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

[KhunHeineken]

On 6/30/2024 at 12:23 AM, Will27 said:

Most would be better of tax wise declaring themselves as residents IMO.

Which would be a false declaration after the proposed changes are passed, and one has been outside of Australia for 183 days. 

[KhunHeineken]

On 6/30/2024 at 4:15 AM, Pattaya57 said:

He has now bought a house and is stressing that if ATO audit him he'll never pass the resident test. So he's decided to elect non-resident on next tax return.

This is exactly what the proposed changes were designed to do, and that's certainty for the ATO, and the individual, what their tax residency status is. 

 

Under the old system, based around where one was "domiciled" your friend would have issues with the ATO, because the ATO could say you have brought a property in Thailand, so therefore you are now "domiciled" in Thailand, therefore a non resident for tax purposes of Australia. 

 

After the proposed changes are passed, basically, 183 days inside Australia, resident, 183 days outside Australia, non resident.  No need for auditing this, and everyone will know the rules and where they stand.

 

The days of arguing you are "domiciled" in Australia, despite not being back in Australia in years will be over.   Thus, one will not be able to "elect" anything in the future.  It changes to a  physical presence and time based model. 

[Will27]

11 minutes ago, KhunHeineken said:

Which would be a false declaration after the proposed changes are passed, and one has been outside of Australia for 183 days. 

It's pretty much a false declaration now.

[Will27]

2 minutes ago, KhunHeineken said:

This is exactly what the proposed changes were designed to do, and that's certainty for the ATO, and the individual, what their tax residency status is. 

 

Under the old system, based around where one was "domiciled" your friend would have issues with the ATO, because the ATO could say you have brought a property in Thailand, so therefore you are now "domiciled" in Thailand, therefore a non resident for tax purposes of Australia. 

 

After the proposed changes are passed, basically, 183 days inside Australia, resident, 183 days outside Australia, non resident.  No need for auditing this, and everyone will know the rules and where they stand.

 

The days of arguing you are "domiciled" in Australia, despite not being back in Australia in years will be over.   Thus, one will not be able to "elect" anything in the future.  It changes to a  physical presence and time based model. 

You're like a dog with a bone saying the proposals will be implemented.

Everyone on here has read your opinion a hundred times over.

Just because you keep saying it, doesn't mean you're right.

 

I've debated this with you before, but you keep repeating it ad nauseam.

IMO, you will still need to declare your residency status.

 

We still have a self assessment tax system.

I don't think the ATO will be linked to Immigration movements and automatically declare your residence status.

 

Of course they will have access if you're audited.

[KhunHeineken]

13 minutes ago, Will27 said:

You're like a dog with a bone saying the proposals will be implemented.

Do you disagree?  Are you stating you believe the proposed changes WILL NOT be passed?  Go on the record.

 

14 minutes ago, Will27 said:

We still have a self assessment tax system.

I don't think the ATO will be linked to Immigration movements and automatically declare your residence status.

 

Of course they will have access if you're audited.

So, pensioners who go overseas on a genuine holiday, and find they lose their supplements after 6 weeks, how does that happen?  They didn't inform Centerlink of their travels.  How did Centerlink know to stop their supplements? 

[Will27]

Just now, KhunHeineken said:

Do you disagree?  Are you stating you believe the proposed changes WILL NOT be passed?  Go on the record.

 

So, pensioners who go overseas on a genuine holiday, and find they lose their supplements after 6 weeks, how does that happen?  They didn't inform Centerlink of their travels.  How did Centerlink know to stop their supplements? 

I've told you several times.

I don't think they will be passed.

 

Not sure how many times I can say it.

And no, I'm not going to tell you why (again) or keep going around in circles with you.

 

I know how it happens.

Again, I've told you before why I don't think the ATO will implement it.

 

So please resist the urge to reply with a 1000 word answer on why I'm wrong and you're right.

 

You don't always have to have the last word even though you try.

So save yourself the time and effort.

 

Agree to disagree.

[ElwoodP]

Reported abusive post removed along with several others and their replies.

[Fat is a type of crazy]

45 minutes ago, KhunHeineken said:

This is exactly what the proposed changes were designed to do, and that's certainty for the ATO, and the individual, what their tax residency status is. 

 

Under the old system, based around where one was "domiciled" your friend would have issues with the ATO, because the ATO could say you have brought a property in Thailand, so therefore you are now "domiciled" in Thailand, therefore a non resident for tax purposes of Australia. 

 

After the proposed changes are passed, basically, 183 days inside Australia, resident, 183 days outside Australia, non resident.  No need for auditing this, and everyone will know the rules and where they stand.

 

The days of arguing you are "domiciled" in Australia, despite not being back in Australia in years will be over.   Thus, one will not be able to "elect" anything in the future.  It changes to a  physical presence and time based model. 

I don't want to get into what rules may or may not be passed except to note there appears to be nothing new to say. But myself - and Pattaya57 in his post of 25 June in the topic Australian OAP Taxation Issues - has told you that there are other factors that count and even under the proposed rules it is not simply 184 days non resident and 183 days resident so not sure why you say it is. Maybe if you stay years in Thailand it becomes a bit simpler but that is probably the case now. So long cut short it is not a simple thing - even under the new rules - for the decision maker to simply look at immigration dates and decide.

[Pattaya57]

1 hour ago, Will27 said:

It's pretty much a false declaration now.

Yes, this is why my mate decided to change to non-resident after 2 years in Thailand as he has no chance of passing the current rules to remain a resident. Likely he may never have got caught though as up to him to decide to self inform ATO, but he said he didn't want to get caught later and have years of back taxes to pay (his tax agent strongly suggested he was a non-resident for tax)

 

For me, I still meet the rules even though for last 2 years I have been in Thailand over 220 days per calender year on visa exempts and tourist visas (still have 183+ days in Aus 22/23 tax year and 173 days in 23/24 tax year)

 

[Pattaya57]

I remember when you applied for bank accounts in Aus it used to ask something like " Are you a resident of Australia for tax purposes" or maybe "Are you a non-resident of Australia for tax purposes"

 

Now they seem to ask "Are you a tax resident of another Country". If yes, "Please provide TIN" (Tax Identification Number)

 

This is a significant difference as I am not currently a tax resident of another country. I had also previously lived 15 years in Middle East as a tax non-resident of Australia but was never a tax resident of Saudi, Bahrain or UAE where I lived.

 

Does this give an excuse to not declare non-resident? My Mate was on the phone to Westac for 40 minutes yesterday. It of course went to an Indian call centre where mate said they had no clue about Australian non-resident status. All he got was his address changed to Thailand and advice that he had nothing to do as he was not a tax resident of another country

 

(Mate and I are not tax residents of Thailand as we have not yet spent 180 days here this calender year)

 

[Pattaya57]

Further to above, when you advise your Aussie bank you are a tax resident of another country and provide your tax number, they say they will inform the relevant tax authority in that country of all account information. So Thailand would know how much you have in Aus bank and how much interest you earned?

 

This is from ANZ but all banks say the same.

 

"Under the AEOI, all Financial Institutions (including ANZ) must identify accounts held by customers who are foreign tax residents or entities connected to foreign tax residents. Financial Institutions must report these to the relevant Tax Authority who will then automatically exchange the account information with the relevant foreign Tax Authority(ies)."

 

https://www.anz.com.au/about-us/our-company/automatic-exchange-of-information/

 

[KhunHeineken]

On 7/2/2024 at 4:12 AM, Fat is a type of crazy said:

I don't want to get into what rules may or may not be passed except to note there appears to be nothing new to say. But myself - and Pattaya57 in his post of 25 June in the topic Australian OAP Taxation Issues - has told you that there are other factors that count and even under the proposed rules it is not simply 184 days non resident and 183 days resident so not sure why you say it is. Maybe if you stay years in Thailand it becomes a bit simpler but that is probably the case now. So long cut short it is not a simple thing - even under the new rules - for the decision maker to simply look at immigration dates and decide.

No, the proposed changes really are that simple. 

 

Under 45 days inside Australia, non resident.

 

Over 45 days but under 183 days inside Australia, one must meet two out of the four factor tests.  

 

Over 183 days outside Australia, non resident.   

 

When you say "other factors" do you mean the "factor tests?"  If so, here they are:

 

"Under the Commencing Residency Test, if you were present in Australia for 45 days or more in the current income year, then you will apply the ‘factor test’ looking at whether you would be a tax resident. This includes:

 

Rights to reside permanently in Australia: Whether you have a permanent right to reside in Australia for immigration purposes.

 

Australian Accommodation: Whether there is a legal right or arrangement to access accommodation at any time during the income year (including rental properties, own home, living with parents or other relatives).

 

Australian Family: Whether you have family in Australia.

 

Australian economic Interests: Whether you have an employment contract to work in Australia or carry out a business in Australia or have direct/indirect interests in Australian assets.

If you satisfy two or more factors from the above, you will be considered an Australian tax resident."

 

The above was quoted from a random large accounting firm from a Google search.. 

 

https://www.grantthornton.com.au/insights/client-alerts/the-atos-individual-tax-residency-changes-open-for-consultation/

 

Just about every Aussie expat can meet the requirements of the first factor test.  Many may be able to meet one or more of the other three factor tests.  So, no problem for an expat who is prepared to do 46 days in Australia every year.

 

However, if you are out of Australia for 183 days, that's the end of the story.  You will be a non resident for tax purposes, and I would suggest that applies to the majority of Aussie expats in Thailand. 

 

 

 

[KhunHeineken]

On 7/2/2024 at 3:56 AM, Will27 said:

I've told you several times.

I don't think they will be passed.

 

Not sure how many times I can say it.

And no, I'm not going to tell you why (again) or keep going around in circles with you.

 

I know how it happens.

Again, I've told you before why I don't think the ATO will implement it.

 

So please resist the urge to reply with a 1000 word answer on why I'm wrong and you're right.

 

You don't always have to have the last word even though you try.

So save yourself the time and effort.

 

Agree to disagree.

For some reason you never commented on the part of my post that your highlighted, but at least you are on the record.  Many just criticize and sit on the fence. 

 

I have no problem accepting your differing point of view.  I, and many others, hope you are right. 

 

There was never going to be a 1000 word reply.

 

The question I have asked others, and yet to receive an answer from anyone, and I don't expect you to answer it either, is, "For how long do you expect 90 year old laws to remain in place before they are modernized?" 

 

The current 90 year old laws can't remain forever.  At some stage they will have to be updated.  Whether we are at that "stage" or not, time will tell.   

 

 

[Pattaya57]

23 minutes ago, KhunHeineken said:

No, the proposed changes really are that simple. 

Why do you keep promoting this proposed tax change in every thread? It's exactly that, only a proposed change that has sat dormant for years with no current release date planned. Who knows whether they'll ever be realeased or even if they are, they could be significantly different to that proposed years ago.  So what's the point repeating over and over as if they are real when it's total speculation.

 

I prefer to stick to actual tax laws so please don't derail the thread with your favourite topic as your last six posts have all been about the proposed tax changes which no-one asked about (why not start your own thread on it since you care so much about it)

 

[KhunHeineken]

On 7/2/2024 at 4:31 AM, Pattaya57 said:

Yes, this is why my mate decided to change to non-resident after 2 years in Thailand as he has no chance of passing the current rules to remain a resident.

In the future, there will be no need to "change" anything.  It will be a physical presence and time based model based on days inside / outside Australia.  No reviews.  No appeals.  No grey area.  All proven by immigration records.  Simple as that. 

[Fat is a type of crazy]

14 minutes ago, KhunHeineken said:

No, the proposed changes really are that simple. 

 

Under 45 days inside Australia, non resident.

 

Over 45 days but under 183 days inside Australia, one must meet two out of the four factor tests.  

 

Over 183 days outside Australia, non resident.   

 

When you say "other factors" do you mean the "factor tests?"  If so, here they are:

 

"Under the Commencing Residency Test, if you were present in Australia for 45 days or more in the current income year, then you will apply the ‘factor test’ looking at whether you would be a tax resident. This includes:

 

Rights to reside permanently in Australia: Whether you have a permanent right to reside in Australia for immigration purposes.

 

Australian Accommodation: Whether there is a legal right or arrangement to access accommodation at any time during the income year (including rental properties, own home, living with parents or other relatives).

 

Australian Family: Whether you have family in Australia.

 

Australian economic Interests: Whether you have an employment contract to work in Australia or carry out a business in Australia or have direct/indirect interests in Australian assets.

If you satisfy two or more factors from the above, you will be considered an Australian tax resident."

 

The above was quoted from a random large accounting firm from a Google search.. 

 

https://www.grantthornton.com.au/insights/client-alerts/the-atos-individual-tax-residency-changes-open-for-consultation/

 

Just about every Aussie expat can meet the requirements of the first factor test.  Many may be able to meet one or more of the other three factor tests.  So, no problem for an expat who is prepared to do 46 days in Australia every year.

 

However, if you are out of Australia for 183 days, that's the end of the story.  You will be a non resident for tax purposes, and I would suggest that applies to the majority of Aussie expats in Thailand. 

 

 

 

I don't want to get into this too much but in the post I responded to you said 'After the proposed changes are passed, basically, 183 days inside Australia, resident, 183 days outside Australia, non resident.' That is totally different to the more nuanced view you are expressing in this post which notes the 45 days and tests.  

In this post too you say over 183 days outside makes you a non resident but then talk about that between 45 and 183 days inside Australia depends on the tests. Maybe you made an error. See what happens.

[KhunHeineken]

8 minutes ago, Pattaya57 said:

Why do you keep promoting this proposed tax change in every thread? It's exactly that, only a proposed change that has sat dormant for years with no current release date planned. Who knows whether they'll ever be realeased or even if they are, they could be significantly different to that proposed years ago.  So what's the point repeating over and over as if they are real when it's total speculation.

 

I prefer to stick to actual tax laws so please don't derail the thread with your favourite topic (why not start your own thread on it since you care so much about it)

 

I am not derailing the thread.  Look at the thread title.  It's about tax residency. 

 

If you don't want to discuss the proposed changes, that leaves us discussing the current 90 year old laws that have many loopholes.  Which loophole would you like to discuss?  The "domicile" loophole? 

 

Here it is:

 

https://www.ato.gov.au/individuals-and-families/coming-to-australia-or-going-overseas/residency-tests/residency-the-domicile-test

 

"The domicile test is the first statutory test. You're an Australian resident if your domicile is in Australia, unless we're satisfied that your permanent place of abode is outside Australia."

 

The proposed changes to tax residency are the biggest single issue to face Aussie expats in decades.  No just retirees, but also Aussies working abroad. 

 

In my opinion, they will be passed into legislation.  Why don't you go on the record and say they will or they will not be passed, rather than criticize and sit on the fence?

[Fat is a type of crazy]

4 hours ago, Pattaya57 said:

 

 

Does this give an excuse to not declare non-resident?

 

I don't know about this - and this might be obvious - but my only comment would be that the bank and government would have their separate criteria to be classified as non-resident and one may not influence the other . So it sounds a bit rough though if the bank says you can't be treated as a non-resident and get the lower tax on interest while the government says you are a non-resident meaning higher tax on all income as no withholding on the interest. 

[Pattaya57]

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

I don't know about this - and this might be obvious - but my only comment would be that the bank and government would have their separate criteria to be classified as non-resident and one may not influence the other . So it sounds a bit rough though if the bank says you can't be treated as a non-resident and get the lower tax on interest while the government says you are a non-resident meaning higher tax on all income as no withholding on the interest. 

Yeah, I should have put a smiley on that excuse line as wasn't serious. Like you say, I just find it incredible ATO want to know if you are non-resident, while banks just want to know if you're tax resident of another country. Two totally different things

 

Of course an easy way out is just worry about the ATO part and then pay 10% tax on your bank interest at tax time instead of having the bank withhold 10% throughout the year

 

[KhunHeineken]

4 hours ago, Pattaya57 said:

I remember when you applied for bank accounts in Aus it used to ask something like " Are you a resident of Australia for tax purposes" or maybe "Are you a non-resident of Australia for tax purposes"

 

Now they seem to ask "Are you a tax resident of another Country". If yes, "Please provide TIN" (Tax Identification Number)

 

This is a significant difference as I am not currently a tax resident of another country. I had also previously lived 15 years in Middle East as a tax non-resident of Australia but was never a tax resident of Saudi, Bahrain or UAE where I lived.

 

Does this give an excuse to not declare non-resident? My Mate was on the phone to Westac for 40 minutes yesterday. It of course went to an Indian call centre where mate said they had no clue about Australian non-resident status. All he got was his address changed to Thailand and advice that he had nothing to do as he was not a tax resident of another country

 

(Mate and I are not tax residents of Thailand as we have not yet spent 180 days here this calender year)

 

Adelaide Bank explain it quite well.

 

https://www.adelaidebank.com.au/support/foreign-tax-residency/#:~:text=For individual or entity customers,about your foreign tax residency.

 

Westpac.

 

https://www.westpac.com.au/about-westpac/westpac-group/corporate-governance/aeoi/

 

"If you have an existing account or product with us, we may contact you if we have information to suggest that you are a foreign tax resident."

 

Now, I wonder where that information would come from? 

[KhunHeineken]

4 hours ago, Pattaya57 said:

Further to above, when you advise your Aussie bank you are a tax resident of another country and provide your tax number, they say they will inform the relevant tax authority in that country of all account information. So Thailand would know how much you have in Aus bank and how much interest you earned?

 

This is from ANZ but all banks say the same.

 

"Under the AEOI, all Financial Institutions (including ANZ) must identify accounts held by customers who are foreign tax residents or entities connected to foreign tax residents. Financial Institutions must report these to the relevant Tax Authority who will then automatically exchange the account information with the relevant foreign Tax Authority(ies)."

 

https://www.anz.com.au/about-us/our-company/automatic-exchange-of-information/

 

From Westpac.

 

"CRS is an Organisation of Economic Cooperation and Development (OECD) initiative to address income tax evasion. The global agreement requires financial institutions to obtain and report foreign tax residency information of account holders, and their associated parties, to their local tax authority. The local tax authorities of participating countries will exchange reported information on an annual basis."

 

So, the ATO talks to the banks, and the banks talk to the ATO. 

 

The ATO also talks to the tax authorities in other countries, which would be the TRD.   

[KhunHeineken]

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

I don't want to get into this too much but in the post I responded to you said 'After the proposed changes are passed, basically, 183 days inside Australia, resident, 183 days outside Australia, non resident.' That is totally different to the more nuanced view you are expressing in this post which notes the 45 days and tests.  

In this post too you say over 183 days outside makes you a non resident but then talk about that between 45 and 183 days inside Australia depends on the tests. Maybe you made an error. See what happens.

No error. 

 

I've set it out for you.  It becomes a simple physical presence and time based model. 

 

I have said I could do 46 days inside Australia a year and meeting the factor tests is no problem for me.  I wouldn't be happy about it, but I could do it.  However, Labor are looking at increasing the days possibly to 60 days, but probably 90 days.  (link previously posted)  90 days would change the game for me. 

 

In any case, how is this relevant to your typical Aussie expat retiree that hasn't been back to Australia in some years?  How can they possibly argue they are still a resident of Australia for tax purposes? 

[Ben Zioner]

On 6/26/2024 at 8:24 PM, Pattaya57 said:

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

 

Interesting, but wouldn't that make you liable to Thai income tax, if you stay 180 days or more in any given year?

[Fat is a type of crazy]

8 minutes ago, KhunHeineken said:

No error. 

 

I've set it out for you.  It becomes a simple physical presence and time based model. 

 

I have said I could do 46 days inside Australia a year and meeting the factor tests is no problem for me.  I wouldn't be happy about it, but I could do it.  However, Labor are looking at increasing the days possibly to 60 days, but probably 90 days.  (link previously posted)  90 days would change the game for me. 

 

In any case, how is this relevant to your typical Aussie expat retiree that hasn't been back to Australia in some years?  How can they possibly argue they are still a resident of Australia for tax purposes? 

My point is that the way you have worded it is over 183 days out of Australia is a non-resident full stop but then you say between 45 and 183 days in Australia can still be a resident. That's a contradiction. But I get the gist of what you are saying and if one day it happens..

[Pattaya57]

24 minutes ago, Ben Zioner said:

Interesting, but wouldn't that make you liable to Thai income tax, if you stay 180 days or more in any given year?

My understanding is that the double tax agreement means  that as Super pension has already been Taxed in Australia it shouldn't be Taxed again in Thailand

[Pattaya57]

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

My point is that the way you have worded it is over 183 days out of Australia is a non-resident full stop but then you say between 45 and 183 days in Australia can still be a resident. That's a contradiction. But I get the gist of what you are saying and if one day it happens..

Just to point out the actual 45 day proposed rule is "you will be a non-resident if you spend less than 45 days in Australia this income year, and less than 45 days in Australia in each of the two previous income years."

 

So basically you can do one 45 day trip in any 3 year period to retain Australian residency. I actually wish the proposed rule did come out as I'd be good for 2024-26 tax returns as I've done 45+ days in Aus this tax year. Then I just need to book a 6 week holiday in 2027 and be good for another 3 years.

 

[StraightTalk]

On 6/28/2024 at 2:03 PM, Pattaya57 said:

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.

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

Irrespective of tax residency, if you reside overseas Macquarie Bank Limited, Macquarie Equities Limited and/or Macquarie Investment Management Limited will send you bi-annually via transact[at]macquarie.com a Tax status declaration form - Individuals
Their international phone contact is: Monday to Friday 9am – 5pm (Sydney time) +61 2 8245 4470

[Pattaya57]

3 hours ago, StraightTalk said:

Irrespective of tax residency, if you reside overseas Macquarie Bank Limited, Macquarie Equities Limited and/or Macquarie Investment Management Limited will send you bi-annually via transact[at]macquarie.com a Tax status declaration form - Individuals

I've never advised any bank of my Thai address so have never received a tax status declaration form from any of them.

 

I don't know why anyone would give their overseas address to a bank unless you were formally declaring yourself as non-resident? 

[StraightTalk]

1 hour ago, Pattaya57 said:

I don't know why anyone would give their overseas address to a bank unless you were formally declaring yourself as non-resident?

If, after you've done your homework, you conclude that it's the right thing to do, then go for it - up2u.

[KhunHeineken]

9 hours ago, Pattaya57 said:

I've never advised any bank of my Thai address so have never received a tax status declaration form from any of them.

 

I don't know why anyone would give their overseas address to a bank unless you were formally declaring yourself as non-resident? 

https://www.commbank.com.au/about-us/opportunity-initiatives/policies-and-practices/fatca.html#:~:text=You will need to declare,when requested by the bank.

 

"New laws require you to tell us about your tax residency on account opening and to let us know if this changes

 

CommBank will need to report certain account information to the Australian Taxation Office (ATO)"

 

The link mentions new accounts, but my banks still occasionally ask me to update my residency status.  As another member said, it's up to you what you what residency status you declare to them.  A false declaration would no doubt be a against the law.