To be an Aussie non-resident for Tax, or not?

[Pattaya57]

I have a number of friends who would fight to the death to keep their 'Australian resident for tax' status, when clearly living retired in Thailand for 2-5 years in their Condo with a Thai wife and children in school is not in line with being an Aussie tax Resident.

The main reason given was they wanted to keep the tax free threshold a resident gets, however this is not always the best choice.

As an example, for someone that earns $45k bank interest in Australia here is resident tax vs non-resident tax (using the new 2024/25 tax rates of 16% between $18200 and $45000)

Resident
$18,200 - tax free
$26,800 @ 16% = $4288
$45,000 @ 2% medicare = $900
Total Tax = $5188

Non-resident
$45,000 @ 10% = $4500

Note 1: $36,400 bank interest has exactly the same $3640 tax as a resident or non-resident

Note 2: a resident is taxed at 32% (with medicare) for every $ over $45k, vs only 10% for non-resident, so this becomes an even easier choice.

I know other examples are better as resident, but I'm just pointing out that being a non-resident for tax is not always the bad thing that some people believe.

 

Edited Wednesday at 01:02 PM by Pattaya57

[Pattaya57]

Oh I should add, unbelievably in the year you elect to be a non-resident the ATO still gives you a minimum $13,464 tax free + $395 for every month you're a resident in that year. So if you elect 10th October you will have $15,043 tax free threshold (instead of $18,200 for full tax year)

I will be electing October for Non-resident status to use that $15k tax free threshold while the other 8 months Interest will be at only 10% instead of 18% or 32% (with medicare)

[georgegeorgia]

As far as I know when I retire in my not taxed on my  Super .

 

[Pattaya57]

14 minutes ago, georgegeorgia said:

As far as I know when I retire in my not taxed on my  Super .

 

Correct, if retired and over 60 taking a Super pension you are not taxed on that pension as a resident or non-resident.

 

A lot of people will have other income that is taxed though so need to decide which status

 

Edited Wednesday at 01:36 PM by Pattaya57

[Fat is a type of crazy]

I have a defined benefit super which is a bit different. It has little tax if resident but as far as I can tell a lot more if non resident so it is a big deal. 

[Pattaya57]

26 minutes ago, Fat is a type of crazy said:

I have a defined benefit super which is a bit different. It has little tax if resident but as far as I can tell a lot more if non resident so it is a big deal. 

I also have a defined benefit Super pension which I have been getting since age 55. 18.2% of the pension is currently tax free but I pay tax on the rest. They told me it's zero tax when I turn 60 just like normal Super?

Edited Wednesday at 04:05 PM by Pattaya57

[Fat is a type of crazy]

Just now, Pattaya57 said:

I also have a defined benefit Super which I have been getting since 55. I pay tax on it currently but they told me it's zero tax when I turn 60 just like normal Super?

In my case - a federal employee -   at 60 I'll pay a bit of tax because some bits are still taxable but there is the special tax offset they brought in for defined benefit recipients. But if I was a non resident you lose the tax free threshold and I am not sure if the tax offset still applies. Hard to find something clear on it but I recall one poster here noting he pays a decent amount of tax.  

[georgegeorgia]

12 minutes ago, Fat is a type of crazy said:

20 minutes ago, Pattaya57 said:

turn 60 just like normal Super

In my case - a federal employee

 

Federal employee?

So in other words you didn't work a day in your life 

Edited Wednesday at 04:18 PM by georgegeorgia

[Pattaya57]

17 minutes ago, Fat is a type of crazy said:

In my case - a federal employee -   at 60 I'll pay a bit of tax because some bits are still taxable but there is the special tax offset they brought in for defined benefit recipients. But if I was a non resident you lose the tax free threshold and I am not sure if the tax offset still applies. Hard to find something clear on it but I recall one poster here noting he pays a decent amount of tax.  

Mine is Dept of Defence. I took pension 3 years ago but now remember there were 3 components. One was 18.2% tax free immediately at 55, one other was fully taxable until 60 when it became tax free and 3rd component had the 15% tax offset. I have some research to do.

[Pattaya57]

10 minutes ago, georgegeorgia said:

 

Federal employee?

So in other words you didn't work a day in your life 

Please go away with comments like that

[Fat is a type of crazy]

19 minutes ago, Pattaya57 said:

Mine is Dept of Defence. I took pension 3 years ago but now remember there were 3 components. One was 18.2% tax free immediately at 55, one other was fully taxable until 60 when it became tax free and 3rd component had the 15% tax offset. I have some research to do.

Not sure if Defence has the same super as the normal PSS  - had a feeling there's might be separate - but the PSS call centre have been helpful for me on working out the exact tax when I hit 60. There is an Ultimate PSS series on youtube of around 50 videos which talks about everything from continuing to contribute for tax deductions even after you have stopped working to creating annuities etc. But nothing I found on non residency and how it works for that. 

[still kicking]

1 hour ago, Pattaya57 said:

Please go away with comments like that

Give him a break he is a floor Cosmetica 

[metisdead]

A baiting troll post contravening our Community Standards and a reply has been removed.

[Pattaya57]

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

In my case - a federal employee -   at 60 I'll pay a bit of tax because some bits are still taxable but there is the special tax offset they brought in for defined benefit recipients. But if I was a non resident you lose the tax free threshold and I am not sure if the tax offset still applies. Hard to find something clear on it but I recall one poster here noting he pays a decent amount of tax.  

 

I checked my Commonwealth Super defined benefit statement and it has three components, 1. Tax Free, 2. Taxable Taxed and 3. Taxable untaxed. At 60, the first 2 components are tax free, while the 3rd Component is Taxed at 10% less than my marginal tax rate.

If I'm a non-resident that would be 30% marginal tax rate minus 10% = 20% tax on Component 3 only

If resident, marginal tax rate would be 0% if assessible income < $18,200, 16% if between $18,200 and $45,000 and 30% if > $45,000, so component 3 tax rate would either be 0%, 6% or 20%

Every person will have a different ratio, but mine is 1. Tax free - 18.2%, 2. Taxable Taxed - 25.8%, 3. Taxable Untaxed - 56.0%

So as non-resident I would have 20% tax to pay on 56% of my pension, which is equivalent to 11.2% on my whole pension. Note this is same amount I'd pay as Resident with assessible income >$45,000 (but would also have to pay 2% Medicare)

 

Edited Thursday at 01:12 AM by Pattaya57

[Fat is a type of crazy]

9 minutes ago, Pattaya57 said:

 

I checked my defined benefit statement and it has three components, 1. Tax Free, 2. Taxable Taxed and 3. Taxable untaxed. At 60, the first 2 components are tax free, while the 3rd Component is Taxed at 10% less than my marginal tax rate.

If I'm a non-resident that would be 30% marginal tax rate minus 10% = 20% tax on Component 3 only

If resident, your marginal tax rate would be 0% if < $18,200, 16% if between $18,200 and $45,000 and 30% if > $45,000 so component 3 tax rate would either be 0%, 6% or 20% (mine would be 20%)

Every person will have a different ratio, but mine is 1. Tax free - 18.2%, 2. Taxable Taxed - 25.8%, 3. Taxable Untaxed - 56.0%

So as non-resident I would have 20% tax to pay on 56% of my pension, which is equivalent to 11.2% on my whole pension. Note this is same amount I'd pay as Resident with assessible income >$45,000 (but would also have to pay 2% Medicare)

 

That's a good summary. Maybe I'm thinking too much but I wasn't sure that the 10 per cent tax offset would necessarily apply to a non-resident. Probably does. 

[Fat is a type of crazy]

51 minutes ago, Fat is a type of crazy said:

That's a good summary. Maybe I'm thinking too much but I wasn't sure that the 10 per cent tax offset would necessarily apply to a non-resident. Probably does. 

Looks like not a concern re 10 per cent and non-residents. https://community.ato.gov.au/s/question/a0J9s0000001GV5EAM/p00039729

[Pattaya57]

In case people don't know, you only inform the ATO you're a non-resident during your tax return. So as I'm planning to elect non-resident from 14-Oct-24, I just fill out non-resident for 259 days when I file my 2025 tax return, so pretty easy.

 

What I'm finding not easy is how to inform the banks that I'm a non-resident so that they can apply the 10% withholding tax. Note that you also have to verify an overseas address or they will withhold the top tax rate of 45% instead of 10%. Of my 3 banks: 

 

Westpac - can add overseas address online and change tax residency, but only if you say yes to being a tax resident of another country (I'm not yet a tax resident of Thailand)

 

Macquarie - says call a 1800 number to add overseas adress which I don't think you can call from overseas? No option to elect non-resident

 

NAB - Residence can change online but if you dont have another country's tax id number you have to call Australia, while to add an international address you have to call a different Australian number

 

I find it ridiculous that you have to call Australian banks from Thailand, with all the expected long hold times, just to inform your change to non-resident tax status and add an international address.

 

Has anyone had emails accepted to change your bank tax status? Or any other way not requiring long phone calls?

 

Edited yesterday at 07:24 AM by Pattaya57

[KhunHeineken]

3 hours ago, Pattaya57 said:

In case people don't know, you only inform the ATO you're a non-resident during your tax return. So as I'm planning to elect non-resident from 14-Oct-24, I just fill out non-resident for 259 days when I file my 2025 tax return, so pretty easy.

 

What I'm finding not easy is how to inform the banks that I'm a non-resident so that they can apply the 10% withholding tax. Note that you also have to verify an overseas address or they will withhold the top tax rate of 45% instead of 10%. Of my 3 banks: 

 

Westpac - can add overseas address online and change tax residency, but only if you say yes to being a tax resident of another country (I'm not yet a tax resident of Thailand)

 

Macquarie - says call a 1800 number to add overseas adress which I don't think you can call from overseas? No option to elect non-resident

 

NAB - Residence can change online but if you dont have another country's tax id number you have to call Australia, while to add an international address you have to call a different Australian number

 

I find it ridiculous that you have to call Australian banks from Thailand, with all the expected long hold times, just to inform your change to non-resident tax status and add an international address.

 

Has anyone had emails accepted to change your bank tax status? Or any other way not requiring long phone calls?

 

I've never volunteered this information.  My bank/s have always had to ask me for it.  Maintaining a "domicile" in Australia, my reply to them is I am still a resident for tax purposes. 

 

How each member answers the question is up to them, however, making a false declaration is an offense.

 

I suspect after the proposed changes are passed, it will not matter in the future anyway. 

[Pattaya57]

43 minutes ago, KhunHeineken said:

I've never volunteered this information.  My bank/s have always had to ask me for it.  Maintaining a "domicile" in Australia, my reply to them is I am still a resident for tax purposes. 

 

How each member answers the question is up to them, however, making a false declaration is an offense.

If you want to stay a resident that's fine, I was asking how to inform banks I'm now non-resident. 

 

I don't know what false declaration you're referring to but I'm choosing to become a non-resident as I'm far better off tax wise by doing so.

 

Edited yesterday at 11:29 AM by Pattaya57

[KhunHeineken]

14 minutes ago, Pattaya57 said:

Up to you as is it's up to me.

No, up to you as in, up to everyone how they choose to answer.

 

15 minutes ago, Pattaya57 said:

I'm choosing to become a non-resident as I'm far better off tax wise by doing so. I don't know what false declaration you're referring to.

Many continue to their bank/s they are a resident for tax purposes, when they clearly are not.  

[Pattaya57]

So I guess no members here have declared themselves to their bank as non-resident from Thailand?

 

I'm surprised when people can actually be better off by doing so.