DogLover in WA Posted September 2, 2018 Share Posted September 2, 2018 I’ve got myself into abit of a problem and hoping someone else out there has either been in something similar or can give me advice. I owe a house in UK and had it for 7 years before I got married to a Pom and moved to join him and his Aussie son in WA with my 13 year old daughter . I’ve been in WA coming up to 9 years now and during this time my house has been rented out. I did speak to an accountant who told me that as my rent just about fell below the taxable amount I wouldn’t need to do returns each year or pay tax so I’ve never worried about it til now. As I wasn’t able to get work in our rural town my hubby added me to his tax return as nil earnings and said not to disclose my uk house etc to ATO. After 7 years marriage/7year itch/midlife crisis my marriage has ended and I’ve been unsuccessfully seeking work and nothing at all in a 60km radius of me. I have been claiming Centrelink to help me out but only just covers rent and so my uk rent is supplementing my income or I wouldn’t be able to eat. My rent money in uk wouldn’t even be enough to pay my rent over here! I have been thinking of relocating to Melbourne where I can hopefully find a job and move closer to where my daughter is currently living. I think it’s now time to sell my uk house so I can truely settle over here but due to claiming centrelink and the ATO not knowing etc I could be up for a huge debt and as it is just me now trying to support myself I can’t afford to lose my house. I’ve also lost both my parents in the last 6 years so no family support or help. My head is mashed with trying not to stress and sort myself out but I feel the only way around it is to stop being an Aussie resident for tax purposes, move back to the uk for a bit .. then sell my uk house and try moving to Melbourne later. To do this is stressful and expensive (I have a dog and have been quoted $5000) to fly him over, let alone my boxes of stuff (do I send back or find someone to look after it for me). I love it here in Australia (I just desperately need work to support myself and pay my own rent) and don’t particularly want to move back. What other options do I have? Help!?! Quote Link to comment Share on other sites More sharing options...
newjez Posted September 2, 2018 Share Posted September 2, 2018 3 hours ago, DogLover in WA said: I’ve got myself into abit of a problem and hoping someone else out there has either been in something similar or can give me advice. I owe a house in UK and had it for 7 years before I got married to a Pom and moved to join him and his Aussie son in WA with my 13 year old daughter . I’ve been in WA coming up to 9 years now and during this time my house has been rented out. I did speak to an accountant who told me that as my rent just about fell below the taxable amount I wouldn’t need to do returns each year or pay tax so I’ve never worried about it til now. As I wasn’t able to get work in our rural town my hubby added me to his tax return as nil earnings and said not to disclose my uk house etc to ATO. After 7 years marriage/7year itch/midlife crisis my marriage has ended and I’ve been unsuccessfully seeking work and nothing at all in a 60km radius of me. I have been claiming Centrelink to help me out but only just covers rent and so my uk rent is supplementing my income or I wouldn’t be able to eat. My rent money in uk wouldn’t even be enough to pay my rent over here! I have been thinking of relocating to Melbourne where I can hopefully find a job and move closer to where my daughter is currently living. I think it’s now time to sell my uk house so I can truely settle over here but due to claiming centrelink and the ATO not knowing etc I could be up for a huge debt and as it is just me now trying to support myself I can’t afford to lose my house. I’ve also lost both my parents in the last 6 years so no family support or help. My head is mashed with trying not to stress and sort myself out but I feel the only way around it is to stop being an Aussie resident for tax purposes, move back to the uk for a bit .. then sell my uk house and try moving to Melbourne later. To do this is stressful and expensive (I have a dog and have been quoted $5000) to fly him over, let alone my boxes of stuff (do I send back or find someone to look after it for me). I love it here in Australia (I just desperately need work to support myself and pay my own rent) and don’t particularly want to move back. What other options do I have? Help!?! You probably want to see an accountant. It might not be as bad as you think. Quote Link to comment Share on other sites More sharing options...
DogLover in WA Posted September 2, 2018 Author Share Posted September 2, 2018 Here or in uk? Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 2, 2018 Share Posted September 2, 2018 (edited) 27 minutes ago, newjez said: You probably want to see an accountant. It might not be as bad as you think. It could be as bad as she thinks. As an Australian resident, she is legally obliged to declare her worldwide income on her Australian tax return. It sounds like she hasn't done that for nine years, which means she coujld be up for a big fine if they find out. However, if her income was below the taxable threshold, she might be OK. What's much more serious is that she's now lying to Centrelink about her income. If Centrelink find out, she may be charged with fraud. Edited September 2, 2018 by Marisawright Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 2, 2018 Share Posted September 2, 2018 (edited) There's two ways to look at this situation. The morally correct solution is to confess your situation to Centrelink (an accountant can't help you there) and also consult a good accountant about how to deal with the ATO. Make sure you choose one who's experienced in dealing with international tax. The other option is to escape back to the UK as fast as possible. The longer you stay, the more likely it is that either the ATO or Centrelink will catch up with you. If you leave now and let them both know you've ceased to be a resident, there's a chance they may just close your files and never notice. The trouble is that it means you can never come back. A tax file number is for life, so if you come back, you'll be back in the system (only with more money) which makes it even more likely that they'll query where your funds came from, and it will all come out. Edited September 2, 2018 by Marisawright 1 Quote Link to comment Share on other sites More sharing options...
DogLover in WA Posted September 2, 2018 Author Share Posted September 2, 2018 As my daughter doesn’t want to move back to the uk I guess I don’t have much choice if you think I’d never be able to come back. Quote Link to comment Share on other sites More sharing options...
newjez Posted September 2, 2018 Share Posted September 2, 2018 2 hours ago, Marisawright said: It could be as bad as she thinks. As an Australian resident, she is legally obliged to declare her worldwide income on her Australian tax return. It sounds like she hasn't done that for nine years, which means she coujld be up for a big fine if they find out. However, if her income was below the taxable threshold, she might be OK. What's much more serious is that she's now lying to Centrelink about her income. If Centrelink find out, she may be charged with fraud. From an Australian tax point of view she may be ok as you say, but she may owe UK income tax. A letting agency should have withheld this, but she may not have used one. There may also be capital gains considerations in both countries. But I think she needs to seek professional help to assess and mitigate her situation. Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 2, 2018 Share Posted September 2, 2018 (edited) 2 hours ago, DogLover in WA said: As my daughter doesn’t want to move back to the uk I guess I don’t have much choice if you think I’d never be able to come back. In that case, go to Centrelink and confess. The longer you leave it, the worse it will be. Collecting benefits under false pretences (which is what you are doing) is fraud and they treat it very seriously. If you volunteer the information, they may let you off lightly and just arrange a repayment schedule for any overpayment of benefits. Edited September 2, 2018 by Marisawright Quote Link to comment Share on other sites More sharing options...
newjez Posted September 2, 2018 Share Posted September 2, 2018 (edited) 17 minutes ago, Marisawright said: In that case, go to Centrelink and confess. The longer you leave it, the worse it will be. Collecting benefits under false pretences (which is what you are doing) is fraud and they treat it very seriously. If you volunteer the information, they may let you off lightly and just arrange a repayment schedule for any overpayment of benefits. Would the time she has been on Centrelink be a mitigating factor as well? I'm assuming she only need declare the rent as income first after deductions such as mortgage repairs etc. Hence why I suggested she see an accountant first to determine how much she has defrauded Centrelink. Capital gains in the UK may be significant depending on where she lived. House prices have doubled in that time, although exchange rates have dropped. She would need professional advice as to which country she should be resident in when she sells to max her advantage. She could loses a sizable amount of money if she gets this wrong. Edited September 2, 2018 by newjez Quote Link to comment Share on other sites More sharing options...
Gbye grey sky Posted September 2, 2018 Share Posted September 2, 2018 5 minutes ago, newjez said: Would the time she has been on Centrelink be a mitigating factor as well? I'm assuming she only need declare the rent as income first after deductions such as mortgage repairs etc. Hence why I suggested she see an accountant first to determine how much she has defrauded Centrelink. Capital gains in the UK may be significant depending on where she lived. House prices have doubled in that time, although exchange rates have dropped. She would need professional advice as to which country she should be resident in when she sells to max her advantage. She could loses a sizable amount of money if she gets this wrong. Just to say the exchange rate changes do not get taken into account when calculating a Capital Gain. UK CGT can also be mitigated if you move back in for a few years before selling the house - but this appears not to be an option. I agree that the OP appears to be in a bit of strife but it may not be as bad as she fears though the failure to disclose her income to Centrelink when claiming benefits will be viewed as fraud. A good accountant is needed I feel. Advice on here can only be of very limited help. Quote Link to comment Share on other sites More sharing options...
DogLover in WA Posted September 2, 2018 Author Share Posted September 2, 2018 Thanks for your comments so far ... I’ve been on the uk Gov site to use the CGT calculator and apparently I won’t need to pay any. I think the income tax may have changed but I think I should be under the limit for paying any (fingers crossed), I think that goes the same with Australia too so it’s only centrelink I have a worry over. I’ve been on centrelink since my marriage breakup where I’ve been struggling with depression, anxiety and stress as well as not being about to gain employment in my area - not that that is an excuse I know. I am prepared to do the right thing but am so scared of legal implications.. i never even played truant from school or gave my homework in late lol ... so this is way over my head! Quote Link to comment Share on other sites More sharing options...
AJ Posted September 2, 2018 Share Posted September 2, 2018 (edited) 3 hours ago, newjez said: I'm assuming she only need declare the rent as income first after deductions such as mortgage repairs etc. Hence why I suggested she see an accountant first to determine how much she has defrauded Centrelink. The full rent should have been declared as income in Australia. You can offset mortgage interest but not the mortgage, you can also offset maintenance and agents fees. OP should have completed and NRL1 form as an overseas landlord which means you are not taxed in the UK, still have to do a tax return but wont have to pay, but full amount gets added on to Australian earnings and declared to the ATO. Also for Centrelink the house should be declared as an asset as it is not OP's place of residence. The rent is also classed as income Edited September 2, 2018 by AJ Quote Link to comment Share on other sites More sharing options...
DogLover in WA Posted September 2, 2018 Author Share Posted September 2, 2018 I know what I should have done right from the start now but I’ve no idea how to make it right ... it’s true what they say the longer you leave it the harder it becomes to sort it out and deal with it Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 2, 2018 Share Posted September 2, 2018 7 minutes ago, DogLover in WA said: I know what I should have done right from the start now but I’ve no idea how to make it right ... it’s true what they say the longer you leave it the harder it becomes to sort it out and deal with it I suggest going to Centrelink and getting that over with first. Take your figures with you - what you get in rent plus details of all the expenses you pay for the property (mortgage, agent's fees etc). It's up to them to calculate what it all comes to and how it affects your benefits. You could go to an accountant first and wait for him to give you an idea what the outcome will be, but what good will that do, really? Centrelink will still want to do their own calculations and every day wasted is another day you're in the wrong. Also make an appointment with an accountant, to get your tax sorted out. If the rent is your only income you may find you've got nothing to pay but there will be tax returns to file. 1 Quote Link to comment Share on other sites More sharing options...
newjez Posted September 2, 2018 Share Posted September 2, 2018 6 hours ago, DogLover in WA said: I know what I should have done right from the start now but I’ve no idea how to make it right ... it’s true what they say the longer you leave it the harder it becomes to sort it out and deal with it I would hope that they would look favourably on you as well if you come forward on your own accord. Quote Link to comment Share on other sites More sharing options...
digitalis Posted September 2, 2018 Share Posted September 2, 2018 (edited) Ouch I sympathise. First things first, take a deep breath........Things are never as bad as they seem! I have been in a similar(ish) scenario and the biggest takeaway lesson I learnt was that it is very very easy for anxiety and stress to take over and for you to start admitting and confessing to things which at this moment in time may not be in your best interest to confess or admit to. Take that however way you want to. Forget about the tax implications of the UK rental for the time being, that's not a biggie at present. Your biggest issue is your immediate lack of funds THEN the Centrelink and lack of declaration. The Aussie governement isn't going to take away the value of your house. How long have you been claiming it for? Are there literally NO JOBS withing the vicinity for you? Anything? Desperate times call for desperate measures I'm afraid and if you get off it now, and start doing something as long as financially feasible you can sell your UK house and this will all be a distant memory. Edited September 2, 2018 by digitalis 2 Quote Link to comment Share on other sites More sharing options...
digitalis Posted September 2, 2018 Share Posted September 2, 2018 (edited) It doesn't sound like a good idea to come back here aside from the fact you don't want to. Get a job, ANY job, get off centrelink and start putting the research down for selling your house and move. In all honesty, it's highly unlikely you will be caught by the system doing what you're doing at present BUT If you rely on the sale of your house to get off CL, then you are talking months. And every additional month is additional amount claimed technically fraudulently. I promise you I'm not preaching, I've been in a similar situation! Edited September 2, 2018 by digitalis 1 Quote Link to comment Share on other sites More sharing options...
Nemesis Posted September 3, 2018 Share Posted September 3, 2018 In addition to getting advice from an accountant asap, I would also be warning your previous partner f what you now have to do. If they were filing taxes saying that you had no income, whilst the house was rented out, then there be an issue with the ATO there as well. Quote Link to comment Share on other sites More sharing options...
Patphillips47 Posted September 3, 2018 Share Posted September 3, 2018 On 02/09/2018 at 13:53, newjez said: You probably want to see an accountant. It might not be as bad as you think. What Centrelink benefit are you claiming have you looked on their website to see how much you are allowed to earn before you start loosing $ off the benefit ? My Grandaughter works seasonally and claim benefit during the times she is off work -then when she goes back to work its usually intermittent so she stays on benefit but informs them 2 weekly of what hours she has worked and how much she has earned Then Centrelink gives her a part payment until such time as she is working full time again What I am saying is you never know but what you are getting in rent for the UK house if you declare it you might still get part Centrelink Quote Link to comment Share on other sites More sharing options...
Alan Collett Posted September 23, 2018 Share Posted September 23, 2018 On 02/09/2018 at 17:23, Gbye grey sky said: Just to say the exchange rate changes do not get taken into account when calculating a Capital Gain. <snip> Respectfully - yes, they do. Best regards. Quote Link to comment Share on other sites More sharing options...
can1983 Posted September 23, 2018 Share Posted September 23, 2018 Almost nobody ends up with a capital gains bill for being overseas, but you are required to do the declaration. There are 3 ways to calculate it and you are allowed to take the one which is to your advantage. You just need to get the advice of a good accountant! Quote Link to comment Share on other sites More sharing options...
Alan Collett Posted September 23, 2018 Share Posted September 23, 2018 22 minutes ago, can1983 said: Almost nobody ends up with a capital gains bill for being overseas, but you are required to do the declaration. There are 3 ways to calculate it and you are allowed to take the one which is to your advantage. You just need to get the advice of a good accountant! The main issue for the enquirer is likely to be CGT in Australia, not in the UK. Best regards. Quote Link to comment Share on other sites More sharing options...
can1983 Posted September 23, 2018 Share Posted September 23, 2018 7 minutes ago, Alan Collett said: The main issue for the enquirer is likely to be CGT in Australia, not in the UK. Best regards. Oh yes I see long periods in Oz as perm will attract CGT on overseas interests. As I'm like many who move here whilst the sale completes the gain is minimal or if my estate agent is to believed house prices are falling so there has been no gain since I moved. That raises an interesting question... if you have a house in the uk worth GBP250 in June 2017when you move and the exchange rate is 2.00 ($500,000). You sell in June 2018 for GBP245 and the rate is 1.80 ($441,000) you've made a loss there of $59k so is that a tax loss Quote Link to comment Share on other sites More sharing options...
Alan Collett Posted September 23, 2018 Share Posted September 23, 2018 Just now, can1983 said: Oh yes I see long periods in Oz as perm will attract CGT on overseas interests. As I'm like many who move here whilst the sale completes the gain is minimal or if my estate agent is to believed house prices are falling so there has been no gain since I moved. That raises an interesting question... if you have a house in the uk worth GBP250 in June 2017when you move and the exchange rate is 2.00 ($500,000). You sell in June 2018 for GBP245 and the rate is 1.80 ($441,000) you've made a loss there of $59k so is that a tax loss This is a capital loss - unfortunately not a loss that can be deducted from your income. Best regards. Quote Link to comment Share on other sites More sharing options...
can1983 Posted September 23, 2018 Share Posted September 23, 2018 6 minutes ago, Alan Collett said: This is a capital loss - unfortunately not a loss that can be deducted from your income. Best regards. I know it was tongue in cheek Quote Link to comment Share on other sites More sharing options...
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