UK Rental Property

[salsera]

Hi, we have a property which we are renting out in the UK whilst here on a 457. We declared the income from our UK property rental on our Australian tax return last year but now  have been told we also need to complete a UK tax return. How do we ensure that the income from our property is not taxed on our uk tax return when it has been taxed in Australia - we obviously don't want to pay tax twice?

[LouDYorkie]

As I understand it, you didn't need to declare your U.K. property income in Australia being on a 457. But as you did, I think you declare all of the same on your U.K. Tax return (plus or minus any entitlements that differ between the two countries) and also declare the tax already paid to the ATO. That is then offset against anything you owe to HMRC. You don't pay fully twice, unlike some other countries.

 

[Andy R]

Oh interesting, I never even thought about that. I'm coming over to Sydney on a partner visa and have a property I rent out in the U.K..Will I have to declare income from that in Australia?


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[Ken]

As Lou has already pointed out you don't report Foreign Income when you're on a 457. The procedure to avoid double taxation on UK rental income is that you claim the tax you've paid in the UK as an offset against your Australian tax liability (there's a space in the foreign income section of your tax return to put it - or there would be if you were a permanent resident and so had a foreign income section). HMRC have "first dibs" on UK rental income, the ATO only get the second bite (but the double taxation agreement means their bite plus the UK tax doesn't exceed the normal Australian tax rate). Often however the UK tax is zero as most people that I know don't have enough UK rental income (after deducting all the allowable expenses including mortgage interest) to exceed their tax free allowances.

HMRC won't allow you to offset Australian tax against UK income, that's not how the double taxation agreement works (you can offset Australian tax against foreign income - but if you're not UK resident you won't have any foreign income on your UK tax return). If you've paid too much tax in Australia then you need to file an amended tax return to get it back from the ATO.

[Ken]

23 minutes ago, Andy R said:

Oh interesting, I never even thought about that. I'm coming over to Sydney on a partner visa and have a property I rent out in the U.K..Will I have to declare income from that in Australia?


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Yes you will have to declare that income. Permanent residents pay tax on their worldwide income. Temporary residents only on their Australian income. Partner visa's are a little strange because they're not immediately permanent visas - but they're normally taxed as if they are. Except if they don't become permanent and you depart Australia then you were a temporary resident after all and can reclaim any excess tax you paid.

[Andy R]

Ok , thank you for that info [emoji106]


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[Alan Collett]

20 hours ago, salsera said:

Hi, we have a property which we are renting out in the UK whilst here on a 457. We declared the income from our UK property rental on our Australian tax return last year but now  have been told we also need to complete a UK tax return. How do we ensure that the income from our property is not taxed on our uk tax return when it has been taxed in Australia - we obviously don't want to pay tax twice?

Consider lodging an amendment to your already submitted Australian tax return to exclude the UK rental income.  

If your UK property is generating a rental surplus a tax return amendment will generate a tax repayment.

Best regards.

[LouDYorkie]

Oh interesting, I never even thought about that. I'm coming over to Sydney on a partner visa and have a property I rent out in the U.K..Will I have to declare income from that in Australia?

 

 

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You don't have to declare property, but you still have to declare earned income (wages) if that applies.

Oh, and only if it's a temporary visa. Permanent residents declare all worldwide income I believe.

[Alan Collett]

1 minute ago, Lou Dower said:

You don't have to declare property, but you still have to declare earned income (wages) if that applies.

Oh, and only if it's a temporary visa. Permanent residents declare all worldwide income I believe.

https://www.ato.gov.au/Individuals/International-tax-for-individuals/In-detail/Foreign-income-of-Australian-residents/Foreign-income-exemption-for-temporary-residents---introduction/?page=1#Who_is_a_temporary_resident_

No - the exemption in respect of foreign income for temporary residents isn't t usually available when an individual who is a tax resident of Australia is in a relationship with an Australian.

Best regards.

[LouDYorkie]

https://www.ato.gov.au/Individuals/International-tax-for-individuals/In-detail/Foreign-income-of-Australian-residents/Foreign-income-exemption-for-temporary-residents---introduction/?page=1#Who_is_a_temporary_resident_
No - the exemption in respect of foreign income for temporary residents isn't t usually available when an individual who is a tax resident of Australia is in a relationship with an Australian.
Best regards.

Yes I agree Alan Collett, sorry-I realise now I wasn't being very clear. I was trying to refer to 457 specifically but realise there are many other temp visas [emoji4]