surfersj Posted November 16, 2015 Share Posted November 16, 2015 I am looking to retire and move from the UK to Australia on a CPV that gives permanent residency status. Under the terms of the UK/OZ double taxation agreement my responsibility for paying taxes would be to the ATO. I would like to clarify if any income earned in the UK prior to arriving in Australia would be included as part of my taxable income in Australia for that current tax year? For example, if my visa was granted and I actually moved to Australia on 30th March 2016, would income earned in the UK between 30th June 2015 and 30th March 2016 require to be declared as taxable income in the Australian tax year ending 30th June 2016. Link to comment Share on other sites More sharing options...
grahamffc Posted November 16, 2015 Share Posted November 16, 2015 No, those 9 months would only be taxable in the UK Link to comment Share on other sites More sharing options...
Petkula73 Posted November 17, 2015 Share Posted November 17, 2015 Make sure you time this to maximise your tax free allowances in both countries. You have an 11K tax free limit in the UK and $18,200 in Australia, so in total that's something like $42500 of income that you can keep without needing to pay tax. What you'll be able to most likely do is claim back the overpaid tax in the UK (as your tax code will be wrong if you don't complete the full year) and likewise in Australia if you are here for only a few months before the end of the financial year. When we came over in 2011 I continued to be paid in the UK for 14 months, then switched to be being paid here and consequently the free pay limits worked beautifully for me. I ended up paying something daft like 12% net tax for 2 years until it all caught up. Link to comment Share on other sites More sharing options...
Alan Collett Posted November 17, 2015 Share Posted November 17, 2015 You don't get the full $18,200 tax free threshold if you commence tax residency in Australia in August or later - but similarly the $18,200 isn't carved up into 1/12 slices for each month you are a tax resident. The subject of a part year tax free threshold is discussed here: https://www.ato.gov.au/Individuals/Ind/Tax-free-threshold-for-newcomers-to-Australia/ By contrast in the UK you are entitled to the full personal allowance for a UK tax year in which you are partly a tax resident. Best regards. Link to comment Share on other sites More sharing options...
surfersj Posted November 17, 2015 Author Share Posted November 17, 2015 Would I be correct in saying that this rule would apply to all income earned in the UK before arriving in Australia? I am thinking here with specific regard to fully accessing a private pension fund by withdrawing the whole sum as cash and paying the relevant taxes to HMRC before leaving the UK. So, just clarifying that the net proceeds after deduction of UK tax does not risk getting a double-hit and also have to be declared as taxable income for that financial year once arrived in Australia? Link to comment Share on other sites More sharing options...
surfersj Posted November 17, 2015 Author Share Posted November 17, 2015 I believe what may happen in my future situation is that my ATO tax obligation would not be fulfilled until the end of the OZ tax year when I would submit a tax return and pay my OZ taxes once per year? I mention this as I would not be working in Australia and would have no income from an employer. My only income would be state and private pension paid gross into UK bank account and transferred to my OZ bank account. Does that make sense or is there some mechanism that I would pay tax monthly somehow in Australia? Link to comment Share on other sites More sharing options...
surfersj Posted November 17, 2015 Author Share Posted November 17, 2015 Thank you Alan for mentioning this link. It explains perfectly how the tax free allowance in OZ is calculated depending upon the arrival month in OZ. Link to comment Share on other sites More sharing options...
Ken Posted November 18, 2015 Share Posted November 18, 2015 I believe what may happen in my future situation is that my ATO tax obligation would not be fulfilled until the end of the OZ tax year when I would submit a tax return and pay my OZ taxes once per year? I mention this as I would not be working in Australia and would have no income from an employer. My only income would be state and private pension paid gross into UK bank account and transferred to my OZ bank account. Does that make sense or is there some mechanism that I would pay tax monthly somehow in Australia? If you have a large tax bill at the end of the year then after the first year the ATO will almost certainly require you to pay tax installments quarterly. You have the option of paying the ATO estimate or providing your own estimate (interest applies if you significantly underestimate - but not if the ATO underestimate). The amount paid by installment is reconciled with the actual tax to be paid at the end of the year. Link to comment Share on other sites More sharing options...
Alan Collett Posted November 18, 2015 Share Posted November 18, 2015 https://www.ato.gov.au/General/payg-instalments/who-needs-to-pay-payg-instalments/ Yes, as Ken says you may well find yourself in Australia's PAYG instalment system if you have a fair amount of income that is untaxed upon receipt by you. Best regards. Link to comment Share on other sites More sharing options...
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