Tax in Australia any info?

[Kellie23]

Does anyone know the tax issues with renting a property in UK and living in Aus? My understanding is we will have to pay any tax in Uk but if money is regularly coming to us in AUS will it be taxed again? Also does anyone know much about capital gains tax in Aus if we sold uk house at a later date? Sorry if I sound stupid but I have no idea when it comes to things like this!

[Notts]

What visa are you on? Are you UK citizens?

 

Both have an effect. If you are on a temporary visa such as a 457 then your rental income is not taxable in Aus. If you have PR then it should be declared on your Aus tax return (when earned, regardless of whether you bring it over).

 

If you are UK citizens then you are still entitled to a UK personal allowance, which will reduce the UK tax payable (it has been suggested that non-residents may lose the personal allowance, but nothing has been decided yet).

 

Currently non-residents pay no UK CGT, but this is due to change from April 2015. If you sell within 3 years of moving out then you will have no CGT liability if the property was your main/only home. Your Aus CGT position depends on whether you sell within six years of becoming tax resident, and on whether you buy a property in Aus in the meantime.

[Kellie23]

What visa are you on? Are you UK citizens?

 

Both have an effect. If you are on a temporary visa such as a 457 then your rental income is not taxable in Aus. If you have PR then it should be declared on your Aus tax return (when earned, regardless of whether you bring it over).

 

If you are UK citizens then you are still entitled to a UK personal allowance, which will reduce the UK tax payable (it has been suggested that non-residents may lose the personal allowance, but nothing has been decided yet).

 

Currently non-residents pay no UK CGT, but this is due to change from April 2015. If you sell within 3 years of moving out then you will have no CGT liability if the property was your main/only home. Your Aus CGT position depends on whether you sell within six years of becoming tax resident, and on whether you buy a property in Aus in the meantime.

 

 

Thank you for your reply.

 

we are coming to Aus on a 189 pr visa. We are uk citizens and have lived in our house for 9 years. Our plan is to rent our property here in the UK and then we will rent a house in Aus. If we are happy and settled in Aus after a couple of years then we plan to sell our UK home to buy in Aus. So could we be liable for tax in both countries? Or is that only the case if it was big some of money? X

[Marisawright]

So could we be liable for tax in both countries? Or is that only the case if it was big some of money? X

 

You will be liable for tax in both countries, but that doesn't mean you'll pay more tax. There's a double taxation agreement which means you shouldn't be taxed twice on the same thing. On your Aussie tax return, you'll need to show the British tax you've paid on your rental property, and that should mean Australia won't tax it again.

[Legs2011]

You'll need to register in the UK for the Non-resident Landlord Scheme. Either your tenant/agent will withhold tax (at 20% I believe) from rent paid to you, or if you get approval from HMRC you can pay your UK taxes through a tax return. Filing a return in the UK is likely to get a better result because you can claim deductions.

 

You will get credit in Australia for tax paid in the UK. The tax paid in the UK should be less than Australia.

 

You should be able to get a deduction for your interest costs on any mortgage in both countries.

[Echidna66]

You'll need to register in the UK for the Non-resident Landlord Scheme. Either your tenant/agent will withhold tax (at 20% I believe) from rent paid to you, or if you get approval from HMRC you can pay your UK taxes through a tax return. Filing a return in the UK is likely to get a better result because you can claim deductions.

 

You will get credit in Australia for tax paid in the UK. The tax paid in the UK should be less than Australia.

 

You should be able to get a deduction for your interest costs on any mortgage in both countries.

 

Just dont tell them..They target the honest didnt you know??

[samdom1]

Just dont tell them..They target the honest didnt you know??

 

This was my thinking...how will they know if you dont declare it...im mot sure if thats dishonest or not? As you mentioned youll be paying tax on your income from rent in uk so if you dont mention it in oz you wont be liable for both im guessing?? Im certainly not an expert ....anybody elses thought?? Am i suggesting something that can get them into trouble??

[Notts]

When you submit your Australian tax return you will be making a declaration that the information given is accurate - so knowingly not declaring something that should be included is dishonest and illegal.

[NickyNook]

Of course it's dishonest to not declare income you're required to declare on an Australian tax return. For a start, you'll be lying when you declare that your return is complete and correct.

 

There are two potential issues - how do you explain regular payments arriving from overseas? Banks talk to the ATO so the foreign income can't necessarily be kept a secret.

 

And you could never, ever bring the capital over, if you've never declared the asset. What if you want to sell the property and want the proceeds over here? How do you explain a sudden windfall of cash?

[samdom1]

Of course it's dishonest to not declare income you're required to declare on an Australian tax return. For a start, you'll be lying when you declare that your return is complete and correct.

 

There are two potential issues - how do you explain regular payments arriving from overseas? Banks talk to the ATO so the foreign income can't necessarily be kept a secret.

 

And you could never, ever bring the capital over, if you've never declared the asset. What if you want to sell the property and want the proceeds over here? How do you explain a sudden windfall of cash?

 

I agree...was playing devils advocate/thinking out loud. Tax is always an area of uncertainty i would say speak to a financial advisor who knows about uk assests as well as australia xxx

[Alan Collett]

I agree...was playing devils advocate/thinking out loud. Tax is always an area of uncertainty i would say speak to a financial advisor who knows about uk assests as well as australia xxx

 

 

Uncertainty? Not in this area of tax - the requirements in respect of UK property being let by a non-UK resident person who is a tax resident of Australia are (relatively) clear cut.

 

Best regards.

[Rupert]

I agree...was playing devils advocate/thinking out loud. Tax is always an area of uncertainty i would say speak to a financial advisor who knows about uk assests as well as australia xxx

 

What a load of rubbish. There is no uncertainty or need to pay devils advocate in the matter of whether somebody needs to declare income or not. It is crystal clear. And as explained, not declaring rental income but then transferring over the proceeds of a house later will, without a shadow of a doubt, come to the attention of the ATO. I don't know why so many people, who are probably honest in every other way become so dishonest about matters of tax.

 

Anyway, situation of the OP is very straightforward and clear. The net income is declared on both tax returns and any tax paid in UK will be deducted from the bill in Australia.

[samdom1]

What a load of rubbish. There is no uncertainty or need to pay devils advocate in the matter of whether somebody needs to declare income or not. It is crystal clear. And as explained, not declaring rental income but then transferring over the proceeds of a house later will, without a shadow of a doubt, come to the attention of the ATO. I don't know why so many people, who are probably honest in every other way become so dishonest about matters of tax.

 

Anyway, situation of the OP is very straightforward and clear. The net income is declared on both tax returns and any tax paid in UK will be deducted from the bill in Australia.

 

Sorry I should have been clearer, when I said uncertainty, I was meaning that Tax is an area where I have no knowledge so I wouldn't be certain about the same things the OP was unclear about!

As I said, albeit in very poor taste I was only being mischievous and playing devils advocate...I am a very honest tax paying individual who, as I also stated,would enlist the services of an expert in these matters. I have a financial advisor here in the uk and will certainly be getting one in OZ, not for any other reason than I know nothing about this topic....so perhaps I should have been quite and not been mischeivous, note to self....don't get involved!