Australian OAP Taxation Issues.

[KhunHeineken]

22 minutes ago, TroubleandGrumpy said:

That was provided to you as an example of the sort of matter that some people will get active about when the Govt decides to look into changing anything that affects those receiving social welfare.

So far in all the documents I have seen, there is no statement that their aim is to tax overseas pensioners. But if that was to occur, then I am certain that many 'groups' will resond, at home and overseas, and that ILO Convention will but one of the many things that will be taken into account.

It's too late to be "active" about it.  The consultation phase concluded in September 2023. 

 

I would find it hard to believe the government would purposely put forward a policy that breaches such a treaty.  Sure, they will move closer to the boundary, but not breach it. 

 

I agree it's not their aim to tax pensioners. I never said it was.  What I have always said is pensioners may simply be collateral damage because there's currently nothing in the proposed changes that differentiate pensioners from Paul Hogan.  

[KhunHeineken]

21 minutes ago, TroubleandGrumpy said:

That is a lot to respond to but I will give you two answers, while still saying you could be right and I could be wrong.

1.  There is nothing in any document or website or anywhere I am aware of that says the Govt is going to tax pensioners living overseas.  That is all your opinion that it will happen.

2.  20+ years working in Canberra means I understand how it works (a lot). I have given presos and proposals to House and Senate Committees and other bodies, who were going through the 'development' stages of changing or adding a new Law/Rule.

It's definitely a "time will tell" matter. 

 

I am only going on the proposed changes, and some laws surrounding them.  Eg. a pension is deemed an income at law.  What is finally implemented has yet to be seen.  

 

We know the government has stated they are looking at tweaking the 45 day rule.  I have posted links about this before.  Basically, expats had submitted that if they have their 6 weeks annual leave in Australia with friends and family, and then someone gets sick or dies and they have to come back to Australia, they go over the 45 days, so the government was considering increasing the 45 days.  This is the only possible change I am aware of. 

 

Common sense says they should just exempt pensions.  It would be easy to do so, but I have not seen it mentioned anywhere.  Perhaps the APA did make a submission and we will see this in the legislation when it is passed. 

 

Until them, it's the pension is deemed an income, the retiree is outside of Australia for 183 days, and there is no exemption for pensions, thus, my hypothesis or opinion on the issue. 

[Fat is a type of crazy]

Good thing on this page posted by Dinga looking at many aspects of tax in Thailand for Australians.

https://aseannow.com/topic/1306896-thai-government-to-tax-remitted-income-from-abroad-for-tax-residents-starting-2024/page/282/

 

[KhunHeineken]

16 hours ago, Fat is a type of crazy said:

Good thing on this page posted by Dinga looking at many aspects of tax in Thailand for Australians.

https://aseannow.com/topic/1306896-thai-government-to-tax-remitted-income-from-abroad-for-tax-residents-starting-2024/page/282/

 

Interesting webinar. 

 

At 19 minutes:

 

"So under the Australia Thai DTA, there is no exclusion for age pension or superannuation." 

 

I said more research was needed on the provisions in Article 19, as they relate to Article 18.

 

If what this guy says is correct, and the Australia / Thailand DTA offers no tax exemption for aged pensions, either in the source country or resident country, after the proposed changes to tax resident laws are passed in Australia, why wouldn't the Australian government want to take Thailand's slice of the pension tax pie?  Why would Australia "donate" this money to a foreign government, through its expats? 

 

I mentioned it's so simple for them to exempt aged pensions, but the exemption does not appear in the proposed changes.  Perhaps this is why there is no exemption in the proposed changes for aged pensions.  The Australian government knows Thailand will tax the Aussie aged pension, so why wouldn't Australia want to retain primary taxation rights and give the Thai government nothing out of Aussie pensions?  

Edited May 14 by KhunHeineken

[KhunHeineken]

On 5/13/2024 at 12:05 PM, Fat is a type of crazy said:

Good thing on this page posted by Dinga looking at many aspects of tax in Thailand for Australians.

https://aseannow.com/topic/1306896-thai-government-to-tax-remitted-income-from-abroad-for-tax-residents-starting-2024/page/282/

 

Moved from the Thai Tax thread.

 

The 90 year old tax residency laws are modernizing from "domiciled" based law to a physical presence and time based model.  If you are outside of Australia for 183 days, you will be automatically deemed to be a non resident for tax purposes.  It will not matter if you did 1 month in Fiji, 2 months in France etc etc.  All that will matter is you have been outside of Australia for 183 days and will then be a non resident for tax purposes.  No reviews.  No appeals.  The days are proven through immigration records.  

 

The first tax bracket in non resident tax is $0 to $120,000 at 32.5%.  No tax free threshold, for any, and all of your income.  

 

Thailand, and many other countries, have moved to a physical presence and time based tax residency model, and in my opinion, Australia also will in the near future.  

 

If you plan on doing the 6 months in Australia and just short of the 6 months in Thailand in order to minimize your taxes, just remember Australia uses the financial year and Thailand uses the calendar year. 

 

Immigration records take away the current loopholes and can not be disputed. 

 

I agree with you the new laws are designed to deem people as residents, rather than non residents, but it's a double edged sword.  Inside Australia 183 days, resident.  Outside Australia for 183 day, non resident.  It's as simple as that.  

 

The loopholes that many expat Australians have been using, including myself, will close in the near future. 

 

None of us want to do 6 months back in Australia, but if one was to stay 183 days in Australia, and less then 180 days in Thailand, they will go a long way to minimizing their tax in both countries.

[Bvor]

On 5/13/2024 at 12:34 PM, KhunHeineken said:

It's definitely a "time will tell" matter. 

 

I am only going on the proposed changes, and some laws surrounding them.  Eg. a pension is deemed an income at law.  What is finally implemented has yet to be seen.  

 

We know the government has stated they are looking at tweaking the 45 day rule

considering the overall tests and not solely the 183 day "rule" can an OAP returning to oz for cumulative 45 days per financial year be ruled a resident?

any mention of the proposed changes to tax residency in the 2024 Budget Papers?

cheers  

[Olmate]

3 hours ago, Bvor said:

considering the overall tests and not solely the 183 day "rule" can an OAP returning to oz for cumulative 45 days per financial year be ruled a resident?

any mention of the proposed changes to tax residency in the 2024 Budget Papers?

cheers  

Love.to.hear KH on the latest Budget tax reforms, 'please explain'! 

[gearbox]

4 hours ago, Bvor said:

considering the overall tests and not solely the 183 day "rule" can an OAP returning to oz for cumulative 45 days per financial year be ruled a resident?

any mention of the proposed changes to tax residency in the 2024 Budget Papers?

cheers  

From my searches it appears there are no changes in regards to tax residency in the budget.

[KhunHeineken]

4 hours ago, Bvor said:

considering the overall tests and not solely the 183 day "rule" can an OAP returning to oz for cumulative 45 days per financial year be ruled a resident?

any mention of the proposed changes to tax residency in the 2024 Budget Papers?

cheers  

No mention in the latest budget that I am aware of.

 

If you are inside Australia for more than 45 days, but less than 183 days, you have to meet two of the four factor tests.  They are not difficult to meet.

 

https://oreanafinancial.com/financial-planning/australian-tax-residency-proposed-changes/

 

The Labor government was considering increasing the 45 days.  Probably to either 60 days or 90 days. 

[KhunHeineken]

38 minutes ago, Olmate said:

Love.to.hear KH on the latest Budget tax reforms, 'please explain'! 

Nothing in this budget, which is good news.  They will probably just be passed like the changes to the Stage 3 tax cuts.  I can't see them being an election issue.  They have bipartisan support, because it's the previous Liberal government that proposed them, so when they are put to parliament, there will be no opposition to them and they will sail through. 

 

Are you still sticking by the "pensioners will be up in arms" argument as to why they will never be passed into legislation? 

[Fat is a type of crazy]

7 hours ago, KhunHeineken said:

Moved from the Thai Tax thread.

 

The 90 year old tax residency laws are modernizing from "domiciled" based law to a physical presence and time based model.  If you are outside of Australia for 183 days, you will be automatically deemed to be a non resident for tax purposes.  It will not matter if you did 1 month in Fiji, 2 months in France etc etc.  All that will matter is you have been outside of Australia for 183 days and will then be a non resident for tax purposes.  No reviews.  No appeals.  The days are proven through immigration records.  

 

The first tax bracket in non resident tax is $0 to $120,000 at 32.5%.  No tax free threshold, for any, and all of your income.  

 

Thailand, and many other countries, have moved to a physical presence and time based tax residency model, and in my opinion, Australia also will in the near future.  

 

If you plan on doing the 6 months in Australia and just short of the 6 months in Thailand in order to minimize your taxes, just remember Australia uses the financial year and Thailand uses the calendar year. 

 

Immigration records take away the current loopholes and can not be disputed. 

 

I agree with you the new laws are designed to deem people as residents, rather than non residents, but it's a double edged sword.  Inside Australia 183 days, resident.  Outside Australia for 183 day, non resident.  It's as simple as that.  

 

The loopholes that many expat Australians have been using, including myself, will close in the near future. 

 

None of us want to do 6 months back in Australia, but if one was to stay 183 days in Australia, and less then 180 days in Thailand, they will go a long way to minimizing their tax in both countries.

I don't think your theory makes sense. Why should someone going away for 6 months and 4 days to 10 countries and returns home to normal life be told you are a non resident no ifs or buts. Can you show me someone warning about possible implications of a one off longish holiday. It doesn't follow that because there are theoretical proposed  tough rules for those saying they are non-residents who may be deemed residents that the opposite is to be enforced in the same way.  Statements like 'loopholes WILL close in your future' are incorrect as you don't know that. 

 

[KhunHeineken]

4 hours ago, Fat is a type of crazy said:

I don't think your theory makes sense. Why should someone going away for 6 months and 4 days to 10 countries and returns home to normal life be told you are a non resident no ifs or buts.

Well, geez, such a hard question to to answer, but I will make it simple for you.  Yet again, outside Australia 183 days, non resident for tax purposes.  Immigration records will prove this. 

 

Maybe you can explain what your argument to the ATO will be when you have been outside Australia for 183 days, but want to tell them you are still a resident for taxation purposes. 

 

4 hours ago, Fat is a type of crazy said:

Can you show me someone warning about possible implications of a one off longish holiday.

Have you not seen the proposed changes that have been posted many times before?

 

The "long holiday" loophole will end. 

 

4 hours ago, Fat is a type of crazy said:

It doesn't follow that because there are theoretical proposed  tough rules for those saying they are non-residents who may be deemed residents that the opposite is to be enforced in the same way. 

Really? 

 

So the residents can say they are non residents, and the non residents can say they are residents.  Good Luck with that with the ATO.   That one is up there with the famous "Paul Hogan" post.  

 

4 hours ago, Fat is a type of crazy said:

Statements like 'loopholes WILL close in your future' are incorrect as you don't know that. 

The current laws are 90 years old.  The Australian government is modernizing them from a "domicile" based model to a physical presence and time based model.   It really is that simple. 

[Fat is a type of crazy]

8 hours ago, KhunHeineken said:

Well, geez, such a hard question to to answer, but I will make it simple for you.  Yet again, outside Australia 183 days, non resident for tax purposes.  Immigration records will prove this. 

 

Maybe you can explain what your argument to the ATO will be when you have been outside Australia for 183 days, but want to tell them you are still a resident for taxation purposes. 

 

Have you not seen the proposed changes that have been posted many times before?

 

The "long holiday" loophole will end. 

 

Really? 

 

So the residents can say they are non residents, and the non residents can say they are residents.  Good Luck with that with the ATO.   That one is up there with the famous "Paul Hogan" post.  

 

The current laws are 90 years old.  The Australian government is modernizing them from a "domicile" based model to a physical presence and time based model.   It really is that simple. 

The proposed laws in the Consultation Paper note this:

It should be harder to cease being a tax resident than it is to become a tax resident. Once an individual has spent sufficient time in Australia and made enough connections to become a tax resident, it is appropriate for the individual to remain a tax resident until those connections are scaled back to such an extent that they no longer benefit from their connection to Australia enough to justify being taxed as a resident. Adhesive residency is a feature of the existing rules (e.g. the domicile test) and is consistent with international practice.

They note this:

The Ceasing Long-Term Residency Rule 51. Under the Board’s proposed model, a long-term resident would cease to be a tax resident if they spent less than 45 days in Australia in the current income year, and less than 45 days in Australia in each of the two preceding income years. 52. The rationale behind this test is that, consistent with the existing rules (in particular the resides and domicile tests), residency should be harder to lose for long-term residents than for short-term residents, given their stronger connection with Australia. However, the proposed rules will be much easier to apply than either the resides test or the domicile test, which require a holistic assessment of all relevant facts and circumstances, including the individual’s intention and their connections to both Australia and overseas jurisdictions. Instead, this test relies simply on day counts over three income years.

As such my 185 day holiday would not make me a non resident.  Therefore the rules that say that being in Australia for 183 days makes you a resident does not apply in the opposite.

Of course this assumes these rules become law which you have no new information on either.

[KhunHeineken]

1 hour ago, Fat is a type of crazy said:

The proposed laws in the Consultation Paper note this:

It should be harder to cease being a tax resident than it is to become a tax resident. Once an individual has spent sufficient time in Australia and made enough connections to become a tax resident, it is appropriate for the individual to remain a tax resident until those connections are scaled back to such an extent that they no longer benefit from their connection to Australia enough to justify being taxed as a resident. Adhesive residency is a feature of the existing rules (e.g. the domicile test) and is consistent with international practice.

They note this:

The Ceasing Long-Term Residency Rule 51. Under the Board’s proposed model, a long-term resident would cease to be a tax resident if they spent less than 45 days in Australia in the current income year, and less than 45 days in Australia in each of the two preceding income years. 52. The rationale behind this test is that, consistent with the existing rules (in particular the resides and domicile tests), residency should be harder to lose for long-term residents than for short-term residents, given their stronger connection with Australia. However, the proposed rules will be much easier to apply than either the resides test or the domicile test, which require a holistic assessment of all relevant facts and circumstances, including the individual’s intention and their connections to both Australia and overseas jurisdictions. Instead, this test relies simply on day counts over three income years.

As such my 185 day holiday would not make me a non resident.  Therefore the rules that say that being in Australia for 183 days makes you a resident does not apply in the opposite.

Of course this assumes these rules become law which you have no new information on either.

I agree with you that the legislation is designed more so to qualify people as residents, rather than non residents.  Whilst each member reading this forum has different circumstances, your typical Aussie expat retiree hasn't been back to Australia for some years, and when they have, it was most likely for less than 45 days for medical treatment, or a funeral, or similar. 

 

These expats have certainly "scaled back to such an extent that they no longer benefit from their connection to Australia enough to justify being taxed as a resident."  Wouldn't you agree? 

 

Doesn't this part of the document also mean that if it can not be "justified being taxed as a resident" mean they are then "justified being taxed as a non resident."  An individual must be classified as one, or the other. 

 

You say "As such my 185 day holiday would not make me a non resident."   What you are saying is, if your are inside Australia more than 183 days, you are a resident for tax purposes, and if you are outside of Australia for more than 183 days, you are also still a resident of Australia for taxation purposes.  What you describe are the current loopholes that I, and many others, enjoy.  We have maintained "connections"  in Australia and not "scaled back" those connections.  How many expat retirees can say the same?  Most have sold their property, car, furniture etc.  They have ended memberships with clubs.  They have no utility bills in their name.  They have closed bank accounts and handed back credit cards.  These are just to name a few in a long list that would clearly show such an expat retiree has ended residency for tax purposes in Australia.  How would you propose such a retired expat can argue with the ATO that they are still a resident of Australia for tax purposes because they are just on a long holiday?  

 

You have said this, "Therefore the rules that say that being in Australia for 183 days makes you a resident does not apply in the opposite."  The proposed changes are a physical presence and time based model, therefore,  the legislation will be based on where geographically the person is, or isn't, and for how long.  As mentioned, you are basically saying the 183 days only qualifies residents, and not non residents, and I disagree with you on this point.  Reason being, if the 183 days outside of Australia means nothing if you still have "connections" in Australia, then the loopholes still exist, and the proposed changes are designed to do away with the loopholes.  

 

Yes, no new information on the progress of the proposed changes.  What we do know is they are not dead under Labor, which many thought they would be, and given the previous Liberal government proposed them, and the current Labor government are moving forward with them, in my opinion, it's only a matter of time either party puts them to parliament ,with the opposition party, whichever party that may be, not blocking the legislation. 

 

My personal circumstances are I could do the 45 days and easily meet two of the four factor tests.  I don't want to do the 45 days, but I could if I had to.  After consultation with expats, Labor is looking at increasing the 45 days, probably to 60 or 90 days, and that's bad news for people who could do the 45 days. 

 

For your typical Aussie expat retiree who hasn't been back to Australia in years, I can't possibly see how they can argue they are still a resident for tax purposes, even if they maintained some "connections" and given there are no exemptions mentioned in the proposed changes, and no new tax free threshold added to the non resident tax brackets, and the pension is deemed an "income" at law, and now Thailand's new tax, and Australia expanding and updating its DTA's around the world, I see interesting times ahead for Aussie expats living in Thailand.   

[Olmate]

On 5/15/2024 at 5:53 PM, KhunHeineken said:

Nothing in this budget, which is good news.  They will probably just be passed like the changes to the Stage 3 tax cuts.  I can't see them being an election issue.  They have bipartisan support, because it's the previous Liberal government that proposed them, so when they are put to parliament, there will be no opposition to them and they will sail through. 

 

Are you still sticking by the "pensioners will be up in arms" argument as to why they will never be passed into legislation? 

Are you still kicking that can into never never land, youve been on about next, maybe next budget, now its not  likely to be in any Budget.! Seems your fudging your Budget!! no surprise there!! lol

[KhunHeineken]

2 hours ago, Olmate said:

Are you still kicking that can into never never land, youve been on about next, maybe next budget, now its not  likely to be in any Budget.! Seems your fudging your Budget!! no surprise there!! lol

Why don't you get off the fence and state publicly here that it's YOUR opinion that the proposed change WILL or WILL NOT be eventually passed into legislation?

 

 

Edited May 17 by KhunHeineken

[Olmate]

10 minutes ago, KhunHeineken said:

Why don't you get off the fence and state publicly here that it's YOUR opinion that the proposed change WILL or WILL not be eventually passed into legislation?

 

 

Im not the one who wont stop  digging the hole , thats your claim to fame!!! 

[KhunHeineken]

2 minutes ago, Olmate said:

Im not the one who wont stop  digging the hole , thats your claim to fame!!! 

You've dug the hole so deep that you can't admit they will be passed because you've thrown so much mud at me.  You have to keep digging now, otherwise you lose face. 

[Olmate]

18 hours ago, KhunHeineken said:

You've dug the hole so deep that you can't admit they will be passed because you've thrown so much mud at me.  You have to keep digging now, otherwise you lose face. 

Seems the mud is sticking, your starting to dribble like a school kid with that retort. Come back to us next year, the election is your next "pie in the sky"! 

[Bvor]

On 5/16/2024 at 11:55 AM, KhunHeineken said:

My personal circumstances are I could do the 45 days and easily meet two of the four factor tests.  I don't want to do the 45 days, but I could if I had to.  After consultation with expats, Labor is looking at increasing the 45 days, probably to 60 or 90 days, and that's bad news for people who could do the 45 days.

herewith is submission from BDO https://www.bdo.com.au/en-au/insights/tax/submissions/bdo-submission-modernising-individual-tax-residency  re the proposed changes. most likely there are others also under consideration before any implementation.

cheers

[KhunHeineken]

On 5/17/2024 at 11:45 PM, Olmate said:

Seems the mud is sticking, your starting to dribble like a school kid with that retort. Come back to us next year, the election is your next "pie in the sky"! 

No mud sticking here. 

 

What year are you talking about, financial year, or calendar year?

 

I have often said, in my opinion, the proposed changes will not be an election issue. 

 

You still think they will never be passed. 

[KhunHeineken]

On 5/18/2024 at 8:01 AM, Bvor said:

herewith is submission from BDO https://www.bdo.com.au/en-au/insights/tax/submissions/bdo-submission-modernising-individual-tax-residency  re the proposed changes. most likely there are others also under consideration before any implementation.

cheers

The proposed changes will not deviate too much.  They are firmly based on a physical presence and time based model, rather than the current "domiciled" model.

 

As mentioned, expats wanted to see the 45 days increased. 

 

https://www.taxinstitute.com.au/insights/articles/our-submission-on-the-proposed-changes-to-the-individual-tax-res

 

"Changing the individual tax residency rules may potentially increase the number of individuals who are found to be Australian tax residents. The proposed 45-day rule will too easily result in individuals spending more than 45 days in Australia without any genuine or enduring connection to Australia. An increase to a more reasonable threshold, such as 60 days, should be considered."

[TroubleandGrumpy]

Interesting - still going on about tax residency.  The OAP has had some developments.

 

Article on the upcoming indexing changes - July indexation rates to boost some social security payments from July 1 | news.com.au — Australia’s leading news site

 

Pensioner organisation pushing to remove the income limit restrictions on Pensioners - Let’s change the pension rules - National Seniors Australia

 

Thoughts??

 

[KhunHeineken]

On 6/3/2024 at 2:58 AM, TroubleandGrumpy said:

Thoughts??

Non resident tax bracket $0 to $120,000 is 32.5%.  The pension is deemed an income.  Immigration know you have been outside of Australia for 183 days.

 

Thoughts? 

[TroubleandGrumpy]

My thoughts are that KH is seriously out of order. 

[KhunHeineken]

12 hours ago, TroubleandGrumpy said:

My thoughts are that KH is seriously out of order. 

Fail. 

[KhunHeineken]

Ego, I would like to read your "interpretation" of what is said in this youtube webinar, from 17:15 minutes to 21:30 minutes.

 

https://www.youtube.com/watch?v=y1chBfp8_XE

 

This is the guy running it. 

 

https://www.carlturnerfinancial.com

 

They talk about Article 18 and Article 19 of the Australia - Thailand DTA. 

 

 

 

[KhunHeineken]

Simple article in today's online news about tax time, but it has an interesting line in it.

 

https://www.9news.com.au/national/tax-return-2024-australian-taxation-office-warns-australians-not-to-rush-tax-return/e0f6d965-bad9-4202-8330-1f4018ebfc58

 

"Most information from employers, banks, government agencies and health funds usually load into your tax return from late July, Thomson said."

 

"Government agencies" "load into your tax return."  Mmmmmm.   

[Pattaya57]

36 minutes ago, KhunHeineken said:

Simple article in today's online news about tax time, but it has an interesting line in it.

 

https://www.9news.com.au/national/tax-return-2024-australian-taxation-office-warns-australians-not-to-rush-tax-return/e0f6d965-bad9-4202-8330-1f4018ebfc58

 

"Most information from employers, banks, government agencies and health funds usually load into your tax return from late July, Thomson said."

 

"Government agencies" "load into your tax return."  Mmmmmm.   

That's pretty standard info. I always get a text from ATO (via mygov) to tell me that my data has been loaded and it's ready to submit an online tax return. Tax returns are basically filled out for you now with just rental property income and any deductions to be added

 

As for Government agencies, Department of Veterans Affairs (DVA) would be one as would Centrelink I assume so no big deal 

 

Edited June 24 by Pattaya57

[KhunHeineken]

13 hours ago, Pattaya57 said:

That's pretty standard info. I always get a text from ATO (via mygov) to tell me that my data has been loaded and it's ready to submit an online tax return. Tax returns are basically filled out for you now with just rental property income and any deductions to be added

 

As for Government agencies, Department of Veterans Affairs (DVA) would be one as would Centrelink I assume so no big deal 

 

WHEN the proposed changes to tax residency are passed, that "pretty standard info" changes the game for many.  Eg.  Pattaya57 has been outside of Australia for 183 days, thus, no a non resident for tax purposes, therefore, non resident tax brackets apply.