All Aussie Related Stuff (excluding the old age pension)

[Bagwain]

I have been out of Straya for 13 yrs since last visit & 15 yrs since last tax assessment. I recently got an accountant to search with their system (Doesn't raise any flags) with my TFN to see about a 1800 debt owing to the ATO. It has been written off as "Non Pursuit" He said that if I was to lodge a return it would bring it back to life.

 

My concern was the new law that forbids you from leaving the country if you owe money to family Services ($400 +) which is run by the ATO. I don't but I also heard that the program was being considered for other departments as it is so successful. So far they have recouped 1.8 Billion.

 

 

 

[Mister T]

Sorry I cut it short, I then told my accountant what had happened and she asked me if I wanted to stop paying tax and be non resident. As I have no intention of moving back, she informed ATO and whoever else. I still use the family home as my address and used my medicare card when I went back for my grand daughters wedding recently.

[stud858]

2 minutes ago, ThaiBunny said:

The double tax treaty makes the 183-day rule irrelevant

The 183 rule is for someone like a Chinese man comes to live in Australia for 184 days. And intends to live and sets up abode.  He has no abode outside Australia then as he had been in Australia for over 183 days so he can be an Australia resident for tax. 

It would only affect an Australian if they became an immigrant of another country and set up abode there. Which is the debatable point. But not many Aussies are immigrants in Thailand. 

[stud858]

2 minutes ago, Mister T said:

Sorry I cut it short, I then told my accountant what had happened and she asked me if I wanted to stop paying tax and be non resident. As I have no intention of moving back, she informed ATO and whoever else. I still use the family home as my address and used my medicare card when I went back for my grand daughters wedding recently.

Ok. So you've agreed you are not a resident for tax.  no problems there. 

But I thought you lose your medicate card.  Are you sure you've been changed to non resident? 

[ThaiBunny]

I have been out of Straya for 13 yrs since last visit & 15 yrs since last tax assessment. I recently got an accountant to search with their system (Doesn't raise any flags) with my TFN to see about a 1800 debt owing to the ATO. It has been written off as "Non Pursuit" He said that if I was to lodge a return it would bring it back to life.

 

My concern was the new law that forbids you from leaving the country if you owe money to family Services ($400 +) which is run by the ATO. I don't but I also heard that the program was being considered for other departments as it is so successful. So far they have recouped 1.8 Billion.

 

By “Family Services” I assume you mean the Child Support Scheme? It only applies where the Family Court has ordered one divorced parent to contribute to the support of the children. If the parent is delinquent with their payments they are forbidden from leaving Australia until they catch up on the debt. It is run by the ATO only in the sense that payments can be deducted from the parent’s salary. In every other respect it’s administered by Social Services as they are the ones responsible for payments made generally for child support (Google dss.gov.au for details). It’s an example of the data sharing that now goes on all the time between the DSS, the ATO and Immigration

[ThaiBunny]

Ok. So you've agreed you are not a resident for tax.  no problems there. 
But I thought you lose your medicate card.  Are you sure you've been changed to non resident? 

He’s clearly used his Medicare card fraudulently if he’s no longer resident

[Mister T]

7 minutes ago, stud858 said:

Ok. So you've agreed you are not a resident for tax.  no problems there. 

But I thought you lose your medicate card.  Are you sure you've been changed to non resident? 

Yep, DVA confirmed it when I was changing my postal address online. I assume the medicare card is still good until the next expiry date. I have not voted since 2004 as they have never come up with someone who is worth voting for, I did get taken off the roll as I was working over here.

[Peterw42]

51 minutes ago, stud858 said:

Heaps? Throw em at me and we'll analyse their wording,  meaning and intent. Not to make it diffinitive but give some peace of mind to those who stay away for long periods of time. 

The key word there is "intent". If you take a step back from any of the legislation/rulings and ask "what is the intent", the answer is usually to catch people not paying tax or avoiding tax. If you are not avoiding tax etc, the intent is not really directed at you. 

The intent is not to catch your average ex-pat with 20k of mixed income, interest, dividends, rent etc. At the end of the day the ATO isn't going to mount an international investigation just because immigration shows me as outside of Australia. 

[ThaiBunny]

The key word there is "intent". If you take a step back from any of the legislation/rulings and ask "what is the intent", the answer is usually to catch people not paying tax or avoiding tax. If you are not avoiding tax etc, the intent is not really directed at you. 
The intent is not to catch your average ex-pat with 20k of mixed income, interest, dividends, rent etc. At the end of the day the ATO isn't going to mount an international investigation just because immigration shows me as outside of Australia. 

What all these “bush lawyers” also forget is the intent of the residence rules. They are there to try to make MORE people tax resident and therefore tax their overseas earnings in Australia. It’s to provide rules for big earners who want to prove that they are not resident. It’s not intended for people who are already compliant to have their status redefined

[Peterw42]

10 minutes ago, ThaiBunny said:

What all these “bush lawyers” also forget is the intent of the residence rules. They are there to try to make MORE people tax resident and therefore tax their overseas earnings in Australia. It’s to provide rules for big earners who want to prove that they are not resident. It’s not intended for people who are already compliant to have their status redefined

Yes, the broad intention is to get more people to be tax residents, and collect lots of tax from them. Not the other way round. Once you become a non resident they are unaware of your income, and have less means of taxing it.

 

A tax resident sells a house/shares for a million dollars, the ATO knows about it, you may have been negatively gearing it, declaring rental income, doing tax returns, the settlement will be paid into a tax flie linked account etc etc. even if you send the money to thailand, you will still be taxed on it

 

A non tax resident sells the same house/shares for a million dollars, transfers the money out of Australia tomorrow, thats it, the ATO got nothing.

[Will27]

1 hour ago, Peterw42 said:

What back taxes ??? Most of us still do returns and pay tax in Australia. There is no elaborate tax avoidance going on. In my circumstances the ATO gets more tax off me as a tax resident then they ever would as a non resident. 

 

 

 

I'm saying, if people have been declaring they're a resident and they get audited and assessed as a non-resident,

in all likelihood there will be tax and penalties to pay.

[Will27]

1 hour ago, ThaiBunny said:

By “Family Services” I assume you mean the Child Support Scheme? It only applies where the Family Court has ordered one divorced parent to contribute to the support of the children. If the parent is delinquent with their payments they are forbidden from leaving Australia until they catch up on the debt. It is run by the ATO only in the sense that payments can be deducted from the parent’s salary. In every other respect it’s administered by Social Services as they are the ones responsible for payments made generally for child support (Google dss.gov.au for details). It’s an example of the data sharing that now goes on all the time between the DSS, the ATO and Immigration

My understanding is that the CSA can issue a Prohibitive Departure Order to prevent someone leaving the country.

It doesn't have to be the Family Court at all and in most cases is CSA.

 

People are only stopped from leaving when a DPO is issued. Not just when they're in arrears.

I thought it was run by the CSA, not the ATO.

The ATO only gets involved when they recover a refund from the paying parent.

[Will27]

1 hour ago, ThaiBunny said:

The double tax treaty makes the 183-day rule irrelevant

As a tax agent, are you saying the tax treaty means that Australians residing in Thailand

are considered to be residents for tax purposes in Australia?

[oznomad]

Tax resident or not?

It seems like most that have commented want to be, but the reality is that it not a good thing for some.

The guy that has the business in Phuket, and is tax resident in Aus, for example.

I guess you arent aware that as a tax resident in Aus that ALL your income, from anywhere, is taxable by the ATO.

Perhaps you are using the tax treaty to advantage but if not, check it all out.

The links from ATO have been posted in this thread but it is generally not an easy thing to become a tax non-resident.

Yes, you can spend all your time in Thailand and still be tax resident in Aus.

I have been travelling for 3.5 years, and havent lived in Aus for 20 years, and I am still a Aus tax-resident.

As someone mentioned, the ATO wants to keep you in the fold, so to become a non-resident for tax can be quite arduous. Lease or ownership of 'an abode' elsewhere, utility bills, drivers license etc etc are needed, along with the 183 days, and a host of other requirements (in the links).

I am in the process of finding 'an abode' in Thailand. Not because I want one, but purely to satisfy the ATO, so I can become non-resident for tax.

What is best for me might not be best for others though.

If you have offshore income, and small or no Aus income then being a tax non-resident is likely your best move.

Do your research, in the right places.

Opinions are of little value. I read some in this thread that I know to be completely wrong.

Deal with facts from the ATO.

 

Here is another snippet that may be of assistance.

 

The Thai tax system is mostly comparable with those of the Non Dom Countries of English tradition, like Malta, UK or Ireland. In addition to income that is obtained in the country, tax is only paid on foreign income that is transferred to the country. And this foreign income is only taxed if it has been transferred to the country in the same calendar year. 

If the foreign income was obtained from previous years and has been invested abroad, these assests can then be transferred to Thailand free of taxes in the following years. 

Therefore, if you want to take advantage of this very attractive tax system you must have the sufficient funds to be able to live in Thailand for a year, since foreign income shouldn´t be transferred to the country in the same year. 
If you transfer the money in the same year, income tax rates of up to 35% are applied. 

 

[4MyEgo]

7 hours ago, Mister T said:

Sorry I cut it short, I then told my accountant what had happened and she asked me if I wanted to stop paying tax and be non resident. As I have no intention of moving back, she informed ATO and whoever else. I still use the family home as my address and used my medicare card when I went back for my grand daughters wedding recently.

Ok, so you are now a non resident for tax purposes, you mentioned that you use your family home as your address, do you rent out your house or leave it empty, if so you WILL want to read this link below, because if this bill is passed and made legislation, all hell is going to break loose come 1 July 2019 sorry to say, it is only for non residents who own property back in Australia, and I dare say those who are Australian residents for tax purposes who own property would want to get a clear understanding on their residency, a ruling from the ATO would be best, because if audited down the track and deemed a non resident, ALL the capital gains tax from day one, will go to the ATO, i.e. there will be no 50% discount applied to the property, so it's very important one gets it's right.

 

https://www.pwc.com/gx/en/services/people-organisation/publications/assets/pwc-australia-cgt-exemption-for-homes-of-foreign-residents-removed.pdf

[4MyEgo]

8 hours ago, stud858 said:

Heaps? Throw em at me and we'll analyse their wording,  meaning and intent. Not to make it diffinitive but give some peace of mind to those who stay away for long periods of time. 

This might assist, scroll down to:  Bronwyn - an extended job overseas

 

https://www.ato.gov.au/Individuals/International-tax-for-individuals/In-detail/Residency/Examples-of-residents-and-foreign-residents/

 

I would be in the same situation as Bronwyn if I kept my property, the only difference with Bronwyn and myself is that I am retired.

 

Note how they summarise her up under: 

 

The residency test

The Domicile test

&

The 183 Day test

 

Pretty cut and dry to me, as Will27 and myself have said before, because you own a property in Australia, it doesn't automatically qualify you as an Australian Resident for taxation purposes.

 

Happy to hear back your thoughts on this, because it does not necessarily mean they will get you on the 183 day rule, they will go through each test, that said, the 183 days is what the basis is for starting the process of looking into your absence to determine your residency status, the above said, I think/believe this example is pretty much what we have been looking for. 

[4MyEgo]

7 hours ago, Peterw42 said:

Yes, the broad intention is to get more people to be tax residents, and collect lots of tax from them. Not the other way round. Once you become a non resident they are unaware of your income, and have less means of taxing it.

 

A tax resident sells a house/shares for a million dollars, the ATO knows about it, you may have been negatively gearing it, declaring rental income, doing tax returns, the settlement will be paid into a tax flie linked account etc etc. even if you send the money to thailand, you will still be taxed on it

 

A non tax resident sells the same house/shares for a million dollars, transfers the money out of Australia tomorrow, thats it, the ATO got nothing.

Actually having had a background in property for 25 years, I still keep up to date with legislative changes out of interest, you will find this link very interesting if you didn't know that the ATO cracked down on this practice a few years back, i.e. if your solicitor or Conveyancer sells your property as a non resident the purchasers solicitor or Conveyancer from my understanding has to withhold 12.5% of the gross sale proceeds and remit it to the ATO upon settlement, failing to do so makes them accountable for the money, at least that way, they ATO are getting a slice up front, incase the foreign resident has any plans that they are not going to lodge a return or pay their share of capital gains tax, I believe it's on property worth over $750,000.

 

https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/Foreign-resident-capital-gains-withholding-payments/

Edited August 11, 2018 by 4MyEgo

[4MyEgo]

3 hours ago, oznomad said:

The guy that has the business in Phuket, and is tax resident in Aus, for example.

I guess you arent aware that as a tax resident in Aus that ALL your income, from anywhere, is taxable by the ATO.

Perhaps you are using the tax treaty to advantage but if not, check it all out.

The links from ATO have been posted in this thread but it is generally not an easy thing to become a tax non-resident.

Yes, you can spend all your time in Thailand and still be tax resident in Aus.

Copy & pasted at the bottom in bold is from the post the guy who has the business in Phuket, note he said; he made a clean break from Australia, i.e. he has declared that he has moved, therefore he is not an Australian Resident for tax purposes, and making a clean break from Australia is cause for being a non resident for tax purposes, he also said; some sound advice from accountant was useful, so I think he knows that he doesn't have to pay tax back in Australia as he doesn't have any investments that are producing an income in Australia, he said;

 

1) sold all residential properties

2)-6) irrelevant

7) Retained shares market investments

 

Share market investments I believe he means shares are non taxable for non residents unless the shares are unfranked, i.e. the tax has not been paid on them when the dividend is paid.

 

If he is doing tax returns as he states he is, it is probably because he has had some unfranked shares that tax has not been paid and he is declaring that and paying the tax on that, otherwise he doesn't have to lodge a tax return as a non resident, unless he has some other kind of income from Australia that he hasn't told us about.

 

The treaty between Australia and Thailand has no relevance for non residence, so he would not be required to pay tax there either. 

 

I've had no problem over the past 2 years 'declaring' to be a non-resident for tax purposes but I did make a clean break from Australia (43yrs old; own business in Phuket). Some advice from accountant was useful but nothing the ATO website doesn't detail. In short:

 

1) sold all residential properties

2) retained super (but don't contribute)

3) canceled private health insurance (& Medicare)

4) have long term rental in Phuket

5) kids in school in Phuket

6) Come back to Melbourne twice a year for no more than 6 weeks in total

7) Retained share market investments in Australia

 

I still do Australian tax returns but very short and sweet.

[Peterw42]

1 hour ago, 4MyEgo said:

Actually having had a background in property for 25 years, I still keep up to date with legislative changes out of interest, you will find this link very interesting if you didn't know that the ATO cracked down on this practice a few years back, i.e. if your solicitor or Conveyancer sells your property as a non resident the purchasers solicitor or Conveyancer from my understanding has to withhold 12.5% of the gross sale proceeds and remit it to the ATO upon settlement, failing to do so makes them accountable for the money, at least that way, they ATO are getting a slice up front, incase the foreign resident has any plans that they are not going to lodge a return or pay their share of capital gains tax, I believe it's on property worth over $750,000.

 

https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/Foreign-resident-capital-gains-withholding-payments/

That is interesting thanks. I am wondering how they would know non resident owner, it must get tagged on the title . 

[4MyEgo]

3 minutes ago, Peterw42 said:

That is interesting thanks. I am wondering how they would know non resident owner, it must get tagged on the title . 

Actually there are a series of questions the Solicitor and or Conveyancor have to ask and provide that to the purchasers solicitor/conveyacer, they all relate to the property, plus residency status, an Australian address and bank account details are required to be given to the Vendors solicitor/conveyancer and from my understanding they are thorough as they don't want any come back from the ATO, as they could be liable for the amount to be collected.

Edited August 11, 2018 by 4MyEgo

[Peterw42]

2 hours ago, 4MyEgo said:

This might assist, scroll down to:  Bronwyn - an extended job overseas

 

https://www.ato.gov.au/Individuals/International-tax-for-individuals/In-detail/Residency/Examples-of-residents-and-foreign-residents/

 

I would be in the same situation as Bronwyn if I kept my property, the only difference with Bronwyn and myself is that I am retired.

 

Note how they summarise her up under: 

 

The residency test

The Domicile test

&

The 183 Day test

 

Pretty cut and dry to me, as Will27 and myself have said before, because you own a property in Australia, it doesn't automatically qualify you as an Australian Resident for taxation purposes.

 

Happy to hear back your thoughts on this, because it does not necessarily mean they will get you on the 183 day rule, they will go through each test, that said, the 183 days is what the basis is for starting the process of looking into your absence to determine your residency status, the above said, I think/believe this example is pretty much what we have been looking for. 

How stupid is Bronwyn, if she just kept her mouth shut she would have been fine, lol. If she just said she was going travelling and will probably be back in a year or so, why would you even mention a job overseas, taking the family, setting up house etc, its none of their business what you  get up to outside of Australia. 

 

Every-time I have left Australia, nobody has ever asked me these questions so I can only presume Bronwyn volunteered this information. The only information the Australian Government has on me is I am outside Australia, left on a flight bound for Thailand.

Edited August 11, 2018 by Peterw42

[4MyEgo]

1 minute ago, Peterw42 said:

How stupid is Bronwyn, if she just kept her mouth shut she would have been fine, lol. If she just said she was going travelling and will probably be back in a year or so, why would you even mention a job overseas, taking the family, setting up house etc, its none of their business what you  get up to outside of Australia. 

I believe she was audited, and the ruling came back that she was a non resident for tax purposes, and she was claiming that she was an Australian Resident for tax purposes ?

[Peterw42]

12 minutes ago, 4MyEgo said:

I believe she was audited, and the ruling came back that she was a non resident for tax purposes, and she was claiming that she was an Australian Resident for tax purposes ?

What would be the advantage for the ATO to audit her and rule she is a non resident, then they get no tax off her. Ok, they would tax her rental income at the non res rate, but Brownwyn sounds like she is on the big dollars so used to a 40-50% tax rate.

Wouldn't the ATO be better off ruling her a tax resident and going after the big dollars she is earning overseas.

[Will27]

21 minutes ago, 4MyEgo said:

I believe she was audited, and the ruling came back that she was a non resident for tax purposes, and she was claiming that she was an Australian Resident for tax purposes ?

Are these real cases or just different circumstances the ATO have put together as examples?

 

Doesn't really matter I guess.

[4MyEgo]

14 minutes ago, Peterw42 said:

What would be the advantage for the ATO to audit her and rule she is a non resident, then they get no tax off her. Ok, they would tax her rental income at the non res rate, but Brownwyn sounds like she is on the big dollars so used to a 40-50% tax rate.

Wouldn't the ATO be better off ruling her a tax resident and going after the big dollars she is earning overseas.

I too can make no sense of it, for example, if I held my property as an Australian Resident, they would have received tax from the rent I would have been making x the years I am away from Australia, at the end of the day they did me a favour because I sold it and invested the money into the stock market and pay no tax as a non resident and they also miss out on any capital gains tax that would have occurred as well, "go figure", so it's a loss for the ATO, and as it turns out with the downturn in the market, I got out just in time.

 

 

[4MyEgo]

22 minutes ago, Will27 said:

Are these real cases or just different circumstances the ATO have put together as examples?

 

Doesn't really matter I guess.

Probably examples, but have read real cases going the same way.

[Will27]

3 minutes ago, 4MyEgo said:

I too can make no sense of it, for example, if I held my property as an Australian Resident, they would have received tax from the rent I would have been making x the years I am away from Australia, at the end of the day they did me a favour because I sold it and invested the money into the stock market and pay no tax as a non resident and they also miss out on any capital gains tax that would have occurred as well, "go figure", so it's a loss for the ATO, and as it turns out with the downturn in the market, I got out just in time.

 

 

When you're audited, the ATO doesn't care about what's in your favour or their favour TBH.

They just want to make sure that the end result is correct.

Residency for example.

 

There's plenty of times an audit has been beneficial to the taxpayer rather than the ATO.

 

Unless it's a random audit, the ATO usually target occupations or income levels which is

why I think a lot of people who are around the tax-free threshold should be ok.

[stud858]

15 hours ago, 4MyEgo said:

This might assist, scroll down to:  Bronwyn - an extended job overseas

 

https://www.ato.gov.au/Individuals/International-tax-for-individuals/In-detail/Residency/Examples-of-residents-and-foreign-residents/

 

I would be in the same situation as Bronwyn if I kept my property, the only difference with Bronwyn and myself is that I am retired.

 

Note how they summarise her up under: 

 

The residency test

The Domicile test

&

The 183 Day test

 

Pretty cut and dry to me, as Will27 and myself have said before, because you own a property in Australia, it doesn't automatically qualify you as an Australian Resident for taxation purposes.

 

Happy to hear back your thoughts on this, because it does not necessarily mean they will get you on the 183 day rule, they will go through each test, that said, the 183 days is what the basis is for starting the process of looking into your absence to determine your residency status, the above said, I think/believe this example is pretty much what we have been looking for. 

This person has not been classed as a non resident because she had been away for 3 years. She has been classed as a non resident because she has set up an abode overseas and lived in it for more than 2 years years with proof that she can stay that long due to work commitments

 

It's not the same as say a retiring person to Thailand who can only be guaranteed stay in Thailand year by year.  Ie, temporary guest visa.who just may in future time stay longer but has every intention to return to their.abode in Australia that collects their mail, and stores there most valuable items there.that will consider it their only true safe normal ordinary and permanent address. 

 

The 183 rule has nothing to do with either case.

The ATO says does not apply. 

 

It's an interesting article, but in no way suggests if you spend more than 183 days or 5 years out of the country, then you automatically become a non resident.

 

 

[stud858]

I would of thought as a non resident that buying and selling a house in Australia would be seen as a foreigner investment income whilst in Australia and you'd be up for a hefty tax bill. 

Maybe the loophole is that you bought it while you were a resident.  I've not investigated that side and only my opinion.  

[Mister T]

16 hours ago, 4MyEgo said:

Ok, so you are now a non resident for tax purposes, you mentioned that you use your family home as your address, do you rent out your house or leave it empty,

On advice from a lawyer and accountant, I transferred ownership of my properties to my kids several years ago. No GST was payable as I owned them pre 1983, I still use the house as my residential address.