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desreb

AU tax on a second P45?

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Hi,

I'm due to move from the UK to Australia around Christmas. As part of the move, my company is closing my employment contract in the UK on 31st December, and commencing my Australian one (same company) on 1st January. Hence I'll get a P45 referencing 31st December.

However - I'm in sales and get commission, which is paid a month in arrears, with typically a large amount of it in December. My company said they'll pay my commission in a special January 31st payslip, and issue me a second P45 right after that.

So, once I land in Australia, I'll get a GBP salary payment into my UK bank account, which I assume will be declared to the HMRC under PAYE, and which I'll need to declare on my first Australian tax return after July next year, and I assume pay tax at the prevailing rate. I expect to handle it as a split tax year between the UK and Australia.

 

My question is - is it better to receive that payment in my UK or Australian payslips - assuming I can choose? The higher-rate income tax rates are pretty similar, I'm a part-year resident in each, and the amount is the same, just whether it's in one currency or another. The payment relates to work in the UK, due under my UK contract, so I assume its natural home is in the UK. It seems there's little difference in which country's payslip I receive it in, but i thought I'd check.

 

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Possibly taxable in the UK and in Australia, with a Foreign Income Tax Offset available in Australia for PAYE deducted in the UK.

Consider Tax Treaty provisions too.

Is far simpler tax wise if you defer your travel to Australia until after the bonus is paid.

Best regards.

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Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com

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Thanks Alan.

If I can’t defer travel, then would it be an option to receive the commission on my AU payroll? Or would that likely cause other issues due to income being earned in one jurisdiction but paid in another?

Many thanks,


D

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Hi,
I'm due to move from the UK to Australia around Christmas. As part of the move, my company is closing my employment contract in the UK on 31st December, and commencing my Australian one (same company) on 1st January. Hence I'll get a P45 referencing 31st December.
However - I'm in sales and get commission, which is paid a month in arrears, with typically a large amount of it in December. My company said they'll pay my commission in a special January 31st payslip, and issue me a second P45 right after that.
So, once I land in Australia, I'll get a GBP salary payment into my UK bank account, which I assume will be declared to the HMRC under PAYE, and which I'll need to declare on my first Australian tax return after July next year, and I assume pay tax at the prevailing rate. I expect to handle it as a split tax year between the UK and Australia.
 
My question is - is it better to receive that payment in my UK or Australian payslips - assuming I can choose? The higher-rate income tax rates are pretty similar, I'm a part-year resident in each, and the amount is the same, just whether it's in one currency or another. The payment relates to work in the UK, due under my UK contract, so I assume its natural home is in the UK. It seems there's little difference in which country's payslip I receive it in, but i thought I'd check.
 

Just to be aware: They shouldn’t issue a second P45 regardless of the circumstances so either they will be doing so incorrectly or they may just tax you using a 0T tax code (and not issue another P45) which may also mean your tax is incorrect for the year overall and you may end up owing tax or courting a refund depending on your circumstances.
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Just to be aware: They shouldn’t issue a second P45 regardless of the circumstances so either they will be doing so incorrectly or they may just tax you using a 0T tax code (and not issue another P45) which may also mean your tax is incorrect for the year overall and you may end up owing tax or courting a refund depending on your circumstances.


Thanks, that’s interesting. So probably they’ll issue the second on a 0T, and then PAYE will inform HMRC that i received a second untaxed payment, and I’ll need to declare that on my UK SA for that year?

D

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Thanks, that’s interesting. So probably they’ll issue the second on a 0T, and then PAYE will inform HMRC that i received a second untaxed payment, and I’ll need to declare that on my UK SA for that year?

D

0T is not untaxed, it means no personal allowance is applied so you pay tax at your rate (whether 20%, 40% or 45% (or for a Scottish taxpayer add a further 1% to each of these rates) ) on those earnings.
Yes, you would then need to declare on your Self Assessment.
Your employer could hold off issuing the P45 until you’ve received your final pay instead?
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