Hi Folks,
Hope somebody can shed some light, having just completed my first full tax year in Oz, I have been hit with a tax bill from the MLS, to which my employers sponshership does not cover enough in health care cover to prevent paying this, the issue I have is that my tax accountant did not submit my tax based on my worldwide income, i.e I have a place back home and have NRL1 status, i.e I dont pay tax on the income as I'm living in Oz, now the tricky bit, I make a loss on this property, around $50 dollers/month, should I be declaring this, I beleive they call it negative gearing here, the reason I ask is becasue if I declare I dont pay tax because of my UK status on a UK income, the ATO may want to tax me on it, which would put me over the edge, thanks again for any helop anybody can give me

Soory folks, should have inputted my Oz status, I'm on 457 Business long stay visa, however I belive this make me Oz resisdent for tax purposue, ie tax is based on worldwide income

Just because you have NRL status doesn't mean you don't pay UK tax on rental income.

Thanks NedKelly,

I dont pay any UK tax on the income from the rent, apart from the VAT or GST on the mgt agents fees in the UK, the income is ring fenced from tax becasue of NRL1 status, hence the reason to have this status within UK tax. I just really want to know if I can claim the loss I make on it against my Oz tax, or will the ATO try to take tax of me as such, thanks for your reply

I think you need to check on the implications of NRL status. It means you receive the rent without tax deducted but you still have to pay the tax, if any is due.

You then need to declare the income on your Oz tax return but you get to deduct any UK tax paid.

Since you are making a loss things might be different but I have doubts that you will be able to offset a foreign rental loss against an earned income.

You can definitely offset foreign rental losses against your income, this is what negative gearing is. Australia makes you declare all worldwide income but at the same time any losses you have are deducted off it. Obviously if you are making a profit on your rental and you have the Nrl exemption then you would pay tax on it here in australia when you add it in as part of your worldwide income.

The NRL thing is not a "status" and is not an "exemption". As Ned Kelly states it simply means that tax is not deducted at source, but at the end of the year you should complete a UK tax return and if tax is due then it needs to be paid. Remember you cannot deduct mortgage capital repayments, only interest.

You are tax resident OP, however 457 visa holders do not need declare worldwide income, it is a nuance. As you do not need to declare worldwide income, then I would seriously doubt that you can declare losses to offset your tax bill here.

What exchange rate is used when converting monthly UK rental income into AUD for Australian tax return purposes? An average rate for the tax year?
Unlike the UK, Australia allows rental losses to be offset against employment earnings, not carried forward until a rental profit is made?

You are tax resident OP, however 457 visa holders do not need declare worldwide income, it is a nuance. As you do not need to declare worldwide income, then I would seriously doubt that you can declare losses to offset your tax bill here.[/QUOTE]

I concur! After much research on the ATO website, this year I reclaimed Oz tax I paid on my UK rental income in 2009 when I declared it in error because I wasn't aware of the rule about 457 holders not having to declare.

I'm PR now. I am liable for tax in the UK, I also have to declare it in Oz but then claim it back later. I use e-tax. From memory it asks for the income then seperatly for the deductions and charges tax on the profit so I suppose if you make a loss it will reduce your assessable income and therefore your Oz tax.

I wonder if you could go through e-tax and input various details to see how it affects the tax estimate? You don't have to submit it.

I'm assuming you're not expecting to make any profit on it in future because if you were it might be better to be liable in the UK than in Oz.

I did my own tax. My pal's 1st ex tax agent declared when she was on a 457, she's now trying to get that money back, her 2nd ex tax agent wasn't claiming back the UK rental income tax she paid as a PR, her current one is working on information I am providing her with after doing my own research on the ATO website!! The only good tax agent I know of it Dave Collett (think I have that right) from GoMatilda, he might be able to help you.

If you go in to the ATO website there is a table with exchange rates and it tells you what exchange rate you have to use.

Unfortunately a rental loss in respect of a UK let property is usually not deductible on an Aus tax return if you are a temporary visaholder - it is the flipside of a rental surplus not being assessable in the same circumstances.

In case of need, see the FAQ schedule at www.gmtax.com.au

Best regards.

Hi Alan,

Sorry I called you Dave in a previous post!

Not a problem!

Best regards.

Guys

I am on a 457 visa and have a house back in Ireland which is currently rented.

From reading threads here I see that my rental income is not assessable for ATO purposes as I only pay taxes on my Australian derived income.

Do I still have to put it on my tax return or do I leave that blank as its ''non assessable income"?

Thanks in advance