KhunHeineken

The proposed changes to tax residency is the single biggest issue facing expat retirees in years. It will impact on many. It's extremely useful information. I don't expect you to reply.

Hopefully another member will alert you to a recent post I made. If Australia makes a similar tax treaty in the near future with Thailand, as it did with Germany, your services pension gets a free pass from being tax in Australia, the source country.

Follow the research and educate yourself.

BREAKING NEWS As I mentioned before, Australia is looking at updating its tax treaties with other countries. (link previously provided) I had a quick look for a more updated tax treaty so I could know what to expect when Australia updates its tax treaty with Thailand, which is dated 1989. I found a newer tax treaty with Germany, dated late 2015, to start in 2017. There is some good and bad news in it. I have quoted the relevant section. This is the media release setting out the treaty. https://www.financeminister.gov.au/media-release/2015/11/13/new-tax-treaty-signed-germany Pensions Pensions are generally taxable only in the country of residence of the recipient. However: Social security benefits first paid after 31 December 2016 may also be taxed by the source country but the source country tax is limited to 15 per cent of the gross payment; Contributory pensions first paid after 31 December 2016 may be taxed in the source country if the pension is attributable to contributions that received certain tax concessions in the source country for at least a 15 year period; War persecution and similar pensions are exempt from taxation; and Government service pensions are taxable only in the country of residence if the individual is also a national of that country – otherwise, the pension is taxable only in the source country. It appears to me that should Australia and Thailand have a similar treaty, the pension will be taxed at 15% in Australia, being the source country, and due to Thailand having the lesser amount, being 10%, one should receive "credits" from the 15% tax paid in Australia which would mean Thailand does not get to tax the pension. 15% is a lot better than 32.5%.

Lacessit used a link from an Australian law educational website, so I used that website as well. Below are the definitions of the word "provisions" at law. https://classic.austlii.edu.au/au/legis/act/consol_act/la2001133/s16.html#:~:text=A provision of an Act,subparagraphs%2C sub-subparagraphs%2C examples "A provision of an Act or instrument is any words or anything else that forms part of the Act or instrument. Examples—provisions consisting of groups of words sections, subsections, paragraphs, subparagraphs, sub-subparagraphs, examples Examples—provisions consisting of groups of other provisions chapters, parts, divisions, subdivisions, schedules" Cambridge dictionary. https://dictionary.cambridge.org/dictionary/english/provision "provision noun (LAW) [ C ] a statement within an agreement or a law that a particular thing must happen or be done, especially before another can happen or be done: We have inserted certain provisions into the treaty to safeguard foreign workers. [ + that ] She accepted the job with the provision that she would be paid expenses for relocating." NOTE: "a particular thing must happen or be done, especially before another can happen or be done." Article 18 Article 18 Pensions and annuities 1. Subject to the provisions of Article 19, pensions and annuities paid to a resident of one of the Contracting States shall be taxable only in that State. Article 19 Article 19 Government service 1. Remuneration (other than a pension) paid by one of the Contracting States or a political subdivision of that State or a local authority of that State to any individual in respect of services rendered in the discharge of governmental functions shall be taxable only in that State. However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the recipient is a resident of that other State who: (a) is a citizen or national of that other State; or (b) did not become a resident of that other State solely for the purpose of performing the services. 2. Any pension paid to an individual in respect of services rendered in the discharge of governmental functions to one of the Contracting States or a political subdivision of that State or a local authority of that State shall be taxable only in that State. Such pension shall, however, be taxable only in the other Contracting State if the recipient is a resident of, and a citizen or national of, that other State. 3. The provisions of paragraphs 1 and 2 shall not apply to remuneration or a pension in respect of services rendered in connection with any trade or business carried on by one of the Contracting States or a political subdivision of one of the States or a local authority of one of the States. In such a case, the provisions of Article 15, 16 or 18, as the case may be shall apply. As per the austlii website, "provisions" are sections, subsections, paragraphs, subparagraphs, even sub-subparagraphs etc etc. As per the Cambridge dictionary, "provisions" are a "particular thing must happen or be done, especially before another can happen or be done." One member says, "forget about Article 19." I don't think so. Some other members say Article 18 relates to the aged pension and Article 19 relates to services pensions. Worthy of some discussion, but Article 18 relies on the "provisions" of Article 19, and if Article 19 is about service pensions, where's that leave the aged pension? See Article 19 Section 1 - "Remuneration (other than a pension) paid by one of the Contracting States or a political subdivision of that State or a local authority of that State to any individual in respect of services rendered" - no services rendered for the aged pension. See subsection (a) - "is a citizen or national of that other state." Well, there's only a handful of foreigners that have been granted Thai citizenship, so I think it fair to say no members on this thread are Thai citizens. The interesting part of that subsection is "or" Subsection (b) - "did not become a resident of that other State solely for the purpose of performing the services." Once again, services mentioned. Section 2 - "Any pension paid to an individual in respect of services rendered in the discharge of governmental functions" No government functions performed. Section 3 - "The provisions of paragraphs 1 and 2 shall not apply to remuneration or a pension in respect of services rendered in connection with any trade or business" - No services rendered in connection with any trade or business. Some interesting "provisions" in Article 19 that Article 18 are subject to. How do members meet the provision of Article 19? Interesting how no one wants to comment on this, which comes from a link on the Treasury website in relations to Australia and Thailand's double tax treaty. "The agreements work be giVing the country of residence the exclusive right to tax certain catagories of income and allowing the remaining income to be taxed by the country where it was sourced. If the income is then taxed by the country of residence, it is to allow a credit for tax paid in the country of origin. Examples of catagories reserved for tax by the country of residence include: "Industrial or commercial profits where the taxpayer has no permanent establishment in the country where the profits are earned; -Most pensions and purchased annuities;" Scroll down to Thailand. https://treasury.gov.au/tax-treaties/income-tax-treaties

Why is it I perceive a one link wonder who's not gathering all the info and viewing it subjectively?

Huh? Perhaps you should elaborate on what you mean by "ATO conditions." The links are clearly discussing the residency status of pensioners, and the tax implications. Bob - "I will be retiring overseas soon on Australian age pension. I will be non-Australian resident for tax purposes and therefore I will not have the benefit of the tax threshold. My basic tax calculation on ATO site show that I will be paying approx. 30% tax on the age pension, where there would be no tax if resided in Australia. Is this correct?" Blake - " As a foreign resident for tax purposes, you will pay income tax according to foreign resident rates. This means for all income under $180k, you'll pay 32.5c per dollar. You would only report and pay tax on your Australian-sourced income to us."

You edited and added more to your post. No argument from me the hourly wage is higher in Australia, but you have to spend a lot more of that hourly wage just to be able to earn that hourly wage, such is the higher cost of living in Australia.

But you can compare the difference in purchasing power. What does 1000 baht buy you in Australia? What does the same 1000 baht buy you in Thailand? It's important to compare "like for like." That's where "The Big Mac Index" comes in. Google it.

Yet, the advice from the ATO is also this, from two members of staff. https://community.ato.gov.au/s/question/a0J9s0000002ngF/p00172380 https://community.ato.gov.au/s/question/a0J9s000000O2y4/p00197245 Why is Jim right, and the other two wrong? Why is Jim's advice "official" and the above two staff members of the ATO unofficial?

I can see your highlights, but I would be interested in your "interpretation" of the "provisions" in Article 19 that Article 18 relates to.

Well, let's see now. If a tax resident in Australia, you benefit from the tax free threshold, and you may only have to do 45 days and meet two easy criteria in the factor test, although Labor looks like changing the 45 days to be longer. Then, you can spend the resit of the year in Thailand, where you only pay about 10%, or as you say, "token tax." Yeah, yeah, I know. Article 18 that's subject to the provisions of Article 19, yet, no one wants to discuss the "provisions" of Article 19.

Wrong. You can be a tax resident of both. You just said, "all I know is in Australia, you are either a tax resident of Australia or a tax resident of Thailand." You have contradicted yourself again. No. One can't "elect" to be a tax resident One either meets the criteria, or they don't, and that criteria will soon change to a physical presence and time based model, making the criteria even more clear cut. How can it have nothing to do with it when A) the pension is deemed an income and B) the pension is taxable? How can one "elect" to be a tax resident of Australia when they live in Thailand???? You can't "choose." You are deemed one way or another, and the proposed changes are set to make that easier, and more profitable for the government. When the proposed changes come in, how can you argue you are still a tax resident of Australia when you have been outside of Australia for 183 days? There will be no tax free threshold for you as a non resident, but that's ok, because you have no income being generated in Australia, unless you receive a pension, which is deemed an income, and is taxable, then you will get the credits you mentioned, but will pay the 32.5% tax between Thailand and Australia. Can you tell me how a pension then stands outside of non resident tax? Yeah, yeah, Article 18 that is subject to the provisions of Article 19. Those pesky "provisions" again. You can be a resident of two countries. I have posted an easy example of how to be. I say it again for you. You do 45 days and meet two of the criteria in the factor test, then do 180 days in Thailand. You are a resident for tax purposes of Australia and Thailand. You can also be a double non resident. Spend 183 days outside of Australia and 180 days outside Thailand. Yeah, you could be wrong.

You posted it. These are your words: "Not to get off track here, the above highlighted states: while pensions will generally only be taxable in the country of residence." Are they your words, or not? Are you now denying you wrote them? Once again, I would be interested in your "interpretation" of the "provisions" in Article 19. No need to hightlight Article 19, you have already done that a dozen time, but can you discuss your interpretation of the provisions in Article 19? Aren't you putting it forward to be all about the aged pension? After all, it is the pension thread. You still don't get it. The "credits" are given to the either the primary taxing country or the source country for taxes already paid. I not you refuse to comment on the youtube video I post where the guy explains all of this very well. I would be interested in your comments on it.

They can also be a double non resident of two countries, as the guy in the video points out. I have posted how to do this, but many would not like to be outside of Thailand for so long.

One can't simple accept Article 18 when Article 18 states "Subject the provisions of Article 19." You said, "forget about Article 19." You simply can't, when Article 18 s subject to the provisions of Article 19. I would be very interested in your "interpretation" of the "provisions" in Article 19. I see you have highlighted Section 2, but disregarded Section 1 and Subsections (a) and (b) Can you tell me what, exactly, at law, the provisions of Article 19 are that Article 18 relies upon?

How can you "forget about Article 19" when Article 18 is "subject to the provisions of Article 19?" You have contradicted yourself, yet again. "they are both law and both apply to each respective pension" yet, "forget about Article 19. WTF? You are taking all of this very personally. No need for it.

Well, for one, they are not earning a wage to compare.

Most on this form are retired.

I'm still a resident of Australia for tax purposes, despite not living there for some years, but looking towards the passing of the proposed changes, say I did 45 days in Australia and meet two for the factor tests, which I easily can, that makes me a resident of Australia for tax purposes, does it not? Then say I also do over 180 days in Thailand, that makes me a tax resident of Thailand, does it not? Care to comment on this? One can also be a double non resident for tax purposes, and I posted about this some time ago, if one was prepared to move around. I agree. Once again, a double tax agreement ensures the money is not taxed twice, or "double." A double tax treaty isn't about having two countries tax you, or "double" the countries tax you. The highest tax rate between the two countries prevails, and credits are given by both countries towards the tax taken by each country. As for Article 18 that's "subject to the provisions of Article 19" I don't agree with another member who simple says, "Forget about Article 19." This is the same member who beats his chest saying, the link is "the law, the law, the law" but "forget about Article19" of THE LAW.

So that's it then, Thailand is the new tax haven for Aussies. They'll nick name Thailand "Token Tax Thailand" (TTT) We'll have wealth Aussies becoming residents of Thailand to escape paying tax back in Australia.

You can put whatever you want to bed for yourself, that's your prerogative, but that doesn't mean I have accept your interpretation, because that's all it is, your interpretation. I am doing more research, but will say should my research prove you to be correct, I will gladly concede. I have also explain this to you. Now you agree. You are a resident of Thailand for tax purposes. Therefore, Thailand gets primary taxing rights. The highest rate of tax prevails amongst the two countries with the treaty. If it's taxed in Australia, Thailand gives a credit, if it's taxed in Thailand, Australia gives a credit, but they will both equal to the amount of the highest tax rate of either country, so you don't get out of paying one baht or one cent of tax, just because you live in Thailand. Do you agree? Now, "while pensions will generally only be taxable in the country of residence." Don't you love the word, "generally." Do you think "generally" might be worth looking into a bit, just a bit? Like I said before, I think you may be celebrating a little too early, but I will see where my research takes me and I will gladly concede if you are correct.

What you really have posted is your "interpretation" of the law. You read it then claim a not some humble victory over me, even begging me to "come out to play." When I did reply to your posts, and with links, you totally disregarded them. Do you think it's wise to gather all the information first, I do. This came from the Treasury website on Tax Treaties. IIt's even under the Thailand heading. I have posted the link/s before. "The agreements work be giVing the country of residence the exclusive right to tax certain catagories of income and allowing the remaining income to be taxed by the country where it was sourced. If the income is then taxed by the country of residence, it is to allow a credit for tax paid in the country of origin. Examples of catagories reserved for tax by the country of residence include: "Industrial or commercial profits where the taxpayer has no permanent establishment in the country where the profits are earned; -Most pensions and purchased annuities;" Can you see why I am reluctant concede that pensions will only be taxed by Thailand? I 100% agree that, as residents of Thailand for tax purposes, Thailand gets primary taxing rights, but that doesn't mean Australia goes and whistles and misses out. You have to remember, whilst the pension is a modest "income" as the guy in the video explain, the rich can't hide behind this. They have to pay the remainder of tax in the source country. Imaging if I owned 20 houses in Australia but was living in Thailand. I don't get to pat Thai tax on all that rent, and ad Australia gets zero. Can you post your interpretation of the above? Does the above not clearly mention the word "credit" as does your own link from Siam Legal. No, the "credit" is not just for shares, it's for the tax of each country, notice I said EACH because each country gets to tax you, just not the money getting taxed "double."

How can you forget about Article 19 when Article 18 says, "Subject to the provisions of Article 19?" Does this not mean to you, there is some relation, some connection, some correlation, some reliance, that Article 18 has on Article 19? Why don't you give us your "interpretation" of the "provisions" instead of saying "forget about Article 19" when Article 18 is subject to provision listed in Article 19? You just can't "forget about Article 19." So, like the guy in the video addressed, and assuming you are correct for a moment, why is it this is in the double taxation treaty when you are saying it set out to exclude a country, in this case Australia, from being able to tax the income, particularly when Australia is the source country? As I said, the whole idea of a double tax treaty is so the money doesn't get taxed twice, or double, not to say either Thailand gets to tax you and Australia doesn't, or Australia gets to tax you and Thailand doesn't.

You still don't get it. You have put forward the Double Tax Agreement Australia has with Thailand and them declared that it meant Australians receiving a pension from Australia, but who are tax residents of Thailand, will only pay tax in Thailand, and not in Australia, or both countries. The guy in the video, the video which you haven't even commented on, explains that the word DOUBLE in the term Double Taxation Treaty relates to the money not being taxed "double" but each country can still tax the money, just not twice. It is clear that as residents of Thailand for tax purposes, that makes most of us non residents of Australia for tax purposes, that gives Thailand primary taxation rights, but like the guy in the video explains, that doesn't mean you get to tell Australia that you don't have to pay them their 32.5% non resident tax because you are a resident of Thailand for tax purposes and Thailand's tax rate is is 10%. No, as the guy in the video explained, Thailand takes their 10% first, then Australia takes their 22.5%. As he said, you pay the higher of the two, but you do not get taxed twice, or double. You seem to think "double" means more than one country. That's not the meaning of the word "double" in the Double Tax Treaty legislation. Now, I am still looking into Article 18 and Article 19, particularly as Article 18 is under the provision of Article 19. I have not claimed I am correct, but I have not claimed I am wrong at this stage, ether. When I am satisfied with my research, I will announce my position, as me being either correct, or incorrect. In any case, I have posted links showing Australia is planning on changing its tax treaties with all countries in the near future, with a couple already being changed, also with the proposed changes to residency around the corner as well, we don't know what it could look like in the future.