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Tax on savings before TFN...

Tax on savings before TFN...

Old Jul 23rd 2008, 9:19 pm
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Default Tax on savings before TFN...

Hi,

We arrive in Aus on 7th Aug.

We've just set up our Westpac Accounts and registered and validated our Ozforex account the other day.

I've read, and the guy who set up our Westpac account mentioned:
We get charged a higher tax rate until we get our Tax Number (TFN). He said we can claim this once we have our TFN. I know I can't apply for a TFN until we arrive in Aus.

I'm not very tax-savy though - what does this mean?
If we transfer our savings (£25k), will a 'chunk' of this be taken out automatically as tax? How much? How easy is it to get back? How long does it take to get back?

Would we be better to hold off transfering until we arrive in Aus and have a TFN registered with the bank first?

Sorry - lot's of questions. And remember - not tax-savy!

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Old Jul 23rd 2008, 9:27 pm
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Default Re: Tax on savings before TFN...

reading into this a bit further, am I right thinking that we don't pay tax on our original amount, only on the interest we generate each month?

So, if after we transfer our savings, after the first month we generate, say 1k interest, 46% will be taken at source as tax?

We then claim that back at the end of the financial year?
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Old Jul 23rd 2008, 11:40 pm
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Default Re: Tax on savings before TFN...

Hi ,

Yes you're right, you only get taxed on the interest. If you can, get your TFN to Westpac as soon as you have it, but you can claim back the tax (or higher rate of tax) when you fill in your tax return
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Old Jul 23rd 2008, 11:50 pm
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Default Re: Tax on savings before TFN...

If you are not tax resident in Aus then you should be paying foreign withholding tax (10%) on the interest earned (when it is earned). You're supposed to declare this interest on your UK tax return and claim the tax already paid. Note you don't get the 10% back from Aus.

Once resident the tax is 46.5% (or whatever the highest tax rate is). This is charged, as you say, until you supply a TFN. Once you supply the TFN the bank should recredit the tax almost immediately. In my case they did it that month. I would guess there may be cases (e.g. near year end) when they would not be able to do the recredit and you would have to claim the tax back through your Aus tax return.
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