Where am I resident of for tax purposes?

[Guest]

Here's my situation...

I emigrated permanently to Australia in September this year, I have PR, Australia is my main place of residence and I have a PAYG job here.

However, I was self-employed during the UK tax year 2021-22 and, although I haven't received any income since I moved to Australia, I still have a tax return to file and pay in the UK for the year 2021-22.

Am I a tax resident of just Australia or Australia and the UK?

I'm sure it's been answered before but cannot find my exact situation. Any advice appreciated!

Frank

 

[rammygirl]

Split year. Worth getting a tax account to look at it. You became a tax resident in Australia when you arrived ( unless you leave permanently within 6 months) I think. So you do a final return in the uk and a new one in Aus. 

[Ken]

Yes as rammygirl has said you would have become tax resident in Australia (and ceased to be tax resident in the UK) on the day you arrived, if you arrived with the intention of settling permanently.

It's not quite as hard and fast as "unless you leave permanently within 6 months" but if you return to the UK in a short period that will almost certainly change your tax treatment in the UK (they'll treat it as if you never left) and may change your treatment in Australia too (but they'll probably still treat you as resident for the months you were in Australia). Each case is decided on its merits.

The tax returns of both countries include a space or spaces for the date that you became resident and/or ceased to be resident. The Australian tax returns asks you "Did you become a resident for tax purposes during the year?" and "Did you cease to be a resident for tax purposes during the year?" and asks for a date for each, whereas the UK self-assessment return has a separate Residency Section (SA109) which includes questions 3 "If your circumstances meet the criteria for split year treatment, put ‘X’ in the box" and 6 "If you have an entry in box 3 enter the date from which the UK part of the year begins or ends DD MM YYYY"

Edited October 23, 2021 by Ken

[Alan Collett]

https://www.ato.gov.au/law/view/pdf/pbr/tr1998-017.pdf

Not the most compelling of reads, but have a look at Tax Ruling 98/17.

If you're stuck and would like a freebie chat please feel able to contact me via the bdh Tax website (see the www below).

Best regards.

[Guest]

Thanks all for your advice, much appreciated. 

@Alan Collett I will drop you a line at your BDH email this week as will need further advice regarding filing UK/AUS tax returns. 

Also, I have just transferred a large amount of money (across several transactions) from the sale of my house in the UK into my Australian bank account. Do I need to declare this to the ATO? 

Thanks, 

Frank

Edited October 31, 2021 by Guest

[Ken]

20 hours ago, Frank Oz said:

I have just transferred a large amount of money (across several transactions) from the sale of my house in the UK into my Australian bank account. Do I need to declare this to the ATO?

No, transferring money from one bank account to another bank account is not income. It doesn't make any difference if the transfer is between savings account and your transaction account at the same bank or between banks in different countries - you haven't earned anything or otherwise made a profit from doing so. There's a capital gain when you sold your house but presumably that was before you became resident in Australia? Even if it wasn't there's a main residence exemption (although you should still tick the box to say a CGT event occurred if it was while you were resident in Australia).

[Guest]

Cheers @Ken that's really helpful.

The UK house sale actually completed 2 days after we arrived in Australia and the money transferred from UK to Aussie bank accounts in the following weeks.

So if I understand correctly, I just check the CGT event box on the Oz tax return but as it was my main residence I sold - and I have moved here as a PR - then I should be exempt.

Thanks again for all your advice. 

[Alan Collett]

The disposal date for CGT purposes is usually the date of exchange of contracts - assuming there are no conditions in the contract.

So exchange before arrival in Australia and completion subsequently is not an issue for Australian tax.

Best regards.

[Ken]

On 04/11/2021 at 09:26, Frank Oz said:

Cheers @Ken that's really helpful.

The UK house sale actually completed 2 days after we arrived in Australia and the money transferred from UK to Aussie bank accounts in the following weeks.

So if I understand correctly, I just check the CGT event box on the Oz tax return but as it was my main residence I sold - and I have moved here as a PR - then I should be exempt.

Thanks again for all your advice. 

As Alan has pointed out if the contracts were exchanged before you moved (assuming there were nothing unusual in your contract) then it's outside the scope of Australian tax and so you don't have a CGT event to report on your tax return.

[Guest]

I see! Yes, contracts exchanged well before arrival in Australia and no unusual clauses. That makes things simpler then. Thanks both.