Swerv-o

I'm in a bit of a muddle over witholding tax on the interest from my HSBC account.

I set up an HSBC Australia account last year, to get ready for my imminent departure. I paid in the proceeds of my house sale in November, trying to get the best interest rate.

As I have not yet landed in Australia, and probably won't for a bit just yet, I don't have a Tax File Number, so have been unable to pass one onto HSBC. They told me that because I was a non tax resident that they would take a witholding tax of 10% from my interest, which they did on my interest payment for November. I called HSBC, just to check, and they said that apparently they had already received a TFN for my account. I told them that I hadn't got one yet, and they confirmed this, and confirmed that I should pay a 10% witholding tax, because I hadn't landed yet.

Being a suspicious sort of person, I checked my interest payment for December, to discover that HSBC had credited my interest, but not taken any witholding tax of any description.

Should I be concerned over this? I don't want to be hit with a massive tax bill as soon as I arrive, or even before. I won't be spending any of the interest made until I arrive in Australia in the spring, but don't want to end up on the wrong side of the ATO before I even begin. Is this a problem for me or a clerical error on behalf of HSBC?

Any clues?

S

banjo

I don't think it is a huge problem, because as I understand it it's the banks responsibility to sort it out. I remember when I saw this TFN witholding tax on my statement I queried it - you get it back once you lodge your TFN with them anyway.

The banks here are pretty useless so at least you won't be under any illusions of efficient service once you get here!

lacey21

So does the Tax go down when you have your TFN?

lace x

Alan Collett

I'm puzzled: if you don't have a Tax File Number how is it that the HSBC has one matched to your account?

The situation is that while you are a UK tax resident the Aussie source interest is taxable in the UK, with a credit to be claimed for the 10% withholding tax already suffered. You should therefore obtain the relevant supplement to your UK Tax Return after the end of the current tax year and declare the Aussie source interest (and w/holding tax) on the supplement.

Because you are not yet an Australian tax resident the withholding tax settles your obligation to the Australian Taxation Office.

Once you are in Australia and have become a tax resident there you provide the bank with your TFN and they will pay you GROSS interest. You declare the same on your annual Aussie Tax Return and pay tax accordingly.

Best regards.

Alan Collett

It is your responsibility under a self assessment regime to pay the correct tax.

Best regards.

Alan Collett

No, it probably goes up, in that although you will receive the interest on a gross basis once you have a TFN the interest income is assessable and will be taxed at Australian rates of income tax.

Best regards.

lacey21

So all it is just the interest on your savings that is taxable then?

cheers lace x

lacey21

Also is there a threshold for the tax like there is in the UK. Have so much money in and you are taxed less than that and it is nontaxable

cheers again lace x

JAJ

http://www.ato.gov.au

lacey21

Thank you JAJ

lace

Fireman Al

See, doesn't matter where in the world we go, the tax b*stards will get us everytime !!!

JAJ

There are countries/territories out there where you will pay little or no tax, if that's really your number one priority in life.

Public services - like the fire service - do require taxes to operate.



Jeremy