Aussie Tax Returns - Overseas Resident

[PerthLondonGirl89]

Hello,

So I keep putting this off as it confuses me but I really do need to get this sorted. I have been living in the UK since 2014 and naively did not think I needed to complete an Aussie tax return of some sort. Upon checking my ATO account I realised that I have a few years worth of overdue tax returns to complete. Now I am pretty sure that I do not need to lodge an actual tax return but instead I need to submit them as a non-lodgement advice. This is what it says on the "Work Out If You Need To Lodge A Tax Return" page on the ATO website and I believe I fall under this category:-

You do not need to lodge an Australian tax return if:

• you are a foreign resident and your only Australian-sourced income was interest, dividends or royalties and you paid the correct amount of non-resident withholding tax

I spoke with someone from the ATO to update my details and arrange this however they were not much help and confused me even more and I now doubt my understanding!

So I just wanted to ask on here for some advice. I still have a Super account as well as a couple of bank accounts which I have been receiving interest on. All of which are well under the $18,200 tax threshold for Aus. Besides this I receive no other income from Australia. I also don't have any student loans/any loans. What I earn in the UK I pay tax on in the UK. I am not sure what the non-resident withholding tax relates to that is mentioned above?

@Alan Collett and @Ken - you both have been very helpful recently, are you able to advise on this? Am I correct with my thinking that I just need to complete a non-lodgement advice for all the years I have not been resident in Australia based on the above? Alan I think when we spoke you said that this should be the case but I don't think we had discussed Super/bank accounts interest so I am not sure if that changes things.

Sorry to ask what may be an obvious question - it doesn't take a lot to confuse me when it comes to things like this and I just want to get this right

[Marisawright]

If you're not withdrawing any funds from the Super fund, you're not liable to pay tax on it, so that's not relevant (by the way, I hope you've given them your new address and cancelled all the insurances, which are probably not valid anyway).

It's the money in your bank accounts that are an issue. Once you are resident overseas, you are supposed to notify your banks, and they then deduct Non-Resident Withholding Tax from your interest due.   That's all interest, because non-residents don't get the $18,200 tax-free threshold, you pay tax on every cent. 

So, if the bank hasn't been deducting the Withholding Tax, you will need to lodge a tax return so you can pay tax on that interest.  

If you get on to your banks and make sure they deduct the withholding tax from now on, you won't have to do a tax return in future or submit any kind of non-lodgment declararation.

Edited October 12, 2021 by Marisawright

[rammygirl]

Oh and you need to declare the withholding tax on your UK return so it can be set against any tax owed to HMRC if any. Your banks in Australia should know you are non resident if you have given them an overseas address but it doesn’t always compute!

As marissa said there is no tax free threashold for overseas resident and also a single tax rate of about 30%. If you don’t normally do a UK return you might have to work out if doing one will be worth it to get the ATO tax back.

[Ken]

12 hours ago, PerthLondonGirl89 said:

You do not need to lodge an Australian tax return if:

• you are a foreign resident and your only Australian-sourced income was interest, dividends or royalties and you paid the correct amount of non-resident withholding tax

It's exactly what it says above. If you are non-resident and your only income was bank interest from which the 10% foreign resident withholding has been taken then you do not need to lodge a tax return and can just report "return not necessary".

Note that the ATO systems are constantly being improved and as a result they are now automatically blocking people from entering a "return not necessary" if they aren't eligible (e.g. if they have had tax withheld on employment income). Unfortunately that doesn't mean that if the ATO system allows you to enter a "return not necessary" you are definitely eligible (the system is improved, not perfected) but you can be more confident.

[Ken]

You might want to revisit your tax return for the final year you were in Australia. Perhaps you didn't complete it correctly to say that is was your final Australian tax return and didn't provide the date you ceased to be resident? It might explain why there are overdue returns showing.

[PerthLondonGirl89]

Thanks @Marisawright, @rammygirl & @Ken for the explanations, it is really helpful.

That makes a lot more sense now about the banks deducting the Non-Resident Withholding Tax. As I have been receiving interest on my accounts I assume this means that it has not happened and therefore I will actually have to do the tax returns. I am certain when I left I did notify my banks to say I was going overseas, though at that stage I thought it may only be for a year. However it seems as though the systems may still think I am resident, in Aus which complicates things!

Thanks Ken - I will double check my last tax return for the year I left Aus. My dad actually used to help me complete my tax returns and he did mention the other day that he thought he put on the last tax return about moving overseas and therefore the next one would not be required, but I will check!

 

[Marisawright]

2 hours ago, PerthLondonGirl89 said:

As I have been receiving interest on my accounts I assume this means that it has not happened

You'll still receive interest, it just won't be as much.   

I suggest checking your online banking to see if your current address is correct.  If you just "told them" you were going overseas, and didn't actually change your address on your account, then they'll take no action.  

He may well have notified them it was your last return, but then if the banks kept sending in reports that you'd earned interest, I think that would make the ATO ignore that notification.

[Alan Collett]

Have just seen this thread.

It sounds like you are on track now - excellent!   You know where I am if you need me!

Best regards.

[Pokitren]

On 12/10/2021 at 16:18, PerthLondonGirl89 said:

Hello,

So I keep putting this off as it confuses me but I really do need to get this sorted. I have been living in the UK since 2014 and naively did not think I needed to complete an Aussie tax return of some sort. Upon checking my ATO account I realised that I have a few years worth of overdue tax returns to complete. Now I am pretty sure that I do not need to lodge an actual tax return but instead I need to submit them as a non-lodgement advice. This is what it says on the "Work Out If You Need To Lodge A Tax Return" page on the ATO website and I believe I fall under this category:-

You do not need to lodge an Australian tax return if:

• you are a foreign resident and your only Australian-sourced income was interest, dividends or royalties and you paid the correct amount of non-resident withholding tax

I spoke with someone from the ATO to update my details and arrange this however they were not much help and confused me even more and I now doubt my understanding!

So I just wanted to ask on here for some advice. I still have a Super account as well as a couple of bank accounts which I have been receiving interest on. All of which are well under the $18,200 tax threshold for Aus. Besides this I receive no other income from Australia. I also don't have any student loans/any loans. What I earn in the UK I pay tax on in the UK. I am not sure what the non-resident withholding tax relates to that is mentioned above?

@Alan Collett and @Ken - you both have been very helpful recently, are you able to advise on this? Am I correct with my thinking that I just need to complete a non-lodgement advice for all the years I have not been resident in Australia based on the above? Alan I think when we spoke you said that this should be the case but I don't think we had discussed Super/bank accounts interest so I am not sure if that changes things.

Sorry to ask what may be an obvious question - it doesn't take a lot to confuse me when it comes to things like this and I just want to get this right 

An acquaintance of mine had a similar question. I don't remember exactly how it was resolved. I think he went to a lawyer. And he told him what to do in this situation.