Thai I come tax on foreign pension

[darrenr]

1. Hi I was reading the Australian tax Treaty between Australia and Thailand. Article 18 states that pensions are only taxed in the contracting state ( in this case my superannuation pension which is my own privately funded retirement pension Not the Australian Govt Aged pension), ie only taxed back in Australia, just want to know people’s experience ? So if only receiving pension to my Thai bank account I don’t need to submit a Thai tax return and declare that income allowance coming into the Thai account

[lopburi3]

This is likely to be a very gray area now that "pension" deposit into Thai bank account is to be used for some extensions of stay.  Previously deposits into an account here were assumed to be from savings of a previous year so not considered income under current Thai interpretation of rules.  If they now make the decision it must be current year income suspect Thai tax forms may have to be submitted (and those with tax treaty exemption would not have to pay but still file).  Hope I am wrong.  Will be interesting year ahead.

[jimmyyy]

Interesting point!  Any CPA's out there got an opinion on this?

[topt]

6 minutes ago, jimmyyy said:

Any CPA's out there got an opinion on this?

Not a CPA but as per all previous threads on this personally I think anybody not working here who files a tax form showing income received is potentially asking for trouble. 

 

As @lopburi3 suggests above that with the new changes this may become an issue but until it does why jump in if you don't have to. Even with the income received monthly that could still come from your "savings" so would not be taxable under the current revenue regime.

 

2 hours ago, darrenr said:

So if only receiving pension to my Thai bank account I don’t need to submit a Thai tax return and declare that income allowance coming into the Thai account

If your reading of the Oz/Thailand DTA is correct then you are right. To be on the safe side if you can accumulate a years worth and then pay it out to Thailand the following calendar year then even safer as you could prove (if you were ever asked) that it comes from savings accumulated in the previous calendar (Thai tax year) year.

[cleopatra2]

The residency status as determined by the DTA is the factor which determines the state that has taxable rights, under article 18

 

A person who in accordance with the DTA is  resident in Thailand , then any pension falling under Art 18 is taxable in Thailand

 

[darrenr]

So then if I was over 60 years my superannuation pension is free from AUSTRALIAN TAX, yet then if I am resident of Thailand they tax me anyhow ? But what if I am still a resident for tax purposes in Australia then as the super is held in Australia then they are the taxing state as per the DTAntreaty ,remember that being a resident for immigration purposes and tax purposes are two different things in Australia I.e you can be a non resident in immigrati0n status but still be taxed as a resident as the tests are different, sounds to me better not to be a resident of any other country and ,ove between 3 or so countries so as not to be classed as a resident

[darrenr]

So if I was drawing and annual pension ( my savings as not government pensio) from my Australia account of say $50,000 AUD per year then the Thais if I was on a retirement visa would tax me on $50,000 ? Given that I have already paid 15% contributions tax on that pensi0n money in Australia?

 

effectively my pension which I funded and paid tax on in Australia is my own savings, so I would have thought article 18 of DTAncovers this ? Perhaps could understand any interest the pension fund (allocated pension) earns maybe be taxable but if it was as allocated pension fund is in Australia, the Australian tax office would tax it and therefore I would not have to pay tax in Thailand as this is why the double txati0n treaties were created and article 18,applies ?

thoughts ?

[Lacessit]

What you earn in Australia is taxed in Australia provided you retain residency there. As I understand it, you would have to be classed as a non-resident by the ATO before you get into any gray areas. It's worthwhile to retain Australian residency in any case - your super fund might not get franking credits on share dividends otherwise.

[darrenr]

Ok thanks but if my permanent abode is I Thailand as per article 4 “residence” of the DTA then I am classified as a resident for the purposes of the DTA irrespective of my tax status as a resident in Australia?

 

so is every retiree from Australia paying Thai tax and do they get a letter from the Thai tax office if there on a retirement visa,

[cleopatra2]

31 minutes ago, darrenr said:

So if I was drawing and annual pension ( my savings as not government pensio) from my Australia account of say $50,000 AUD per year then the Thais if I was on a retirement visa would tax me on $50,000 ? Given that I have already paid 15% contributions tax on that pensi0n money in Australia?

 

effectively my pension which I funded and paid tax on in Australia is my own savings, so I would have thought article 18 of DTAncovers this ? Perhaps could understand any interest the pension fund (allocated pension) earns maybe be taxable but if it was as allocated pension fund is in Australia, the Australian tax office would tax it and therefore I would not have to pay tax in Thailand as this is why the double txati0n treaties were created and article 18,applies ?

thoughts ?

Australia and Thailand , like other countries , have come to an agreement to determine which state has the taxing rights.

Art 18 is clear only the resident state has taxing rights. The other state cannot tax in this circumstance.

If under the DTA it was determined that you are Thailand resident then , any tax would be subject to Thai domestic law.

The first step is to determine the residency status under the DTA and not Thai domestic law.

 

 

[darrenr]

Ok now got it, so if my super pension is free of tax in Australia, should stay resident of Australia otherwise the Thai tac office could tax me on the whole $50,000 ? I would be sending to Thailand from Australia or is it only the interest earned by the pension fund ? Surely if the pension money was my savings as per the superannuation employer  guareentee which is 9.5% of my wage and also my voluntary contributions and I paid 15% tax they wouldn’t tax me on the $50K?? Or would it be only on the interest earnt from the $50K in the Thai bank account?

so given the pension is a savings vehicle and I a, assuming say if I had $1million in the Australian bank and sent to this savings they would not tax me on it

[Lacessit]

1 hour ago, darrenr said:

Ok now got it, so if my super pension is free of tax in Australia, should stay resident of Australia otherwise the Thai tac office could tax me on the whole $50,000 ? I would be sending to Thailand from Australia or is it only the interest earned by the pension fund ? Surely if the pension money was my savings as per the superannuation employer  guareentee which is 9.5% of my wage and also my voluntary contributions and I paid 15% tax they wouldn’t tax me on the $50K?? Or would it be only on the interest earnt from the $50K in the Thai bank account?

so given the pension is a savings vehicle and I a, assuming say if I had $1million in the Australian bank and sent to this savings they would not tax me on it

You are taxed on the interest that is earned on the money that is in the Thai bank account. It's such a piffling amount, given Thai interest rates, that it's not worth any effort trying to claim it back.

You won't be taxed on any amount you transfer into a Thai bank from Australia. I would suggest, however, you need your head read if you transfer more to Thailand than you can afford to lose.

[KiChakayan]

Actually there isn't much to worry about, a single person earning 65k a month in Thailand pays 44150 THB a year, roughly 3780 a month. That's less than Xrate fluctuations. One married with kids and a 40k income pays buggerall. So if it became clear that they are thinking about collecting income tax I'd do the monthly 40 transfers, and complement with 3 or 4 25k ATM withdrawals with my UBS maestro card.

[darrenr]

Thanks everyone for your help 

[JimGant]

On 1/6/2019 at 4:55 PM, cleopatra2 said:

Australia and Thailand , like other countries , have come to an agreement to determine which state has the taxing rights.

Art 18 is clear only the resident state has taxing rights. The other state cannot tax in this circumstance.

If under the DTA it was determined that you are Thailand resident then , any tax would be subject to Thai domestic law.

The first step is to determine the residency status under the DTA and not Thai domestic law.

 

 

Art 18 references exceptions, found in Art 19, which are government payments (pensions and whatever the Aussie equivalent is to the US Social Security payment). Thus, just like with the US-Thai DTA, Government payments remain the exclusive taxing right of the issuing country. Period. This exclusivity means you *don't* have to file a tax return with Thailand to receive a credit for Aussie taxes against what is owed to Thailand. Nothing is owed to Thailand -- again, because of the exclusivity of Aussie government payments.

 

Private pensions? I'm only familiar with US matters, but a quick look at Art 18 (thai-oz dta) looks like things are similar to the US dta with Thailand. If you're a Thai resident for over 180 days, Thailand has "first dibs" on private pensions, at least on those brought into Thailand in the year paid. So, first you pay Thailand, then, if Oz wants you to also file a tax return for the same private pension payment, you claim a credit for the Thai taxes paid. Thus, the elimination of double taxation. But, unlike under the "exclusivity" concept of dta's, you end up paying the full tax, either to just one, or to both countries (if the credit is less than what is owed to, in this case, Oz).

 

The rule about no taxation in Thailand if brought into country in another year -- is no longer discernible in the Thai tax code. But all the big accounting firms still advertise this rule. Thus, with the fungibility of money, it would seem safe to just make sure your private pension is filtered through a home bank account -- and not direct deposited into Thailand. A direct deposited government pension/payment -- no sweat because of the exclusivity clause of the dta. Samo samo with a Yank's social security payment -- many of which are direct deposited into Thai bank accounts.

 

 

[cleopatra2]

2 hours ago, JimGant said:

Art 18 references exceptions, found in Art 19, which are government payments (pensions and whatever the Aussie equivalent is to the US Social Security payment). Thus, just like with the US-Thai DTA, Government payments remain the exclusive taxing right of the issuing country. Period. This exclusivity means you *don't* have to file a tax return with Thailand to receive a credit for Aussie taxes against what is owed to Thailand. Nothing is owed to Thailand -- again, because of the exclusivity of Aussie government payments.

 

Private pensions? I'm only familiar with US matters, but a quick look at Art 18 (thai-oz dta) looks like things are similar to the US dta with Thailand. If you're a Thai resident for over 180 days, Thailand has "first dibs" on private pensions, at least on those brought into Thailand in the year paid. So, first you pay Thailand, then, if Oz wants you to also file a tax return for the same private pension payment, you claim a credit for the Thai taxes paid. Thus, the elimination of double taxation. But, unlike under the "exclusivity" concept of dta's, you end up paying the full tax, either to just one, or to both countries (if the credit is less than what is owed to, in this case, Oz).

 

The rule about no taxation in Thailand if brought into country in another year -- is no longer discernible in the Thai tax code. But all the big accounting firms still advertise this rule. Thus, with the fungibility of money, it would seem safe to just make sure your private pension is filtered through a home bank account -- and not direct deposited into Thailand. A direct deposited government pension/payment -- no sweat because of the exclusivity clause of the dta. Samo samo with a Yank's social security payment -- many of which are direct deposited into Thai bank accounts.

 

 

Article 19 talks about services rendered discharging government functions. I take that to mean government employees/contractors , etc working for government. 

Art 19 makes pensions taxable only in the resident state, with the exception of government employees pension (art 19 ) 

 

Having looked at the USA -TH dta, I see a specific clause  in art20 limiting social security taxing rights.

No such clause exist in the Australia Thailand treaty.

[JimGant]

On 1/12/2019 at 9:10 PM, cleopatra2 said:

Article 19 talks about services rendered discharging government functions. I take that to mean government employees/contractors , etc working for government. 

Art 19 makes pensions taxable only in the resident state, with the exception of government employees pension (art 19 ) 

 

Having looked at the USA -TH dta, I see a specific clause  in art20 limiting social security taxing rights.

No such clause exist in the Australia Thailand treaty.

The Age Pension (the Aussie equivalent of the US Social Security, albeit with many differences) is, as you point out, not really a gov't pension, as it's not paid for services rendered as a gov't employee. However, neither is it a private pension nor an annuity,  both of which have Thailand with first taxing authority. But what is it? Apparently, it's a third category, namely a "gov't payment." Right from the ATO's mouth.

Quote

• Pensions
• Annuities
• Government payments.
•  
• https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Super-pensions,-annuities-and-government-payments/

Thus, per the Thai - OZ DTA, Article 22, "Other Income"

 

Quote

Items of income of a resident of a Contracting State not dealt with in the foregoing Articles may be taxed in the other contracting State but only if it arises in that other State. If it does not so arise it shall be taxable only in the State of which the recipient is a resident.

As the Age Pension arises in Australia, I would say Oz has taxing authority.

[cleopatra2]

1 hour ago, JimGant said:

The Age Pension (the Aussie equivalent of the US Social Security, albeit with many differences) is, as you point out, not really a gov't pension, as it's not paid for services rendered as a gov't employee. However, neither is it a private pension nor an annuity,  both of which have Thailand with first taxing authority. But what is it? Apparently, it's a third category, namely a "gov't payment." Right from the ATO's mouth.

Thus, per the Thai - OZ DTA, Article 22, "Other Income"

 

As the Age Pension arises in Australia, I would say Oz has taxing authority.

The OP pension is not the Age Pension.

I am not that knowledgeable to state if the ATO definition , in this case applies to the DTA. Or if the Age pension is exportable.

 

Art 22 on initial reading appears to give both states taxing rights. Paragraph 3 in this scenario does not seem to apply, due to the income not falling into either art 7, 14.

Note Paragraph 2 does not exclude paragraph 1

 

Edit

Age pension is income support, thus probably not pension.