Australian govt seems to be reviewing the tax residency rules

[gearbox]

The article is behind a paywall, but displays a few paragraphs for the people who can't access it:

 

https://www.afr.com/politics/federal/business-travellers-tourists-could-be-caught-in-new-tax-rules-20231017-p5ecvy

 

Basically anyone who spends more than 45 days in Oz may be classified as a tax resident.

 

This is an ongoing discussion but if an article appears in a well connected paper as AFR maybe something is on the table for the next budget or soon later.

Edited October 19, 2023 by gearbox
paywall not PayPal

[puck2]

Comment cancelled!

 

Sorry, my mistake.

I mixed " Australia" and Thailand.

Edited October 19, 2023 by puck2

[BenStark]

8 minutes ago, puck2 said:

Sretta and his morons cannot stop offloading daily nonsense. #

 

Thailand was once LoS = Land of Smiles. Today, under this government , you have to translate it = Land of Stupids.

Says he who can't even figure out this topic isn't about Thailand

[Moonlover]

Just now, BenStark said:

Says he who can't even figure out this topic isn't about Thailand

It would be helpful if the topic title indicated that is was referring to Australia!

[hotandsticky]

1 minute ago, Moonlover said:

It would be helpful if the topic title indicated that is was referring to Australia!

Even though it is posted in the  Australia & Oceania Topics and Events section?

[gearbox]

1 minute ago, Moonlover said:

It would be helpful if the topic title indicated that is was referring to Australia!

Changed! It was posted in the Oz forum but these days people seem very sensitive wrt tax residency 😃

[Moonlover]

2 minutes ago, hotandsticky said:

Even though it is posted in the  Australia & Oceania Topics and Events section?

That does not become apparent until you actually visit the thread and even then who looks at the tiny script at the top? @puck2 obviously didn't.

[hotandsticky]

1 minute ago, Moonlover said:

That does not become apparent until you actually visit the thread and even then who looks at the tiny script at the top? @puck2 obviously didn't.

That does not excuse @puck2, or you 🙂, ........................I saw it.

[BenStark]

44 minutes ago, gearbox said:

Basically anyone who spends more than 45 days in Oz

Pretty obvious to me that this topic is about Australia

[KhunHeineken]

No need to worry folks.  This law is only for guys like Paul Hogan. 

[4MyEgo]

On 10/19/2023 at 1:22 PM, gearbox said:

Basically anyone who spends more than 45 days in Oz may be classified as a tax resident.

This is of concern to me as a non resident.

 

The reason I say that is because (not that I read the article) but saw a video the other day that said the rule, if passed, might come into effect 1 July 2024 (no hard concrete evidence) of that yet.

 

This proposal is a 2 sided coin:

 

1) 45 days in Oz would render you a tax resident.

 

2) The other side of the coin is, 3 years out renders you a non resident.

 

Now, for example, if I went back to Oz for 2 years to do my jail term to obtain the age pension, I would have to wait 3 years before I could become a non resident again, instead of the usual 183 days (current).

 

What has this all to do with the price of tea in China, well as a non resident I pay ZERO tax on my share portfolio and ZERO capital gain tax when I buy and sell shares.

 

So becoming a tax resident again for 3 years when I return to the LOS, would mean that I qualify for the tax threshold of $18,200, however that would mean that I would have to pay tax for 3 years on the money that I am receiving from my shares, which excludes any CGT.

 

Then once I obtain the age pension, that would have to be added to my Australian income as a tax resident and would easily push me into the 32.5c to the $ mark.

 

What people are failing to see is that this will effect those non residence of us who have a few coins stashed and comply with the current rules whereas we don't have to pay tax, suffice to say, they will have to weigh up whether is will be worth while going back for the age pension.

 

I hope it doesn't get passed, but like anything, if they can stop money going out the country, they will do it.   

[gearbox]

1 hour ago, 4MyEgo said:

This is of concern to me as a non resident.

 

The reason I say that is because (not that I read the article) but saw a video the other day that said the rule, if passed, might come into effect 1 July 2024 (no hard concrete evidence) of that yet.

 

This proposal is a 2 sided coin:

 

1) 45 days in Oz would render you a tax resident.

 

2) The other side of the coin is, 3 years out renders you a non resident.

 

Now, for example, if I went back to Oz for 2 years to do my jail term to obtain the age pension, I would have to wait 3 years before I could become a non resident again, instead of the usual 183 days (current).

 

What has this all to do with the price of tea in China, well as a non resident I pay ZERO tax on my share portfolio and ZERO capital gain tax when I buy and sell shares.

 

So becoming a tax resident again for 3 years when I return to the LOS, would mean that I qualify for the tax threshold of $18,200, however that would mean that I would have to pay tax for 3 years on the money that I am receiving from my shares, which excludes any CGT.

 

Then once I obtain the age pension, that would have to be added to my Australian income as a tax resident and would easily push me into the 32.5c to the $ mark.

 

What people are failing to see is that this will effect those non residence of us who have a few coins stashed and comply with the current rules whereas we don't have to pay tax, suffice to say, they will have to weigh up whether is will be worth while going back for the age pension.

 

I hope it doesn't get passed, but like anything, if they can stop money going out the country, they will do it.   

Another angle to consider is that if you are non-resident for tax in Australia how does this play with the DTA agreement with Thailand and the proposed tax changes here. I'm not a tax expert at all, but "resident" is mentioned quite a few times in the DTA agreement.

[gearbox]

1 hour ago, 4MyEgo said:

This is of concern to me as a non resident.

 

What has this all to do with the price of tea in China, well as a non resident I pay ZERO tax on my share portfolio and ZERO capital gain tax when I buy and sell shares.

 

 

Not true that you don't pay tax as non resident. You lose all the franking credits, and many dividends are 100% franked. If you are resident and have dividend income around $20k and if all is franked the ATO will give you a few thousands back.

 

https://atlaswealth.com/news/tax-treatment-of-dividends-as-a-non-resident-australian-expat/

[KhunHeineken]

8 hours ago, 4MyEgo said:

This is of concern to me as a non resident.

 

The reason I say that is because (not that I read the article) but saw a video the other day that said the rule, if passed, might come into effect 1 July 2024 (no hard concrete evidence) of that yet.

 

This proposal is a 2 sided coin:

 

1) 45 days in Oz would render you a tax resident.

 

2) The other side of the coin is, 3 years out renders you a non resident.

 

Now, for example, if I went back to Oz for 2 years to do my jail term to obtain the age pension, I would have to wait 3 years before I could become a non resident again, instead of the usual 183 days (current).

 

What has this all to do with the price of tea in China, well as a non resident I pay ZERO tax on my share portfolio and ZERO capital gain tax when I buy and sell shares.

 

So becoming a tax resident again for 3 years when I return to the LOS, would mean that I qualify for the tax threshold of $18,200, however that would mean that I would have to pay tax for 3 years on the money that I am receiving from my shares, which excludes any CGT.

 

Then once I obtain the age pension, that would have to be added to my Australian income as a tax resident and would easily push me into the 32.5c to the $ mark.

 

What people are failing to see is that this will effect those non residence of us who have a few coins stashed and comply with the current rules whereas we don't have to pay tax, suffice to say, they will have to weigh up whether is will be worth while going back for the age pension.

 

I hope it doesn't get passed, but like anything, if they can stop money going out the country, they will do it.   

No where in your post do your address the 183 days outside of Australia. 

 

I suggest you do some more research. 

[4MyEgo]

13 hours ago, KhunHeineken said:

Now, for example, if I went back to Oz for 2 years to do my jail term to obtain the age pension, I would have to wait 3 years before I could become a non resident again, instead of the usual 183 days (current).

Really ?

[KhunHeineken]

On 10/22/2023 at 2:53 AM, 4MyEgo said:

Really ?

That's 183 days inside Australia EVERY YEAR, or possibly face a 32.5% lower pension.   Nothing to do with the qualification period for portability. 

[1]

My take away with this, is it's not specifically a money grab from the ATO. That's not to suggest that it won't benefit them. But it's more about trying to tidy up the the rules surrounding tax residency.

 

The current laws surrounding tax residency are dogs breakfast and I think they were created about 70 years ago and not relevant to a modern society.

 

Anyway it's going to be interesting to see how it's all implemented. Particularly in light of the current tax rules that the Thailand governments might be looking at enforcing. 

 

So buckle up, I know I am!

[KhunHeineken]

13 hours ago, 1 said:

My take away with this, is it's not specifically a money grab from the ATO. That's not to suggest that it won't benefit them. But it's more about trying to tidy up the the rules surrounding tax residency.

 

The current laws surrounding tax residency are dogs breakfast and I think they were created about 70 years ago and not relevant to a modern society.

 

Anyway it's going to be interesting to see how it's all implemented. Particularly in light of the current tax rules that the Thailand governments might be looking at enforcing. 

 

So buckle up, I know I am!

 

The current laws are 90 years old.  Links already provided on another thread. 

 

From The Treasury - Australian Government.  Dated after September 2023. 

 

https://treasury.gov.au/consultation/c2023-205344#:~:text=This measure was announced by,be an Australian tax resident.

 

Article not posted before.  Dated August 2023.

 

https://www.accountantsdaily.com.au/tax-compliance/18901-why-the-long-road-to-tax-residency-will-be-plagued-by-detours

 

If anyone living in Thailand, full time, who derives an income from Australia, and a pension is an income, can circumnavigate the proposed changes if/when they are passed, I will be surprised.  Unless exemptions, tax free thresholds and means testing is added, I don't see how anyone can slip through the net. 

 

Then, you have to deal with Thailand taxing foreign income in the future, and the double taxation agreement. 

 

Buckle up, indeed.  Or, you can believe all of this is just for guys like Paul Hogan, and dismiss all the information in the many, many links provided as scaremongering. 

 

 

 

 

[gearbox]

22 minutes ago, KhunHeineken said:

 

The current laws are 90 years old.  Links already provided on another thread. 

 

From The Treasury - Australian Government.  Dated after September 2023. 

 

https://treasury.gov.au/consultation/c2023-205344#:~:text=This measure was announced by,be an Australian tax resident.

 

Article not posted before.  Dated August 2023.

 

https://www.accountantsdaily.com.au/tax-compliance/18901-why-the-long-road-to-tax-residency-will-be-plagued-by-detours

 

If anyone living in Thailand, full time, who derives an income from Australia, and a pension is an income, can circumnavigate the proposed changes if/when they are passed, I will be surprised.  Unless exemptions, tax free thresholds and means testing is added, I don't see how anyone can slip through the net. 

 

Then, you have to deal with Thailand taxing foreign income in the future, and the double taxation agreement. 

 

Buckle up, indeed.  Or, you can believe all of this is just for guys like Paul Hogan, and dismiss all the information in the many, many links provided as scaremongering. 

 

 

 

 

Circumnavigate what....being a tax resident or non resident? With the proposed new rules it won't be that difficult to remain resident, 45 days in 3 years is easily doable.

[1]

4 hours ago, gearbox said:

Circumnavigate what....being a tax resident or non resident? With the proposed new rules it won't be that difficult to remain resident, 45 days in 3 years is easily doable.

555 I'm pleased you think so. The idea of spending that 45 day in a home that's not my own is probably enough to just make me pay more tax! 

 

I guess I'll have to weigh it up against the cost of flying to Australia Hotel Etc vs being a non-resident for tax purposes 😂

 

5 hours ago, KhunHeineken said:

Then, you have to deal with Thailand taxing foreign income in the future, and the double taxation agreement. 

 

Buckle up, indeed.  Or, you can believe all of this is just for guys like Paul Hogan, and dismiss all the information in the many, many links provided as scaremongering. 

 

I think the funny thing here is that we're probably all guilty at some point in time, some all the time, of complaining about how Thailand is not organized like the West. 

 

But the first sign that they might be getting organized that works against us, most of us are up in arms! 😜

[mfd101]

21 hours ago, 1 said:

I guess I'll have to weigh it up against the cost of flying to Australia Hotel Etc vs being a non-resident for tax purposes 😂

Yes, my personal experience of being declared 3 or 4 years ago 'non-resident for tax purposes' is that it's quite expensive, at least for someone on modest superannuation + small investments. For one thing you lose your tax-free first $18 or 20K - now taxed at roughly 30%.

 

A few weeks ago I received a form from my investment manager company asking whether I was a Thai tax resident & what was my Thai tax number. I replied (truthfully) that I am not a Thai tax resident, I have no Thai income & no Thai tax number, my sole incomes are from Oz. Nothing further heard to date but the fact that they asked means the ATO is on the warpath. With the ALP in power, tax anything that moves is the basic approach.

[4MyEgo]

On 10/22/2023 at 12:36 AM, KhunHeineken said:

No where in your post do your address the 183 days outside of Australia. 

 

I suggest you do some more research. 

183 days is the current situation.

 

I was talking about the proposed, and didn't think my post was that hard to understand.

 

No research required, I know enough about the "current" tax rules regarding residency status, been here 8 years and pay ZERO tax.

[KhunHeineken]

9 hours ago, mfd101 said:

Yes, my personal experience of being declared 3 or 4 years ago 'non-resident for tax purposes' is that it's quite expensive, at least for someone on modest superannuation + small investments. For one thing you lose your tax-free first $18 or 20K - now taxed at roughly 30%.

 

A few weeks ago I received a form from my investment manager company asking whether I was a Thai tax resident & what was my Thai tax number. I replied (truthfully) that I am not a Thai tax resident, I have no Thai income & no Thai tax number, my sole incomes are from Oz. Nothing further heard to date but the fact that they asked means the ATO is on the warpath. With the ALP in power, tax anything that moves is the basic approach.

 

Are you Paul Hogan? 

[KhunHeineken]

1 hour ago, 4MyEgo said:

183 days is the current situation.

 

I was talking about the proposed, and didn't think my post was that hard to understand.

 

No research required, I know enough about the "current" tax rules regarding residency status, been here 8 years and pay ZERO tax.

Once again, you really have NO idea. 

 

Read the proposed changes, which are not "dead in the water" under Labor.  I have posted a link showing the Assistant Treasurer for Labor stating that the proposed changes are in the government's "in-tray." 

 

183 days IS NOT the current situation.  It WILL BE the situation in the future. It will be based on physical presence and time, not "domicile." 

 

Your 8 year run may be coming to an end. 

 

Of course, these changes to legislation could only be for guys like Paul Hogan. 

[4MyEgo]

11 hours ago, KhunHeineken said:

183 days IS NOT the current situation.  It WILL BE the situation in the future. It will be based on physical presence and time, not "domicile." 

 

 

You know, I rarely find myself arguing with people on this forum to get my point across, and I am 110% certain that the same doesn't apply to you because you are ignorant and have blinkers on.

 

Read and reap, this is current and one of many rules regarding residency, so do me and others a favour and STFU instead of trying to prove your point which has no relevance.

 

https://www.ato.gov.au/Individuals/Coming-to-Australia-or-going-overseas/Residency-tests/Residency---the-183-day-test/

 

 

 

[KhunHeineken]

3 hours ago, 4MyEgo said:

 

 

You know, I rarely find myself arguing with people on this forum to get my point across, and I am 110% certain that the same doesn't apply to you because you are ignorant and have blinkers on.

 

Read and reap, this is current and one of many rules regarding residency, so do me and others a favour and STFU instead of trying to prove your point which has no relevance.

 

https://www.ato.gov.au/Individuals/Coming-to-Australia-or-going-overseas/Residency-tests/Residency---the-183-day-test/

 

 

 

 

The last I heard was the proposed changes were in the consultation phase, which ended in September 2023. 

 

  https://treasury.gov.au/consultation/c2023-205344

 

Your link is dated 27th June 2023, so I am not sure how it can be legislated and published before the consultation phase has been completed, but I can't argue with your link.  It's there in black and white. 

 

Interesting times ahead. 

 

 

 

 

[4MyEgo]

1 hour ago, KhunHeineken said:

Your link is dated 27th June 2023, so I am not sure how it can be legislated and published before the consultation phase has been completed, but I can't argue with your link.  It's there in black and white. 

 

The 183 day rule has been around since I was born, that said, the new proposed amendments from my understanding is that they propose if you in the country for 45 days, you are a resident for tax purposes and if you are out of country for 3 years, you are a non resident.

 

If I am correct and the proposal goes through, they will be getting a lot of expats who go back and stay for over 45 days, as it will take them 3 years to reclaim their non-residency status Vs the current rules which is 183 days.

 

They will never stick it to me because when I do go back, it's for a brief 10 days every 2-3 years.

 

Interesting times ahead for some, that said, if I do decide to go back to get the aged pension, I will have to stay for 2 years and they will get me then, however, I will look at restructuring things so that it works in my favour until the 3 years is up and my non residency status is reapplied.

 

It's all a game and you have to be focused on WTF is always going on to win.

[KhunHeineken]

 

Are you confusing "residency" as in one's right to live in Australia, like visas, passport etc, example, permanent residency, with resident for taxation purposes?  They are different.

 

The resident for taxation laws are 90 years old.  Link already provided. 

 

If you look at this link, it says the 183 days only applies to individuals arriving in Australia.

 

https://www.ato.gov.au/Individuals/Coming-to-Australia-or-going-overseas/Your-tax-residency/#BK_183daytest

 

"183-day test

 

This test only applies to individuals arriving in Australia. You will be a resident under this test if you're actually present in Australia for more than half the income year, whether continuously or with breaks. unless it is established that your ‘usual place of abode’ is outside Australia and you have no intention of taking up residence here."

 

There's no dispute that under the 90 years old current laws that if you are in Australia for 183 days or more, you are a resident of Australia for taxation purposes, but as expats, we are more interested in trying to remain a resident of Australia for taxation purposes whilst being outside of Australia for more than 183 days.  Many have been able to do this, including myself, for years.  This was due to the many loopholes in "the domicile test."  Alas, the proposed changes, and the 183 day "bright line test" will focus more on physical presence and time, not "intention" and maintaining a domicile, community ties etc etc.  

 

15 hours ago, 4MyEgo said:

that said, the new proposed amendments from my understanding is that they propose if you in the country for 45 days, you are a resident for tax purposes and if you are out of country for 3 years, you are a non resident.

How many expats have been in Thailand for years, and have not returned to Australia? 

 

15 hours ago, 4MyEgo said:

If I am correct and the proposal goes through, they will be getting a lot of expats who go back and stay for over 45 days, as it will take them 3 years to reclaim their non-residency status Vs the current rules which is 183 days.

I confess, the time period between the 45 days and the 183 days is something that is not clear to me.  It was discussed a little on the other thread. 

 

Say you are correct, and an expat has to return to Australia for 45 days every 3 years or face a 32.5% reduction in their pension, as another member suggested, without free accommodation somewhere, would the cost of flights and accommodation and associated living costs, be more money than losing 32.5% of their pension? 

 

You say they wouldn't "stick it to you" but wouldn't this see you being deemed a non resident for taxation purposes, thus they "stick it to you" assuming you are deriving an income from Australia?  

 

 

15 hours ago, 4MyEgo said:

Interesting times ahead for some, that said, if I do decide to go back to get the aged pension, I will have to stay for 2 years and they will get me then, however, I will look at restructuring things so that it works in my favour until the 3 years is up and my non residency status is reapplied.

I think you will find most Aussie expats in Thailand wish to remain a resident for taxation purposes because it's in their financial interest to do so.  However, there are some who would wish to be a non resident to escape paying tax in Australia.  I know a few people like this.  What's interesting for these people is the new laws coming in how Thailand is going to start taxing foreign income, but that's for another thread.  

 

It's a game of maneuvering one's physical presence, and money, so as to maximize time spent in a location where they wish to live, whilst minimizing tax whilst doing so.  In the past, it was easy.  I have admitted to using the current loopholes for years, and know many others doing the same, but in my opinion, that will change when the proposed change come in. 

 

 

 

 

 

[gearbox]

On 10/25/2023 at 2:14 PM, mfd101 said:

Yes, my personal experience of being declared 3 or 4 years ago 'non-resident for tax purposes' is that it's quite expensive, at least for someone on modest superannuation + small investments. For one thing you lose your tax-free first $18 or 20K - now taxed at roughly 30%.

 

A few weeks ago I received a form from my investment manager company asking whether I was a Thai tax resident & what was my Thai tax number. I replied (truthfully) that I am not a Thai tax resident, I have no Thai income & no Thai tax number, my sole incomes are from Oz. Nothing further heard to date but the fact that they asked means the ATO is on the warpath. With the ALP in power, tax anything that moves is the basic approach.

It depends on the components of your income - if you have interest from the banks, afaik tax is 10%, and the dividends are taxed from 0 to 30 percent depending on franking.

Overall if someone is a resident and gets 40k only from dividends, there could be a tax refund of around 7.5k if all are franked 30%. The non resident would pay no tax, so 7.5k is to pocket if resident. Whether it is worth the trips to Oz depends on the person's circumstances.

[4MyEgo]

8 hours ago, KhunHeineken said:

but as expats, we are more interested in trying to remain a resident of Australia for taxation purposes whilst being outside of Australia for more than 183 days. 

 

There is no confusion to me about the 183 day rule, albeit there are other tests to ascertain whether you are a resident for tax purposes or not, apart from the 183 day test. Being a non resident for tax purposes suits me as I pay no tax back in Oz, apart from the 10% withholding tax on interest held by the banks, and of course there is no arguing that, as I reside here with the kids go to school here in Thailand.

 

Providing your tax residency is done by an individual basis, most escape it, and a lot fail when they are brought before the ATO. Everyone's circumstances are different so to speak.

 

8 hours ago, KhunHeineken said:

I confess, the time period between the 45 days and the 183 days is something that is not clear to me.  It was discussed a little on the other thread. 

 

From my little understanding of the proposed subject is that the 183 days rule will go and be replaced by the 45 day rule every 3 years, meaning, if my interpretation is correct, is that to retain your residency you are required to return for 45 days every 3 years, anyone who doesn't return within that 3 year period will be deemed a non resident, now I might have contradicted myself previously, as it is still not clear to me why they are bringing this about.

 

Are they making it fairer to Ozzies to return every 3 years for 45 days so that they can retain their tax residency status vs a open and shut case, i.e. if your away for 183 days, your deemed a non resident for tax purposes. It's messy in my opinion, but I know that a lot of time has been wasted by the ATO going before courts, not to mention the tax $'s spent to extract $'s from those who fall under the current, I believe 4 point residency rules, which the onus is on the individual to prove. If the new 45 day rule "returning" every 45 days within a 3 years period, then there is no requirement to challenge anything is there ?

 

8 hours ago, KhunHeineken said:

You say they wouldn't "stick it to you" but wouldn't this see you being deemed a non resident for taxation purposes, thus they "stick it to you" assuming you are deriving an income from Australia?  

 

Unless they change the laws regarding how one's money is invested in Australia, it won't effect me, suffice to say, I intend to remain a non resident for tax purposes, so I would have to keep out of the country for 45 days in those 3 years, easy done as I only return for 10 days maximum. You are aloud to earn an income in Australia through dividend paying shares which are non taxable, legally.

 

What I have to consider is will I return to apply for the Aged Pension, because I would be required to stay in the country for the 2 year jail term and my dividend paying shares will fall under the Deeming Rate as a resident and continue when you exit the country and become a non resident again, because you are obtaining the pension as a resident, messy, yes, but I cannot see a way around Centrelink all of a sudden saying, oh, we now see your a none resident for tax purposes, so we will remove the Deeming Rate as it is part of the assets test for the pension, in other words, you can't have your cake and eat it to, that said, there are offsets to minimise the the amount they take off of your pension, and the last time I worked it out it was about $100 per fortnight is memory serves me correctly, but things change all the time so one has to keep abreast of it.

 

8 hours ago, KhunHeineken said:

However, there are some who would wish to be a non resident to escape paying tax in Australia.  I know a few people like this.  What's interesting for these people is the new laws coming in how Thailand is going to start taxing foreign income, but that's for another thread.  

 

I fall into this category, that said, I am not worried about what Thailand proposes in the future because tax is already paid on my dividends, so if they want to tax me again on what's already been taken out, then I will return to Australia and can easily split my portfolio between my wife and myself to obtain a larger threshold than a single would obtain, e.g. $18,200 up to $36,400 adding her to my portfolio before any tax would be payable, lots to consider if that's the case, however, I believe their proposals would be more on Thai's trying to minimise themselves from paying taxes when working overseas, similar to what Australia does when it collects on it's worldwide web of income earners.

 

8 hours ago, KhunHeineken said:

It's a game of maneuvering one's physical presence, and money, so as to maximize time spent in a location where they wish to live, whilst minimizing tax whilst doing so.  In the past, it was easy.  I have admitted to using the current loopholes for years, and know many others doing the same, but in my opinion, that will change when the proposed change come in. 

 

 

We will have to see what the changes bring with them and see where we go from there.