Tax changes for expats

[Will27]

22 minutes ago, ELVIS123456 said:

I remember his name was Graham and he was given as an example on the ATO web site somewhere - deep inside its regulations and laws sections - I remember it took a long time and I stumbled across it.

 

I believe the main reason he had to come back, was to face the charges being laid against him - or be arrested in Thailand I guess.  I assume he had ignored their letters and/or calls - or never got them.  Plus he probably decided to live in the unit while paying off the debt.  And I believe that you cannot declare yourself bankrupt from overseas - maybe and maybe not.  Whatever the reason/s - he came back and he paid off the debt (slowly).

 

Sounds interesting but TBH, I can't see the ATO having someone arrested in Thailand and extraditing them back for $60 000.

I'm not even sure if they'd be able to do it.

There has to be more to it than that I'd imagine.

 

My point about bankruptcy was, I'm surprised more don't go down that avenue, especially if they don't have a lot of assets.

[ELVIS123456]

6 minutes ago, Will27 said:

Sounds interesting but TBH, I can't see the ATO having someone arrested in Thailand and extraditing them back for $60 000.

I'm not even sure if they'd be able to do it.

There has to be more to it than that I'd imagine.

 

My point about bankruptcy was, I'm surprised more don't go down that avenue, especially if they don't have a lot of assets.

Probably right - maybe they we threatening to get his pension stopped or severely reduced to pay the debt.  Maybe he was going to lose the flat if he didnt come back.  Maybe his flat was worth more than the debt and he didnt want it being sold as a 'fire sale'.  Not aware of the details, but I remember he 'had to come back to Australia and clear his debts to the ATO' (or words to that effect).

 

 

[Stevemercer]

I'm sure the man voluntarily returned to Australia so he could re-qualify after 6 months as an Australian resident for tax reasons, and thus pay less tax. After a year or two he could quietly return to Thailand.

 

The ATO does not target non-residents. As mentioned in the above posts, nobody is likely to be targeted in Thailand unless they get caught up in some other audit. The ATO does not use immigration databases to detect/follow-up people who have been out of a Australia for more than 6 months. There are privacy issues, the databases are not fully integrated and it would be too resource intensive to follow-up everyone who is shown as out of Australia (in terms of the possible return).

 

For the average citizen who is caught, they normally audit the last 3 returns and calculate the back tax owned over this period. People are given many different options to pay. If they do not pay, the ATO may seek to garnish their income (if legally possible). Of course, for a person living off their own income they can't garnish too much or it might push them onto the old age pension.

 

In many cases, the person may be forced to return to Australia to live simply because Thailand will become un-affordable. People paying tax on low incomes (less than $40,000 per year) really need the benefit of the tax free threshold to maintain a decent lifestyle. Back in Australia they will need to rely on Government handouts etc. to be able to survive.

[BaanOz]

All this tax talk, was wondering if anyone knows if there is any issues (tax) receiving a pension from an Australian super fund as a non-resident. I understand some funds don't allow non-residents but mine does.

Reason I ask is I was thinking to drop a non-concessional contribution to bump it up and get a pension from it when the time comes. Wondering if there would be a difference doing that or investing that money outside of super as a non-resident.

AFAIK there would be no tax either way except as a non-resident receiving dividends that are not 100% franked you would pay tax. I guess you can invest in cash/interest within a super fund and pay no tax too whereas outside as a non-resident pay 10%.

This is a question today before/if the government fiddle with the franking business!
If that happens who knows what will be left of the super fund.

[ELVIS123456]

On 3/28/2018 at 7:11 PM, BaanOz said:

All this tax talk, was wondering if anyone knows if there is any issues (tax) receiving a pension from an Australian super fund as a non-resident. I understand some funds don't allow non-residents but mine does.

Reason I ask is I was thinking to drop a non-concessional contribution to bump it up and get a pension from it when the time comes. Wondering if there would be a difference doing that or investing that money outside of super as a non-resident.

AFAIK there would be no tax either way except as a non-resident receiving dividends that are not 100% franked you would pay tax. I guess you can invest in cash/interest within a super fund and pay no tax too whereas outside as a non-resident pay 10%.

This is a question today before/if the government fiddle with the franking business!
If that happens who knows what will be left of the super fund.

Funds taken from a normal Super fund are not taxed - doesnt matter if you are resident or non-resident.  

 

Earnings you make from your money inside a normal Super fund whilst in accumulation phase (before retirement) are not taxed  - doesnt matter if you are resident or non-resident. 

 

Normal Fund means nominal tax is paid on entry (from salary deductions) and the Fund pays all due taxes on its earnings. Exceptions tend to be private Super funds and Govt Super funds - 90+% of Super Funds are normal (in that sense).

 

I added non-concessional contributions years ago for the same reason and for other benefits in terms of income when receiving the pension - but now there is a cap so be aware of that. https://www.ato.gov.au/Individuals/Super/In-detail/Withdrawing-and-paying-tax/Super-contributions---too-much-can-mean-extra-tax/?page=6

 

You need to get real financial advice if you are looking at putting serious money into shares/franking dividends. As you stated, Labor is looking at removing concessions for franking credits for those getting Super/Pension - and a few other things in this area. And Labor could easily win the next election - too early to tell. 

 

 

[Bikeman93]

They seem to be taking away an individuals wealth and transferring it into corporations.

 

[BaanOz]

On 3/31/2018 at 11:54 AM, ELVIS123456 said:

Funds taken from a normal Super fund are not taxed - doesnt matter if you are resident or non-resident.

Was also wondering if it's possible our tax free super could be taxed in Thailand. I don't think so.

If all things being equal (fees or brokerage, returns etc), comparing $'s inside and outside of super as a non-resident, I'm thinking better off inside of super.

Reason why, unfranked dividend being taxed as a non-resident plus no franking credits which are built into the returns of the super funds.

Also, you can do your own buying within some super funds and take advantage of the tax situation. Any thoughts?
 

[ELVIS123456]

7 hours ago, BaanOz said:

Was also wondering if it's possible our tax free super could be taxed in Thailand. I don't think so.

If all things being equal (fees or brokerage, returns etc), comparing $'s inside and outside of super as a non-resident, I'm thinking better off inside of super.

Reason why, unfranked dividend being taxed as a non-resident plus no franking credits which are built into the returns of the super funds.

Also, you can do your own buying within some super funds and take advantage of the tax situation. Any thoughts?
 

Excellent question - it is all good but do not get the Super payment sent direct to a Thai Bank.  Get it sent to an Australian Bank or via a Money Exchange.  As far as I am aware of Thai tax laws (not that much), direct 'income' could be taxed (maybe), but money transferred from an Aust Bank could definitely not. 

 

I assume you are meaning a self-managed Super fund? Then yes you can earn more by managing the investments cloasely and you can structure it so it gets taxed less (in Aust). But the Govt has been getting tougher on this too, and it takes a lot of diligence (daily/weekly), and the stress of always being aware og ups/downs on ASX etc, and I understand that for less than about $200K it is not worth the setup and ongoing management costs.

 

If you mean 'normal' Super, then yes - this is what I plan to do plus get the Pension to top it up.  As far being able to buy within a super fund, it varies from fund to fund but what you can usually do is decided what 'balance' of investments you have - cash, conservative, balanced, growth, high growth.  IO you can see the stock market is going up (like Trump gets elected or China/Japan economy booms) then you would switch to growth for a while, and if it will decline (Labor getting elected, US/Iran war) you would switch to balanced or conservative for a while. 

 

[BaanOz]

10 hours ago, ELVIS123456 said:

I assume you are meaning a self-managed Super fund?

Thanks Elvis,
 

No, a SMSF becomes "non complient" if trustees become non residents.

I think it's possible if you make a trustee a resident but they are meant to make decisions about the SMSF in Australia. Might have to have meeting too I'm not sure.

As a non resident it is easier to have a normal Australian superfund.

What I meant if you had money outside of super and investing long term for income, it might be better for tax (for non resident) if you did it within an Australian superannuation fund. Really need professional advice but say you invested in for example some Vanguard ETFs (for income) outside of super, you could do the same within. Some fund allow direct investment rather than the cash, conservative, balanced, growth, high growth.

Yes the government can stuff around with super but if retired you could pull it out. I wouldn't be adding money if I was young :)

[BaanOz]

12 hours ago, ELVIS123456 said:

buy within a super fund

OK found some info explaining about how franking credits are distributed within superannuation funds...

https://cuffelinks.com.au/direct-investment-options-deal-franking-credits/
 

Quote

The Fund uses its total franking credits to offset the total tax liabilities it pays. It achieves this because the assets supporting each investment option across the accumulation and pension phases are combined in the one entity. The franking credits are then allocated to the investment options that have exposure to Australian equities. For example, franking credits received in the Member Direct investment option are attributed to members in the option so they receive their respective benefit of the credits.

Basically, what I'm getting at is (it seems) if investing money within super as a non resident I will receive a few percent more income due to franking credits ?
 

...unless Labor get their way.