is declared on? Obviously I intend to consult an accountant, but unsure if it's a question for a UK accountant or an Australian one.

Re: tax liability
 

Assuming you left the UK permanently and severed most of your links with the UK, you will probably either have become non-UK resident from 1 or 6 April, depending on the exact circumstances. You need to have a very close look at booklet RDR3 to work out the UK position, particularly if the dividend was declared on or before 5 April, in which case your entitlement or not to split year treatment will be relevant.

If the dividend was declared after you ceased to be non-UK resident, it will not be taxable in the UK, although if you do return to the UK it might become so (I can't remember the exact rules though again I think they are covered in RDR3).

It won't be taxable in Australia as you were not Australian resident when it was paid (I assume).

Re: tax liability
 

Thanks for your thoughts Louie, I'll check out that RDR3. The rules do seem quite complex and are beyond me. The divided was declared/received after 5 April 2015, but before entry to Australia. I intend to spend zero days in the UK in the current UK tax year. My best guess is that it goes on the UK tax return, as the Australian return doesn't seem to be interested in income received prior to residency. But I dont know for sure.

Re: tax liability
 

If you spend no time in the UK in the tax year you will be non-UK resident, so you needn't bother with RDR3.

On reflection, I could have worded that better. The tax credit attached to the dividend will suffice to cover the tax due, as long as you have no other income in the UK other than other investment income (as you would lose your personal allowance). It can get complicated if, for instance, you have UK rental profits or pension income, but if your only UK income in the whole tax year 2015/16 is the dividend, there will be no further tax to pay.

If you have to submit a UK return anyway, it will have to be reported on it, but you may well not have to submit a return.

Re: tax liability
 

Thanks again Louie. The dividend will be my only UK income other than investment income. However the sum involved is large enough (even with no other income taken into account) that the tax credit would not have fully covered the tax liability had I remained in the UK. I expect to complete a tax return for the UK for 2015/16. From being an expat previously, I remember it took HMRC several years before they decided I no longer needed to submit a UK return!