Australian taxation and it's effect on Australians living in Thailand.

[Artisi]

I have just been given the heads up by my tax agent this year about being classified as a non-resident Australian - this is solely a tax office (ATO) concern and nothing to do with pension entitlements.

If you are an Australian and living out of the country you are considered a non-resident so any income earned within Aust, including any pension, rental of any property etc. is taxable at the rate or 32.5c in the dollar, this starts at Zero (0) Dollars upto $80,000 unlike the tax rate in Aust. which kicks in at something like $18,000. Bank interest should arranged for withholding tax (10%) to be deducted by your bank.

For the past few years I have been treating my tax returns as if I was a resident - however, this is a big No No and this year my tax agent has said ENOUGH,I must treat you as a non-resident as ATO has advised they are stepping up their investigations into non-residents / tax returns etc. If caught out you will be penalised for the current tax year and investigated for 3 years prior. Bear in mind ATO / Centrelink / Immigration talk to each other and exchange detail as and if necessary, so its very easy for either one to get any necessary info needed.

If you have any doubts about being a resident or a non-resident it is all explained clearly and in detail in the ATO website.

https://www.ato.gov.au/Individuals/Income-and-deductions/How-much-income-tax-you-pay/Are-you-an-Australian-resident-for-tax-purposes-/

Be warned - my tax guy is cautious but for a good reason - he is up to date and fully informed on what is going on with the tax scene.

It's certainly a bugger, it immediately reduces your real "income" by 32.5% (your income from any pension is also taxed at the same rate) and could cause a few problems for people relying on income based visa extensions.

Added: link to establish if you are a resident / non-resident

https://www.ato.gov.au/Calculators-and-tools/Are-you-a-resident/

Edited August 1, 2014 by Artisi

[CBR250]

A lot of this was intended to catch people such as off-shore oil workers etc who are earning money overseas, and not payng tax on it anywhere!.

But the ATO, never one to miss a trick, seems to be trying to extend this. I have dumped one accountant who insisted my tax be done as a "non-resident". I have convinced my new accountant to submit my return as a resident. Primarily because I believe I am an Australian resident given the various court rulings. 99%t of my financial and emotional life is still in Australia, even if my body is flitting about overseas.

So, whatever you do, don't just surrender. The ATO wants you to, but it isn't so simple. You can argue your case. There are 4 main factors that are considered for residence by ATO . These are:

1. Intention or purpose of presence. If you don’t have a permanent home anywhere, even if you spend most time in overseas, you cannot be classified as a "resident" of somewhere else. If you intend to return at some specified (not vague) point of time to live in Australia, you may still be a resident.

The ATO wants it to be simple, and notes that the actual time spent in Australia is not the key factor in the Resides test. The resides test from the ATO notes:

… the period of time that you spend in Australia is not, by itself, decisive in determining your residency status.

However, if you do reside in Australia for more than 6 months a year, they usually accept that you are an Australian resident. But read on...other factors are considered.

2. Family and business/employment ties. If you have extensive family and business ties to Australia, you can be a resident. If your kids are in school or University in Australia, it is a tie. If your parents live in Australia, ditto. If your wife lives in Australia and you don't, ditto. If you earn income from a business that is registered in Australia, pay your GST and earn from Australian customers, you are maintaining business ties.

3. Maintenance and location of assets. Where are all of your assets? If you have sold your house in Australia, and bought a house in Thailand in which you live and intend to stay, you are not an Australian resident. But if all of your assets are in Australia, and you are having an extended holiday in your retirement years, they are really overstepping the mark to say you are a "non-resident".

4. Social and living arrangements. Are you a member of sporting teams, a Church, synagogue, mosque, social clubs etc in Australia? Do you have a long term lease for where you live overseas, or do you move around a lot?

There have been a number of court cases where the ATO has lost in trying to classify people as "non-resident".

See: http://law.ato.gov.au/atolaw/view.htm?docid=ITR/IT2650/NAT/ATO/00001 (seems to be an old ruling, I am looking for something newer. But I beleive that the principles will still largely apply).

Summary of Ruling

5. The Ruling concludes, bearing in mind the wide, general language used in the first test in the "resident" definition, and the state of satisfaction which must be reached in the second test, that it is not possible to provide conclusive rules for determining the residency status of individuals leaving Australia temporarily. The Ruling says, however, that the following factors need to be taken into account:

(a)

the intended and actual length of the individual's stay in the overseas country;

(

any intention either to return to Australia at some definite point in time or to travel to another country;

©

the establishment a home outside Australia;

(d)

the abandonment of any residence or place of abode the individual may have had in Australia;

(e)

the duration and continuity of the individual's presence in the overseas country; and

(f)

the durability of association that the individual has with a particular place in Australia.

The weight to be given to each factor will vary with individual circumstances of each case and no single factor is conclusive.

And, note that the Australian government has access to banking and tax records for many countries – e.g. Thailand, Philippines and Indonesia. they have this via AML and Economic Governance Partnerships. If you move your money out of Australia into local investments, they will find you while it is in your name (and who wants to transfer everything they own into the name of their wife / girlfriend / boyfriend or some family member? Too many horror stories). You can always lose your money by putting it into gold bars under your bed....... although my goldbug friends say gold is now so low it can only go up!

But hey, isn't Australia weird for expats? One of the few countries where you WANT to prove you are a resident. It is beneficial to not be a resident by most other tax systems in developed countries. And Australia is one of only 2 countries where they won't give you a pension unless you live there for 2 years after age 63 (the other one is NZ).

[Farma]

I don't think ATO's left hand knows what the right hand is doing.

For 20 years I submitted tax returns as an resident expat working overseas and visiting Oz for maybe 2 weeks a year.

5 years ago my accountant notified me ATO had decided I was non-resident and they said I didn't have to submit returns unless my circumstances changed.

Last year out of the blue despite my circumstances not changing I received a nasty letter from ATO informing me it was my duty to submit yearly tax returns and I was required to submit returns for those missing 4 years or face a fine.

Sounds like there's a bit of a money grab going on.

[CBR250]

Some more info for those wanting to investigate options. Obviously, you do not want to have to challenge the ATO in court. They have billions of dollars behind them that allows them to bankrupt even the wealthy. But you can (and should) go to the Administrative Appeals Tribunal and even contact your MP (and put a rocket under him/her for letting such overly greedy laws through - thanks Wayne Swan. And if you are in a Lib seat, you can always ask "why aren't the Libs getting rid of Labour's unjust taxation"?

SOME USEFUL FINDINGS FOR RETIRED / NON-WORKING / WORKING EXPATS.
1. Sully v Commissioner of Taxation (http://www.austlii.edu.au/au/cases/cth/AATA/2012/582.html)
The AAT ruled that income received by Mr Sully from his employment as a marine engineer in Dubai was correctly included in his Australian tax assessment for the 2009 tax year.

The AAT held that Mr Sully did not satisfy the ‘ordinary meaning of the word resides’ test as he only maintained residual connections with Australia. However, the AAT was not convinced that he had established a permanent place of abode in another country. Mr Sully was found to be a ‘citizen of the world’ who was prepared to go wherever his work took him. As such, because his domicile of origin was Australia, he was considered to be a resident for tax purposes.

AND ANOTHER USEFUL ONE
2. Sneddon v Commissioner of Taxation (http://www.austlii.edu.au/au/cases/cth/AATA/2012/516.html)

In this case the AAT held that Mr Sneddon was an Australian tax resident and the income he obtained from his employment in Qatar for the 2009 income year was properly included in his Australian tax assessment.
Mr Sneddon started working with a company in Qatar in April 2008. While in Qatar, he lived alone in a fully furnished apartment provided by his employer. After considering eight relevant factors, the AAT concluded that Mr Sneddon was a resident of Australia under the ordinary meaning of the word ‘resides’. He maintained a ‘continuity of association’ with Australia despite his physical absence from Australia for a majority of the income year.
The AAT also noted in passing that Mr Sneddon did not satisfy the second test as he did not establish ‘a permanent place of abode’ in Qatar.

Read carefully. These are very important distinctions to make.

[David48]

Artisi ... thanks for the heads up and great replies to your OP ...

[ozsamurai]

Indeed a valuable thread for the bookmark pile, thanks mate!

Oz

[Bluetongue]

Does the fact that Thailand only permits most retirees to stay for periods of 12 months at a time including the "alien" having to report their whereabouts every 90 days have any bearing on the situation. Ie no permanent residence. To the ATO most probably not, however in the AAT such language might bear some weight. Each retiree's situation is probably a little bit different in some way so I am not sure that a blanket ruling can be applied. When I did the online residency test it gave me an inconclusive answer but I follow the issue with interest. Basically 32.5% of 19,200 = $6240 AUD pa.

[simple1]

And Australia is one of only 2 countries where they won't give you a pension unless you live there for 2 years after age 63 (the other one is NZ).

A bit of detail, but this observation is incorrect. After being granted Aged Pension at age 65 you must reside in Oz for two years to paid offshore (portability).

Aged Pension residency criteria:

http://www.humanservices.gov.au/customer/services/centrelink/age-pension

Full portability payment amount could be affected for some by Govt increasing the Working Life Residency criteria from 25 to 35 years as of 01/07/2014

Bit annoying that you must reside in Oz at the time of claim. I haven't lived in UK for thirty years, yet applied offshore & was granted proportional amount in four weeks. Applied onshore in Oz, with more onerous paperwork than UK, yet six weeks later still no formal response.

[neverdie]

A really good thread which I will follow with a keen eye. I have long battled the ATO over this resident rubbish.

I would also like to add, that whilst Non Residents will pay the 32.5 (%) taxation on the first 80k each year, any income earned in the way of bank interest attracts the flat rate of 10% withholding tax only. MOST of you are probably aware, but something you may wish to keep in mind for if and when bank interest rates increase.

[Will27]

This has also been discussed in depth in this thread

http://www.thaivisa.com/forum/topic/642885-state-pensions-australia-others/page-1?hl= Australia

Personally, I agree with this post by SaintLouisBlues:

My Australian friend living in Thailand is a retired tax accountant. In his opinion unless he deliberately rattles the ATO cage they will always assume he is a resident for tax purposes. He bases this on fact that the legislation everyone is so keen to quote here is designed for people who are trying to avoid Australian tax by claiming they are not residents of Australia in a given tax year, not to catch people who are not resident but are claiming to be so. He thinks the ATO will act only if Centrelink who administer pensions decide to make an issue of a pensioner who is claiming onshore benefits eg. Utility allowance but in fact is living offshore, and even then the likelihood the ATO will act is very low.

A mutual friend who lived in Australia most of his life until he retired and gets the full government pension happens to have a New Zealand passport as well, so he just enters and leaves Australia on his periodic visits there on his NZ passport while his Australian passport records show he is still in Australia.

[Old Croc]

I live permanently in Thailand. I receive a government superannuation pension. I contacted the the Taxation department and spoke to an officer in their superannuation department. I was advised that as I am a recipient of a government superannuation pension that I would always be a resident of Australia for taxation purposes. As such I get the Taxation Free Threshold. Only downside is I have to pay the medicare levy. When I fill out my taxation return I tick resident and give my Thailand address.

When I spoke this the taxation department the decision that they quoted me is now linked to my tax file number. I was given a number which refers to the decision they made.

I spoke to an expert in their superannuation section.

Before I spoke with them I had the same belief as you. My niece who is an accountant was in the same opinion.

I have a Comsuper (government) pension and based on RipStanley's two posts from that other thread, quoted above, I have and will continue to state I am a resident.

Edited August 2, 2014 by Old Croc

[simple1]

This has also been discussed in depth in this thread

http://www.thaivisa.com/forum/topic/642885-state-pensions-australia-others/page-1?hl= Australia

Personally, I agree with this post by SaintLouisBlues:

My Australian friend living in Thailand is a retired tax accountant. In his opinion unless he deliberately rattles the ATO cage they will always assume he is a resident for tax purposes. He bases this on fact that the legislation everyone is so keen to quote here is designed for people who are trying to avoid Australian tax by claiming they are not residents of Australia in a given tax year, not to catch people who are not resident but are claiming to be so. He thinks the ATO will act only if Centrelink who administer pensions decide to make an issue of a pensioner who is claiming onshore benefits eg. Utility allowance but in fact is living offshore, and even then the likelihood the ATO will act is very low.

A mutual friend who lived in Australia most of his life until he retired and gets the full government pension happens to have a New Zealand passport as well, so he just enters and leaves Australia on his periodic visits there on his NZ passport while his Australian passport records show he is still in Australia.

I have been going through a process with Centrelink, they had online records of movement in/out of Oz for past thirty years on both NZ/Oz passports. If ATO/Centrelink wished to check, your friend will be caught out

Edited August 2, 2014 by simple1

[Will27]

This has also been discussed in depth in this thread

http://www.thaivisa.com/forum/topic/642885-state-pensions-australia-others/page-1?hl= Australia

Personally, I agree with this post by SaintLouisBlues:

My Australian friend living in Thailand is a retired tax accountant. In his opinion unless he deliberately rattles the ATO cage they will always assume he is a resident for tax purposes. He bases this on fact that the legislation everyone is so keen to quote here is designed for people who are trying to avoid Australian tax by claiming they are not residents of Australia in a given tax year, not to catch people who are not resident but are claiming to be so. He thinks the ATO will act only if Centrelink who administer pensions decide to make an issue of a pensioner who is claiming onshore benefits eg. Utility allowance but in fact is living offshore, and even then the likelihood the ATO will act is very low.

A mutual friend who lived in Australia most of his life until he retired and gets the full government pension happens to have a New Zealand passport as well, so he just enters and leaves Australia on his periodic visits there on his NZ passport while his Australian passport records show he is still in Australia.

I have been going through a process with Centrelink, they had online records of movement in/out of Oz for past thirty years on both NZ/Oz passports. If ATO/Centrelink wished to check, your friend will be caught out

Yep

As Old Croc has previously advised, DIAC have movement records for Oz citizens regardless

of the passport being used.

[CBR250]

As Will27 advises, there is another thread that deals with Australian Pension questions.

http://www.thaivisa....thers/page-1?hl

It would probably be useful to keep this thread focused on the questions of the ATO and residency / non-residency, as this is a major issue for self-funded retirees living and/or traveling overseas extensively (+ those with incomes from e.g. day trading on ASX). As OP noted, the ATO will tax you heavily if you are classified as a non-resident - 32.5% from the first $1 you earn! However, if you are a resident for tax purposes, at least you get the tax free threshold of around $20k before they start dipping into your pocket.

How to ensure one is classified as a resident by the ATO is clearly not straightforward. Any experiences, advice or information is helpful for those in this situation. How to best manage investments and finances if the ATO does decide one is a "non-resident" is also very valuable information. I suggest it would be good to try to keep this thread focused on these issues, and those discussions concerning Centrelink entitlements, superannuation etc would be best served by being held on the existing thread.

[Artisi]

As Will27 advises, there is another thread that deals with Australian Pension questions.

http://www.thaivisa....thers/page-1?hl

It would probably be useful to keep this thread focused on the questions of the ATO and residency / non-residency, as this is a major issue for self-funded retirees living and/or traveling overseas extensively (+ those with incomes from e.g. day trading on ASX). As OP noted, the ATO will tax you heavily if you are classified as a non-resident - 32.5% from the first $1 you earn! However, if you are a resident for tax purposes, at least you get the tax free threshold of around $20k before they start dipping into your pocket.

How to ensure one is classified as a resident by the ATO is clearly not straightforward. Any experiences, advice or information is helpful for those in this situation. How to best manage investments and finances if the ATO does decide one is a "non-resident" is also very valuable information. I suggest it would be good to try to keep this thread focused on these issues, and those discussions concerning Centrelink entitlements, superannuation etc would be best served by being held on the existing thread.

I fully agree, ATO and Centrelink payments are two completely different animals and can only be discussed and compliment each other in the giving with one hand and taking it back with the other.

This thread would be more useful if only the tax issues of Australians living / working / on extended holidays overseas are developed - it is important to fully understand the in's and out's of the subject without clouding it with Centrelink information.

[gk10002000]

The USA has been taxing any and all monies US citizens earn anywhere in the world. Of course depending on circumstances there are some foreign income exclusions and things like that.

I don't know what the Aussies have to deal with or what investment taxation relief they have available but I mention my USA accounts. The US has some tax free investments and accounts available and with some advance planning I can legally minimize my taxes quite a bit. I plan to convert my Traditional IRA over to a Roth IRA next year as I am expecting that to be a low income year. I will pay lower taxes on the conversion than what I would have paid when I earned the monies, but now all monies earned in that Roth IRA will always be tax free. In addition, my traditional IRA sheltered the state income taxes for the states I was working in. I am now a Florida resident and when I convert the monies I won't pay any state Income tax on it.

[CBR250]

Note that since 19 April 2012 Thailand has a comprehensive tax treaty with Australia. See:

https://www.ato.gov.au/General/International-tax-agreements/In-detail/Tax-treaties/Countries-that-have-a-tax-treaty-with-Australia/

[ozsamurai]

I recently had call to move funds from Citibank in Japan to Thailand Citibank, I made specific inquiries about the disclosure of OS funds with them as I have four separate currency accounts with them. I had known for many years that US customers of Citibank Japan (I can not speak of others) were required to lodge their social security number or face having hefty 'taxes' applied, this was over 10 yrs ago. I kind of wiped the sweat off and thought thank goodness I'm not a US citizen... The AUD account is clearly labeled 'non-resident', although I still see myself as a resident, and here on more or less of an extended vacation. So there has still been no push here in Thailand as far as I can see to make it mandatory to report such account to the ATO. Of course once in Oz, that is a different matter, not declaring OS bank accounts could get you in trouble come tax time, right?

Oz

[ripstanley]

I live permanently in Thailand. I receive a government superannuation pension. I contacted the the Taxation department and spoke to an officer in their superannuation department. I was advised that as I am a recipient of a government superannuation pension that I would always be a resident of Australia for taxation purposes. As such I get the Taxation Free Threshold. Only downside is I have to pay the medicare levy. When I fill out my taxation return I tick resident and give my Thailand address.

When I spoke this the taxation department the decision that they quoted me is now linked to my tax file number. I was given a number which refers to the decision they made.

I spoke to an expert in their superannuation section.

Before I spoke with them I had the same belief as you. My niece who is an accountant was in the same opinion.

I have a Comsuper (government) pension and based on RipStanley's two posts from that other thread, quoted above, I have and will continue to state I am a resident.

Thanks for quoting my previous posts.

If you are receiving an Australian Government superannuation pension you will always be an Australian resident for taxation purposes. i have also discovered that if you are away from Australia for more then 5 years you can claim a medicare exemption.

.http://www.humanservices.gov.au/spw/customer/forms/resources/3169-1306en.pdf

[Thai Chi]

I live permanently in Thailand. I receive a government superannuation pension. I contacted the the Taxation department and spoke to an officer in their superannuation department. I was advised that as I am a recipient of a government superannuation pension that I would always be a resident of Australia for taxation purposes. As such I get the Taxation Free Threshold. Only downside is I have to pay the medicare levy. When I fill out my taxation return I tick resident and give my Thailand address.

When I spoke this the taxation department the decision that they quoted me is now linked to my tax file number. I was given a number which refers to the decision they made.

I spoke to an expert in their superannuation section.

Before I spoke with them I had the same belief as you. My niece who is an accountant was in the same opinion.

I have a Comsuper (government) pension and based on RipStanley's two posts from that other thread, quoted above, I have and will continue to state I am a resident.

Croc, I would get your own ATO decision linked to your tax file number.

There may be things in play here that allows one person (like ripstanley) to claim residence while someone else may be excluded due to other assets and /or income (?)

I found ripstanley's information very interesting and tried to find a link that would clarify my possible future situation. Thus far I have been unsuccessful, so if anyone knows where this info can be got, please share.

As a DFRDB recipient (paid through Comsuper) I would like nothing better then to avoid the 32.5% tax as a non resident if I decided to stay here permanently.

I am also wondering what effect my part Veterans pension and bank interest would play in the scenario ????

[Old Croc]

RipStanley: thanks for the further confirmation, and info on the Medicare levy.

Thai Chi: I have the same thoughts (doubts) as you, and am concerned I would get a different Officer/decision if I contacted ATO.

Therefore I am reluctant to make this enquiry directly in case I find my self suddenly paying $10,000+ extra in tax. I would love to see something definitive in writing.

I had a partial DSP when I left Australia, this expired after 13 weeks. I've always had, and declared, bank interest and paid normal tax on it.

[CBR250]

I understand that overseas investors should pay more tax if they benefit from Australia's economic system. I don't want Beijing billionaires who have bought up waterfront mansions and get tax breaks from the PRC to get away without any tax being paid in Oz (although with some good accountants, they probably don't pay much anyway). In fact, I don't even like the idea of non-citizens being able to buy Australian land. I like the Thai system. Let foreigners buy condos, not land.

I really am cheesed of that the new ATO rules aim at treating me exactly the same as that Beijing billionaire. The 30 years of tax I paid in Oz should count for something - as should the fact that I choose to remain an Australian citizen and have a lot of my life invested there - kids and family etc. I already accept that by living overseas I will never be eligible for a government pension. because, as an Oztralian, I MUST live in Australia for the 2 years prior to applying for a pension at or after age 65. And anyway, due to being abstemious during my working life, I can support myself in old age.

SO, Option 1 - and I welcome comments.

I move back to Oz, put all of my money into a rather extravagant "family home" (tax exempt), so that my assets are low enough that the government will have to pay me unemployment until I am old enough for the pension in a few years. I know there is no work, as there aren't many jobs around for burnt out academics. (BTW, I doubt that the stupid Oz bureaucrat who dreamed up this expat income stream considered that when I return I will then of course be using roads, public transport, hospitals, community services etc. I also won't pay for health care, but just add to the waiting lists and medicare costs for doctors and the PBS).

I will naturally spend my allowed time (parole) overseas each year - probably in Thailand and SE Asia. If my money is tied up in a house, I probably won't be able to afford going to Europe so much. But if I do buy a nice place near a beach, I can probably get a few months rent during those holiday times to pay for my travel. And I won't pay much tax on that, as I will concentrate all house repair / improvement costs into those few months. Maybe even a small mortgage on the house and use the money for holidays, so that the tax breaks on the interest negate any tax.

Option 2. I sell up all of investments (mostly shares- and now is probably a good time to do do so) from Australia and invest the money and pay tax in Thailand or elsewhere. As I have no real home, I am not quite sure how best to do this. Maybe I should "create" a home in Thailand, Singapore, Malaysia, or even Cambodia. And pay local tax rates. Thailand isn't too bad - it has a progressive tax rate, and even on a personal income of $60k a year from investments I would pay about 20% maximum tax - considerably less than Australia's 32.5% as a non-resident. The SET is new, but moving into the real world of international finance rapidly. Or I could simply use an international investment company that has local offices - such as Aberdeen. Invest internationally, but pay tax locally.

I would welcome any suggestions - legal of course - about how best to manage this situation, as there is no way I am not going to hand over an extra $12-15k a year in taxes. I pay some tax at present and don't use ANY services there. And I have paid an awful lot of tax over the years. No more.

[Will27]

I understand that overseas investors should pay more tax if they benefit from Australia's economic system. I don't want Beijing billionaires who have bought up waterfront mansions and get tax breaks from the PRC to get away without any tax being paid in Oz (although with some good accountants, they probably don't pay much anyway). In fact, I don't even like the idea of non-citizens being able to buy Australian land. I like the Thai system. Let foreigners buy condos, not land.

I really am cheesed of that the new ATO rules aim at treating me exactly the same as that Beijing billionaire. The 30 years of tax I paid in Oz should count for something - as should the fact that I choose to remain an Australian citizen and have a lot of my life invested there - kids and family etc. I already accept that by living overseas I will never be eligible for a government pension. because, as an Oztralian, I MUST live in Australia for the 2 years prior to applying for a pension at or after age 65. And anyway, due to being abstemious during my working life, I can support myself in old age.

SO, Option 1 - and I welcome comments.

I move back to Oz, put all of my money into a rather extravagant "family home" (tax exempt), so that my assets are low enough that the government will have to pay me unemployment until I am old enough for the pension in a few years. I know there is no work, as there aren't many jobs around for burnt out academics. (BTW, I doubt that the stupid Oz bureaucrat who dreamed up this expat income stream considered that when I return I will then of course be using roads, public transport, hospitals, community services etc. I also won't pay for health care, but just add to the waiting lists and medicare costs for doctors and the PBS).

I will naturally spend my allowed time (parole) overseas each year - probably in Thailand and SE Asia. If my money is tied up in a house, I probably won't be able to afford going to Europe so much. But if I do buy a nice place near a beach, I can probably get a few months rent during those holiday times to pay for my travel. And I won't pay much tax on that, as I will concentrate all house repair / improvement costs into those few months. Maybe even a small mortgage on the house and use the money for holidays, so that the tax breaks on the interest negate any tax.

Option 2. I sell up all of investments (mostly shares- and now is probably a good time to do do so) from Australia and invest the money and pay tax in Thailand or elsewhere. As I have no real home, I am not quite sure how best to do this. Maybe I should "create" a home in Thailand, Singapore, Malaysia, or even Cambodia. And pay local tax rates. Thailand isn't too bad - it has a progressive tax rate, and even on a personal income of $60k a year from investments I would pay about 20% maximum tax - considerably less than Australia's 32.5% as a non-resident. The SET is new, but moving into the real world of international finance rapidly. Or I could simply use an international investment company that has local offices - such as Aberdeen. Invest internationally, but pay tax locally.

I would welcome any suggestions - legal of course - about how best to manage this situation, as there is no way I am not going to hand over an extra $12-15k a year in taxes. I pay some tax at present and don't use ANY services there. And I have paid an awful lot of tax over the years. No more.

I would be interested to know what the "new rules" are that you're referring to.

I didn't think the rules of residency for tax purposes had changed.

The taxes that you paid did account for something. They accounted for roads,

health care etc. Remaining an Australian citizen, IMO, shouldn't have anything to do with

taxation rates etc.

As for option 1, I'm pretty sure the rate of 32.5% that you mention is for income tax.

You could, sell your shares and put the money into a term deposit. You can then claim

to be a non-resident and pay 10% flat PAYG withholding tax.

[CBR250]

I understand that overseas investors should pay more tax if they benefit from Australia's economic system. I don't want Beijing billionaires who have bought up waterfront mansions and get tax breaks from the PRC to get away without any tax being paid in Oz (although with some good accountants, they probably don't pay much anyway). In fact, I don't even like the idea of non-citizens being able to buy Australian land. I like the Thai system. Let foreigners buy condos, not land.

I really am cheesed of that the new ATO rules aim at treating me exactly the same as that Beijing billionaire. The 30 years of tax I paid in Oz should count for something - as should the fact that I choose to remain an Australian citizen and have a lot of my life invested there - kids and family etc. I already accept that by living overseas I will never be eligible for a government pension. because, as an Oztralian, I MUST live in Australia for the 2 years prior to applying for a pension at or after age 65. And anyway, due to being abstemious during my working life, I can support myself in old age.

SO, Option 1 - and I welcome comments.

I move back to Oz, put all of my money into a rather extravagant "family home" (tax exempt), so that my assets are low enough that the government will have to pay me unemployment until I am old enough for the pension in a few years. I know there is no work, as there aren't many jobs around for burnt out academics. (BTW, I doubt that the stupid Oz bureaucrat who dreamed up this expat income stream considered that when I return I will then of course be using roads, public transport, hospitals, community services etc. I also won't pay for health care, but just add to the waiting lists and medicare costs for doctors and the PBS).

I will naturally spend my allowed time (parole) overseas each year - probably in Thailand and SE Asia. If my money is tied up in a house, I probably won't be able to afford going to Europe so much. But if I do buy a nice place near a beach, I can probably get a few months rent during those holiday times to pay for my travel. And I won't pay much tax on that, as I will concentrate all house repair / improvement costs into those few months. Maybe even a small mortgage on the house and use the money for holidays, so that the tax breaks on the interest negate any tax.

Option 2. I sell up all of investments (mostly shares- and now is probably a good time to do do so) from Australia and invest the money and pay tax in Thailand or elsewhere. As I have no real home, I am not quite sure how best to do this. Maybe I should "create" a home in Thailand, Singapore, Malaysia, or even Cambodia. And pay local tax rates. Thailand isn't too bad - it has a progressive tax rate, and even on a personal income of $60k a year from investments I would pay about 20% maximum tax - considerably less than Australia's 32.5% as a non-resident. The SET is new, but moving into the real world of international finance rapidly. Or I could simply use an international investment company that has local offices - such as Aberdeen. Invest internationally, but pay tax locally.

I would welcome any suggestions - legal of course - about how best to manage this situation, as there is no way I am not going to hand over an extra $12-15k a year in taxes. I pay some tax at present and don't use ANY services there. And I have paid an awful lot of tax over the years. No more.

I would be interested to know what the "new rules" are that you're referring to.

I didn't think the rules of residency for tax purposes had changed.

The taxes that you paid did account for something. They accounted for roads,

health care etc. Remaining an Australian citizen, IMO, shouldn't have anything to do with

taxation rates etc.

As for option 1, I'm pretty sure the rate of 32.5% that you mention is for income tax.

You could, sell your shares and put the money into a term deposit. You can then claim

to be a non-resident and pay 10% flat PAYG withholding tax.

The new rules I believe began about 2012. They relate to a stricter interpretation if "resident for tax Purposes".

I have no argument that taxes I paid were totally normal and acceptable. Being an Australian citizen should mean something. I don't want people with no emotional investment in or connections to Australia to have the same benefits I do. Same as Thais not allowing us to buy their land - I think this is sensible.

The 32.5% is of course for income tax. Happy to pay that. BUT the whole point is that as a non-res you do not get the $20k threshold - or the sliding scale from there on. That means an extra $7k tax on just the first $20k one earns. In total, I could be up for about $12k or so extra tax just because I spend a lot of time outside Oz. I hope that makes my objection clearer. I am not trying to evade taxes, but neither am I an "overseas" investor making money out of Australia. I want pay what is fair - what I have paid for 30+ years.

Thanks for Option 3 - I know I could sell my shares and put the money into a bank and pay the 10% withholding tax - but bank interest is derisory at present. It barely covers inflation. I don't want to throw money away. Leaving aside the capital gains, my shares overall are paying about 6%. And the capital gains are a good hedge against inflation.

Back to the drawing board.

[Bluetongue]

Regarding the Comsuper issue ie Ripstanley's post that if you receive a Comsuper pension you will

always be regarded as a resident, I'm reasonably sure that when I researched this it was "while you

are a contributor to Comsuper you are regarded as a resident" this was to protect public servants

working overseas. Perhaps it has changed or perhaps the expert he got the ruling from misunderstood the situation who knows.

I for one am not going to approach them.

[Will27]

I would be interested to know what the "new rules" are that you're referring to.

I didn't think the rules of residency for tax purposes had changed.

The taxes that you paid did account for something. They accounted for roads,

health care etc. Remaining an Australian citizen, IMO, shouldn't have anything to do with

taxation rates etc.

As for option 1, I'm pretty sure the rate of 32.5% that you mention is for income tax.

You could, sell your shares and put the money into a term deposit. You can then claim

to be a non-resident and pay 10% flat PAYG withholding tax.

The new rules I believe began about 2012. They relate to a stricter interpretation if "resident for tax Purposes".

I have no argument that taxes I paid were totally normal and acceptable. Being an Australian citizen should mean something. I don't want people with no emotional investment in or connections to Australia to have the same benefits I do. Same as Thais not allowing us to buy their land - I think this is sensible.

The 32.5% is of course for income tax. Happy to pay that. BUT the whole point is that as a non-res you do not get the $20k threshold - or the sliding scale from there on. That means an extra $7k tax on just the first $20k one earns. In total, I could be up for about $12k or so extra tax just because I spend a lot of time outside Oz. I hope that makes my objection clearer. I am not trying to evade taxes, but neither am I an "overseas" investor making money out of Australia. I want pay what is fair - what I have paid for 30+ years.

Thanks for Option 3 - I know I could sell my shares and put the money into a bank and pay the 10% withholding tax - but bank interest is derisory at present. It barely covers inflation. I don't want to throw money away. Leaving aside the capital gains, my shares overall are paying about 6%. And the capital gains are a good hedge against inflation.

Back to the drawing board.

Don't get me wrong, I'm in the same boat as Old Croc and receive govt super and would be mightily

pissed off if I was assessed as a non-resident.

But I believe that ripstanley has provided some good information.

But as yet, I don't believe there is anything in concrete to say it.

And I doubt anyone would contact the ATO for information whilst

giving their details.

I still think the post by SaintLouisBlues in post 10 is accurate.

The only thing you can do I guess is have a contingency plan if it

does happen.

As far as citizenship is concerned, you do get benefits not afforded to

non-residents but different rules for taxation isn't one of them nor

should it be, IMO.

[Will27]

Regarding the Comsuper issue ie Ripstanley's post that if you receive a Comsuper pension you will

always be regarded as a resident, I'm reasonably sure that when I researched this it was "while you

are a contributor to Comsuper you are regarded as a resident" this was to protect public servants

working overseas. Perhaps it has changed or perhaps the expert he got the ruling from misunderstood the situation who knows.

I for one am not going to approach them.

That was my understanding of the taxation regulations, that it was while you're still contributing.

Ripstanley has received a ruling so that's great for hm.

Again, I think that the majority of the people residing in Thailand would be considered

non-residents for tax purposes.

I think the poo would really hit the fan for example if the ATO "enforced" it.

Imagine the outcry if pensioners or those on low incomes got slugged.

I'm pretty sure its one of those issues the ATO and government would prefer

to leave alone to be honest.

It's good to have something in place if it does happen, but it's also not good to

be jumping at shadows either.

I haven't read any reports of a public servant or pensioner being assessed as a non-resident

after claiming residency.

You also have to factor in that the majority of people in this situation wouldn't be in a large

income bracket so it wouldn't be in the ATO's firing line.

[Old Croc]

Regarding the Comsuper issue ie Ripstanley's post that if you receive a Comsuper pension you will

always be regarded as a resident, I'm reasonably sure that when I researched this it was "while you

are a contributor to Comsuper you are regarded as a resident" this was to protect public servants

working overseas. Perhaps it has changed or perhaps the expert he got the ruling from misunderstood the situation who knows.

I for one am not going to approach them.

This was also all I found when checking.

I could find nothing covering Comsuper pensioners.

If Ripstanley (or anyone else) has something other than his verbal decision, I would love to read it.

[mamborobert]

There ar equite a few taxation rulings where expat or permananet departure comsuper recipients have tried to argue that they should not be paying any tax in Australia. These have always been knocked back and always classified the pensioner as a non resident. I am not clear if the non resident status was self declared in order for the pensioner to try an establish that they shoudl not pay tax at all but fo rthe most part it seems that they did not meet the broader residence requirements. Either way it has been noted as a "fact" in the decision that the recipients were non residents.

For me this is a keep quiet and say nothing issue.....and I still have a residence in Oz so better off than most,

http://law.ato.gov.au/atolaw/view.htm?rank=find&criteria=AND~annuities~basic~exact&target=J%20JA&style=html&sdocid=AID/AID2004298/00001&recStart=81&PiT=99991231235958&recnum=96&tot=1081&pn=ALL:::ALL

and

http://law.ato.gov.au/atolaw/view.htm?rank=find&criteria=AND~annuities~basic~exact&target=JA&style=html&sdocid=AID/AID2004126/00001&recStart=81&PiT=99991231235958&recnum=100&tot=1081&pn=ALL:::ALL

Edited August 14, 2014 by mamborobert

[CBR250]

Will27:

"I would be interested to know what the "new rules" are that you're referring to.

I didn't think the rules of residency for tax purposes had changed."

Another indication of the change is the alteration on the e-tax forms. In 2014, there is a section that requires you to note when you left and entered Australia. I may wrong, but I have no recollection of this question being in any of the e-tax forms in 2013 or preceding years.