# Australian Tax Question



## Macrossian (May 19, 2008)

Hi Everyone,

First I want to thank all those who have contributed to this forum and made it such a good source of information for newbies such as myself planning for the big move to Dubai. I look forward to meet everyone in future forum gatherings!

I am about to fly to Duabi from Australia in a ew weeks' time. I undertsand that I have to notify the ATO as well as financial institutions like banks,, superannuation funds, etc of my change in status to a non-resident for tax purposes. 

I rang up ATO last week to find out how to go about "notifying", that is whether it involves filling up a form or writing a letter. But I was told that there is NO need for me to notify the ATO, as Australian tax lodgement is self-assessed. This has left me puzzled. 

How does this "notification" process go about? For those who have gone through the process, please enlighten me


----------



## flossie (Jun 9, 2008)

A quick answer as I'm meant to be somewhere else.

You don't need to notify the tax office because when you fill out your tax return, it will say on there that you have left the country. (Strongly advise you to get an accountant's help with this. One that has experience with offshore Aussies!) You have to notify banks, investment companies etc etc in writing. When your accountant (!) fills out your next tax return, he/she will notify the tax office then.


----------



## alli (Mar 6, 2008)

Yeah, when you fill in your tax return it'll all be done for you.
HOWEVER.

You will be an australian residents for tax purposes this year. For tax purposes, if you spend over 6 months in Aus, you are a resident.

It is very complicated, get an accountant ASAP


----------



## flossie (Jun 9, 2008)

alli said:


> Yeah, when you fill in your tax return it'll all be done for you.
> HOWEVER.
> 
> You will be an australian residents for tax purposes this year. For tax purposes, if you spend over 6 months in Aus, you are a resident.
> ...



Isn't it 6 months per financial year, though? In which case, you will be okay because financial year has just started?


----------



## sgilli3 (Mar 23, 2008)

flossie said:


> Isn't it 6 months per financial year, though? In which case, you will be okay because financial year has just started?



I believe it is Floss..6 months per financial year.
I have an "appointment" via the phone with our accountant tomorrow, as our tax situation has changed.
Will be asking LOTS of questions !!!
No matter how many times I read ATO website, and follow the prompts..I still cant work out our taxes properly...(lol)


----------



## alli (Mar 6, 2008)

I moved here in June, and I am an australian resident for tax purposes, that's all i know.


----------



## Osh (Mar 9, 2008)

Hi Macrossian

Our accountant told us that at the end of each financial year a single page form is completed and sent to the ATO advising that no tax is payable as no income was earned in Aus that year. He will do this automatically for us each year unless we notify him otherwise.

However as the others have said, anything you do earn in Aus needs to be declared.

Hope this helps.


----------



## kaz101 (Nov 29, 2007)

alli said:


> I moved here in June, and I am an australian resident for tax purposes, that's all i know.


Probably because that was towards the end of the tax year since the tax year in Oz runs from July 1st to June 30th so here in Oz we've just started a new tax year. 

Regards,
Karen


----------



## Macrossian (May 19, 2008)

Many thanks to everyone for the advice and information. As I understand and as some have kindly pointed out, I will lodge tax as per normal for the financial year Jul 2007- Jun 2008. But from Jul 2008 onwards (this month), I will be in Dubai and thus become non-resident for tax purposes (by doing the right things and observing the rules of course).

Speaking to an accountant is a must and I am trying to get in touch someone who knows all these international tax stuff. A friend has already introduced a potential contact but that may not be really that helpful , does anyone know of good accountants well-versed in Australian tax? Any input would be much appreciated. Cheers.


----------



## Tiger (Jul 8, 2008)

*Taxed in Australia, working in Dubai*

Just a quick question? How do you stop Australia taxing you? I have been through the tax act and found the following. If the country you work is tax free you are not exempt from tax purposes. See 2D

Do you have anyone I can speak to about this?

Many thanks.


INCOME TAX ASSESSMENT ACT 1936 - SECT 23AG 
Exemption of income earned in overseas employment 
(1) Where a resident, being a natural person, has been engaged in foreign service for a continuous period of not less than 91 days, any foreign earnings derived by the person from that foreign service is exempt from tax. 
(1A) A person is taken, for the purposes of subsection (1), to have been engaged in foreign service for a continuous period of 91 days if: 
(a) the person died at a time when he or she was engaged in foreign service for a continuous period of less than 91 days; and 
(b) he or she would have otherwise continued to be engaged in the foreign service; and 
(c) his or her continuous period of engagement in the foreign service would have otherwise been a period of at least 91 days. 
(2) An amount of foreign earnings derived in a foreign country is not exempt from tax under this section if the amount is exempt from income tax in the foreign country only because of any of the following: 
(a) a law of the foreign country giving effect to a double tax agreement; 
(b) a double tax agreement; 
(c) provisions of a law of the foreign country under which income covered by any of the following categories is generally exempt from income tax: 
(i) income derived in the capacity of an employee; 
(ii) income from personal services; 
(iii) similar income; 
(d) the law of the foreign country does not provide for the imposition of income tax on one or more of the categories of income mentioned in paragraph (c); 
(e) a law of the foreign country corresponding to the International Organisations (Privileges and Immunities) Act 1963 or to the regulations under that Act; 
(f) an international agreement to which Australia is a party and that deals with: 
(i) diplomatic or consular privileges and immunities; or 
(ii) privileges and immunities in relation to persons connected with international organisations; 
(g) a law of the foreign country giving effect to an agreement covered by paragraph (f). 
(2A) Subsection (2) does not apply in relation to foreign earnings to the extent that the person derived them from foreign service in Iraq after 31 December 2002 but before 1 May 2004. 
(3) If the income of a taxpayer of a year of income consists of an amount that is exempt from tax under this section (in this section called the exempt amount ) and other income, the amount of tax (if any) payable in respect of the other income is calculated using the formula:


----------



## sgilli3 (Mar 23, 2008)

Hi Tiger,
I was chatting to our accountant today in regards to a few changes we have to our tax situation, and from what I can gather...for us:
We will not be taxed in Oz as this is our only income (and even when we return to Oz...the money we make here will be our only income)
If we return to Oz and are making money here AND in Oz then we will be liable to pay tax.

For us to keep our money totally tax free when we return to Oz my hubby needs to spend more than 193 days per tax year in Dubai. Anything out of that and he will classes a resident of Oz for tax purposes.

Sooo confusing. We are looking at requesting a private ruling from the Tax Office...
So far, in our years here, we have managed, for the year we returned home, not to pay tax on that money. We were asked by Centerlink though to show amount earned, so they could calculate whether Family Benefit backpay would be paid to us.


----------



## flossie (Jun 9, 2008)

Tiger said:


> Just a quick question? How do you stop Australia taxing you? I have been through the tax act and found the following. If the country you work is tax free you are not exempt from tax purposes. See 2D
> 
> Do you have anyone I can speak to about this?
> 
> ...



Before we moved to Dubai, my DH worked offshore. Basically,most of the info you have posted has to do with people working on rigs etc. If they work in a country with a double tax agreement with Australia, then they are not liable to pay tax to Australia if they are liable to pay tax in the country they have been working in. The 91 days mentioned is also to do with countries with a double tax agreement with Australia. This means that even if you are a resident for tax purposes during your offshore work, if you work continuously for 91 days in the same country, Australia has no claims on tax on that income. This used to work in our favour when DH had his old job and we were living in Australia. Because UAE has no income tax, this doesn't apply. This is why you have to prove you are a non-resident for tax purposes to be exempt from income tax in Australia while earning in Dubai. How do you do this? There are a few basic rules.

You have to intend to be out of the country for more than two years.

You cannot maintain a home in Australia.

You must notify all banking institutions etc that you are a non-resident for tax purposes.

You should limit your trips back home.

Any houses you have in Australia must be either rented our available for rent the whole time you are away.

Our accountant also advised us that my husband could not have any dependants living in Australia while he was working Dubai. This differs to what Sgilli has been told by her accountant. This highlights how ambiguous the tax law is and why it is important to get an accountant's advice. It may be worthwhile getting a private ruling just so you know exactly where you stand.


----------



## sgilli3 (Mar 23, 2008)

Hi Flossie,
You are soooo right..the law is very ambiguous.
From what I understand, for us, when we return to Oz, hubby can still earn money OS and it still be tax free...so long he is gone more than 193 days (approx 6 months)...and I am earning nothing.
As soon as either of us earn anything in Oz-it is taxed.

Like I said..this is why we are looking at a private ruling.
The above rule suits us (DH will travel between Oz & Dubai when we return to live in Oz), as our business is here...but we want it in writing !!!

edited to add: we are also registered as non residents, and are even off the electoral role


----------



## Tiger (Jul 8, 2008)

Do you mind sending me contact details of your accountant? I have been getting conflicting advice on this side. Your's sounds like they know more about the matter.

Appreciate any assistance.

TB


----------



## flossie (Jun 9, 2008)

Stephen Thompson at Shakespeare and Co in West Perth. They have a website, so if you do a Google search, you can get their details. We actually use Brad Loftus but everything goes through the partners as well. Sorry, at 'home' eating Burger Rings and Dim Sims (sorry, Sgilli!!), so don't have the details on me. They deal with alot of people we know in the oil industry, also. If they don't know something, they'll find out. They don't get insulted if you question them, they just do more research and then let you know they were right all along. LOL.

p.s. Am getting fat!!!

pps..Not sure if you were actually speaking to me or Sgilli, so thought I'd answer in case it was me. Can't stress enough to find an accountant who has experience in offshore cases. So many accountants don't!!


----------



## alli (Mar 6, 2008)

I may just have to use your recommendation too. Does he deal with people from Sydney do you reckon?


----------



## flossie (Jun 9, 2008)

Alli, they deal with us all the way in Dubai, so I guess it doesn't matter where you're from. No harm in emailing them and asking?


----------



## ugogirl (Aug 13, 2008)

Hi All

After reading this thread last week, I went to see my accountant as I was considering whether to leave my apartment here unrented when I go to Dubai.

I also asked her a few more questions. Here is the summary:

* part year tax income - when you are a non-resident for part of the tax year, you only pay tax on the income you earn in Australia. Also the tax free threshold is prorata, eg. if you are in Australia for 6 months, then you only get half of the $5000 tax free threshold. 

* your accountant notifies the ATO of your residency status when they do your return.

* any money you make overseas and deposit into your Aus bank accounts is not taxed (only the interest earned on money in that account is taxed).

* if you have an investment property here, being a non-resident, you can claim that part of the trip that is for the investment property (ie. maintenance, etc). 

* any income you earn on the investment property (less expenses) is taxed.

* any income you earn from buying australian equities (shares) is taxed (no matter where the the account is based).

* keeping a property here (without renting it out) is no problem. You can prove you are out of the country with immigration records. Suggestion is don't have any mail sent there anyway. 

* of course if you do rent your property out, then you can claim all the expenses (including interest on loans, etc).

* I went to my bank and they said I don't need to notify them about living overseas, except if you're changing your address in order to have your statements mailed to your overseas address.

* the ATO has the right to remove a 10% provisional tax from your Aus bank account for potential interest earned (but this sorts itself out when you do your tax return) - and they don't know you're a non-resident until your first tax return anyway.

Hope this helps. Double check with an accountant or the ATO as well.

cheers


----------



## sgilli3 (Mar 23, 2008)

Thanks for adding a little more information to help others out UGoGirl.

Much appreciated


----------



## TAPXE (Nov 29, 2008)

ugogirl said:


> Hi All
> 
> After reading this thread last week, I went to see my accountant as I was considering whether to leave my apartment here unrented when I go to Dubai.
> 
> ...


Hi ugogirl,

Thanks for the great info. You mention that any income you earn from buying australian equities is taxed, however it is my understanding that as long as you are a non resident, there is no capital gains tax on australian equities (only property). 

See: w w w . ato.gov.au/individuals/content.asp?doc=/content/64155.htm&pc=001/002/012/014/003&mnu=&mfp=&st=&cy=1

Can anyone clarify which is correct?

Many thanks


----------



## macca_24 (Apr 14, 2008)

What an excellent thread I haven't done my tax return for 2 years as they started keeping my $700 odd return for some imagined debt, without informing me, just helped themselves.


----------



## Queenslander (Apr 16, 2008)

I suggest if you have any doubts you go to the ATO website and look for the calculators section. There is a self assessment calculator there that allows you to determine your residency status for tax purposes. Hope that helps a little. Cheers


----------



## Fatenhappy (Jun 23, 2009)

Just left Oz 1 June and went through all this with the ATO and my accountant.

Basically if you don't want to be seen as being an Australian resident and as stated by Tiger previously from the act ..... _"Where a resident, being a natural person, has been engaged in foreign service for a continuous period of not less than 91 days, any foreign earnings derived by the person from that foreign service is exempt from tax. " _ So then, turn that around ... if your've been off shore for more than 91 days whammo !!! irrespective of your location if you have any Australian Tax implication.... i.e. you need to show no ties of any description financially with Australia to get around it.

You have to show NO taxable income being generated in Australia for the duration. As explained to me, this also obviously includes all pensions and annuities from all sources including investment properties in the form of rents etc etc.

Thats exactly why we are selling our Australian house rather than renting it.

Bottom line see your accountant as he is the only one who can really assess your circumstances.

Cheers
Greg.


----------



## Fatenhappy (Jun 23, 2009)

hol2412 said:


> xxxxxx


Thanks John ...

After recent comments, I have reapproached my own accountants in Oz. 

They have redirected me toward a further firm of accountants there who also specialize in international affairs with relation to the ATO.

I have fired off my complete situation to the new contact, had receipt confirmed, and am now awaiting exact detailed particulars to my situation as it is a little complex.

Appreciate the offer, and certainly appreciate your concerns, but on something as serious as this that could have further ramifications if not approached in the correct manner, I would rather pay for specific advice.

Thanks again for your concerns
Greg ...


----------



## Fatenhappy (Jun 23, 2009)

..... Try this for a real useful link from the ATO girls and boys ... Residency - overview

If you sniffaround it goes on into pensionable income, public service employees and all manner of other bits and pieces etc. Not the be all end all, but sure does explain a lot ....

If in any doubt .... bottom line is you can't do better than getting specific professional advice for your circumstances .... compared to what you may loose otherwise, small price to pay!!

Cheers
Greg,


----------



## Grass hopper (Apr 27, 2009)

The Australian tax system is one of the most complex and far reaching in the world...the recent changes targeted at short/medium term overseas assignments only extend that. I've done tax units twice at uni and still have difficultly working through the labyrinth that is the ITAA. 

I agree with what other have written…the best advice is to get professional advice. My company uses Deloitte and they are really good but expensive. However compared to the amount you would pay for incorrect advice it's easily worth it. In addition to tax advice they can also help you advice about things like offshore banking and trust structures. Also if you have wrong advice and you rely on it then it is possible you may have recourse against the firm that gave you the advice.

Personal circumstances do make a difference hence personal advice is definitely required. Things to ask about include evidencing that you cease to be tax resident when you leave (leave the electoral role, sell assets, cancel memberships, change addresses etc), investments and superannuation in Australia while you are overseas (if you have insurance thorough your super check if you are still covered) and then what happens when you go back home.


----------



## leeberry3 (Mar 15, 2009)

*stoping the tax man*



Macrossian said:


> Hi Everyone,
> 
> First ....trunked...
> How does this "notification" process go about? For those who have gone through the process, please enlighten me



I had this problem when i first left the UK. I had to fill a form with Inland to get them to take me out of their automated system. I image Ausy have to go through a similar process. The only requirement was to prove i was paying Taxes in Malaysia by sending my Malaysian tax ID number to them so they can verify it. My hunch is that you need to follow a similar process although taxes are higher in Dubia. I'd recommend moving to a lower tax rate if you can. I am rate at 4% here but I never pay that much because of the tax deductions for businessmen. Hint I was really pinched when I left the UK because I moved all my investments off shore. Besure the same wont happen to you by moving your investments before you leave. I recently heard from my bank that EU countries are now seeking to crackdown on tax evasions so make sure your move is not illegal with the auditors. 

Lee


----------



## illawarrior (Aug 16, 2010)

alli said:


> I moved here in June, and I am an australian resident for tax purposes, that's all i know.


The ATO has many criteria for determining whether you will be treated as a resident or non resident of Aust for tax purposes. How long you will be out of the country, is only one factor. Probably the biggest factor is whether you have "set up home" in the new country.


----------

