Australian Foreign Resident Superannuation Question

[4MyEgo]

Hi Guys

 

I have a question for Aussie Xpats, although I think I have the answer.

 

If you derive income from Australia as a Non-Resident, can you pay superannuation contributions to your Australian Superannuation Fund, and if so how much in percentage terms as I know as an Australian Resident, the tax is 15c in every dollar into super, however am not sure if it may also apply to Foreign Residents, i.e. at 15c in the dollar.

 

I do not work for anyone, and also don't know if I could do a salary sacrifice, because if I could that would be great.

 

I have had some clients back in Australia seek my consultancy services during the financial year 2016-2017 in which I earned $25,000 for the consultancy work and now have to lodge a tax return and pay tax at Non-Resident rates, but would be good if I could reduce that by making super contributions as 15c Vs 32.5c is a no brainer and I am due to cash in my super at 60 if I want too, or just leave it there till later. 

 

I am aware that I can deduct items like mobile charges, internet costs, toner cartridges, stationary item expenses and depreciation items like printers, laptops etc etc, and am interested to know if there are any Aussie Xpats contributing to superannuation from income derived from Australia, other than from property, and or what other items they are claiming as deductions

 

As for me saying earlier that I think I have the answer, is really asking the question, why on earth wouldn't I be entitled too do so otherwise, or have they taken everything away from us ? 

Edited November 1, 2017 by 4MyEgo

[malcoml]

I researched this a while back and as a non resident your are not meant to contribute to an Austrlian super fund.

 

That means in theory they could tax you at top marginal rate.

 

This was a few years ago so I suggest you phone the tax office.

[4MyEgo]

1 hour ago, malcoml said:

I researched this a while back and as a non resident your are not meant to contribute to an Austrlian super fund.

 

That means in theory they could tax you at top marginal rate.

 

This was a few years ago so I suggest you phone the tax office.

Thanks for your input malcoml

 

My accountant just emailed me back stating that as a Foreign/Non-Resident you are not allowed to make deductions, so there goes that scenario as you also confirmed, but look what I discovered below.

 

There I was researching to try out find out for myself as well as posting this topic on TVF, now what I found was that there is no mention of a non-resident making an income from Australia, that is not in Australia, could this be a loophole ?

 

I mean, if you look at the ATO's website, it states that as a non-resident, you must advise your bank of your overseas address so that it can withhold 10% withholding tax, and you as a non-resident do not pay any tax on fully franked shares as the tax is already taken out, also there is no capital gains tax paid on shares, and if you earn an income from Australian property, you pay 32.5c in the $ up to $80,000, but there is no mention of what tax a non-resident has to pay, if any, if he makes an income in Australia, if he is not in the country.

 

It states what a non-resident pays if they are in Australia earning an income, but nothing about a non-resident earning an income from Australia, who is not in the country, call it a technicality ?

 

This is a very interesting scenario, I mean, how can someone earn an income from Australia if they are not in Australia, well, the internet has been here for ever, and one doesn't need to physically be in Australia to provide consultancy work, and be paid their fee into an Australian bank account, where the tax is 10% withholding tax.

 

So if I cannot see where it states that tax is payable from income derived from Australia as a non-resident that is not present in Australia, I would think that there is no tax payable.

 

Could be onto something here ?

 

https://www.ato.gov.au/business/international-tax-for-business/payments-to-foreign-residents/

Edited November 1, 2017 by 4MyEgo

[Seeall]

Great  post,

 

not much about on AU expats as AU is so "in their own weeny world down there"  I have nearly given up on finding  wise accountant who knows about

international finances/wealth and tax.  Tired of the loudmouthed "we can do all" bs from aussie accountants that will in fact get you into trouble, know very little and are useless.

 

As for the ATO... be careful, I have seen many posts with people reporting different replies fromthe  ATO for the same topic..  same deal as the above..

yes, some say get it in writing, but we all have seen the "disclaimer" in the small text...l ike the insurance companies ha ha..

 

So, thanks again for sharing and good luck with your tax affairs... and if anyone does know of a fair dinkum international financial savvy person that can deal with AUS let me know...

[bazza73]

I'm by no means an expert in this field; however, I would think if the OP is charging consultancy fees in Australia, he would need to be charging GST as well. Then it gets murky - he's supposed to submit a Business Activity Statement

( BAS ) every quarter, which remits GST to the tax office. How that works with someone non-resident... I give up.

The really good international accountants are busy feathering their nests at major multinationals. No offence meant, but finding a competent accountant to service an annual contract of $25,000 is a big ask.

[4MyEgo]

1 hour ago, bazza73 said:

I'm by no means an expert in this field; however, I would think if the OP is charging consultancy fees in Australia, he would need to be charging GST as well. Then it gets murky - he's supposed to submit a Business Activity Statement

( BAS ) every quarter, which remits GST to the tax office. How that works with someone non-resident... I give up.

The really good international accountants are busy feathering their nests at major multinationals. No offence meant, but finding a competent accountant to service an annual contract of $25,000 is a big ask.

Hey bazza73 by no means was I looking for an international accountant....lol

 

Just stumbled on this which answers my question I think its pretty cut and dry:

 

You do not need to lodge an Australian tax return if you are a foreign resident and your only Australian-sourced income was interest, dividends or royalties from which non-resident withholding tax has been correctly withheld.

 

Aside from this exception, you must lodge a tax return if any of the following apply:

• Tax was deducted from any payments (such as wages) made to you during the financial year.
• You are an Australian resident and your taxable income was more than the tax-free threshold.
• You are a foreign resident and you earned more than $1 in Australia during the financial year.
• You are leaving Australia permanently or for more than one financial year.

Edited November 1, 2017 by 4MyEgo

[bazza73]

12 hours ago, 4MyEgo said:

Hey bazza73 by no means was I looking for an international accountant....lol

 

Just stumbled on this which answers my question I think its pretty cut and dry:

 

You do not need to lodge an Australian tax return if you are a foreign resident and your only Australian-sourced income was interest, dividends or royalties from which non-resident withholding tax has been correctly withheld.

 

Aside from this exception, you must lodge a tax return if any of the following apply:

• Tax was deducted from any payments (such as wages) made to you during the financial year.
• You are an Australian resident and your taxable income was more than the tax-free threshold.
• You are a foreign resident and you earned more than $1 in Australia during the financial year.
• You are leaving Australia permanently or for more than one financial year.

You are a foreign resident and you earned more than $1 in Australia during the financial year.

 

Well, that says it all. It also reminds me of the employment statistics that say if you work one hour in a month, you are employed. So let's see - my tax return cost me $165 last year. If I earned as a foreign resident, I'd have to make $165 before I could break even.

 

In response to the original question, I have found ( age 74 ) I am better off closing down my self-managed super fund and operating my investments as an individual. While I lose the tax exemption on earnings in the SMSF, that is cancelled out by the senior citizens tax offset (SATO), franking credits,  and the fact I am no longer shelling out $2500 a year in accountant, auditor and ASIC fees. I'd suggest you should review your super fund periodically to see if you still need it.

[4MyEgo]

16 minutes ago, bazza73 said:

You are a foreign resident and you earned more than $1 in Australia during the financial year.

 

Well, that says it all. It also reminds me of the employment statistics that say if you work one hour in a month, you are employed. So let's see - my tax return cost me $165 last year. If I earned as a foreign resident, I'd have to make $165 before I could break even.

 

In response to the original question, I have found ( age 74 ) I am better off closing down my self-managed super fund and operating my investments as an individual. While I lose the tax exemption on earnings in the SMSF, that is cancelled out by the senior citizens tax offset (SATO), franking credits,  and the fact I am no longer shelling out $2500 a year in accountant, auditor and ASIC fees. I'd suggest you should review your super fund periodically to see if you still need it.

Thanks Bazza

 

I got ride of my SMSF years ago as I was paying what you said annually for what ?

 

I have a bkoer who charges me 1% in and 1% out, so the way I see it, if he is making me money, so is he.

[ELVIS123456]

Check out this website - I found it very useful in the past.

https://www.exfin.com/superannuation-contributing-overseas

 

Seems to be as rather complex and ever-changing issue.