Working on 143 visa

[Maddyowen]

Hi,

my Dad has just moved over on a parent contribution visa 143.

He would love to work a couple of days a week but is concerned about being taxed heavily.  He claims two pensions both from the UK, state and a work pension.

Does anyone know if he can work a certain amount of hours and not get taxed or if it just not worth doing? 
 

maddy 

[Marisawright]

11 minutes ago, Maddyowen said:

Hi,

my Dad has just moved over on a parent contribution visa 143.

He would love to work a couple of days a week but is concerned about being taxed heavily.  He claims two pensions both from the UK, state and a work pension.

Does anyone know if he can work a certain amount of hours and not get taxed or if it just not worth doing? 

He will get taxed at the same rate as you and every other Australian.  You should be able to work it out, there's a table in this article:

https://www.canstar.com.au/superannuation/tax-free-threshold/

I hope he is already submitting an Australian tax return every year.  As a permanent resident he must declare all his foreign income, including pensions. 

[Maddyowen]

Hi,

thanks for the reply. I just rang the ATO and explained the situation. She wasn’t overly confident with her answers but said that if my Dad doesn’t work then he will not have to do a tax return and therefore doesn’t need a tax file number. However if he does want to work then he would have to do a tax return. 
 

I'm confused ???

[ramot]

8 minutes ago, Maddyowen said:

Hi,

thanks for the reply. I just rang the ATO and explained the situation. She wasn’t overly confident with her answers but said that if my Dad doesn’t work then he will not have to do a tax return and therefore doesn’t need a tax file number. However if he does want to work then he would have to do a tax return. 
 

I'm confused ???

I’m no tax expert, but now we are citizens here, having come the 143 pathway route, all our income comes from the UK and we have both have a TFN and pay tax here. My only advice, and I hardly ever give advice, is to use a tax agent who understands both tax systems.

We only paid UK tax when we were on a  temporary visa before gaining PR, then had  to pay tax here 

Alan Collett comes well recommended on this site by posters who have used him.

Edited February 23, 2022 by ramot

[Marisawright]

4 hours ago, Maddyowen said:

Hi,

thanks for the reply. I just rang the ATO and explained the situation. She wasn’t overly confident with her answers but said that if my Dad doesn’t work then he will not have to do a tax return and therefore doesn’t need a tax file number. However if he does want to work then he would have to do a tax return. 
 

I'm confused ???

Never trust the operators on government helplines. They’re just reading off a screen. 

The truth is, if your dad’s annual income from work AND/OR pension AND/OR investments is less than the tax free threshold then he doesn’t need to do a tax return. If it’s more than that, then he must do a tax return because foreign pensions are taxable in Australia and so he’s breaking the law if he doesn’t declare it

Edited February 23, 2022 by Marisawright

[Maddyowen]

So even thou he pays tax on his pensions in the UK he will then be taxed again in Australia if its over the threshold? 

[Marisawright]

41 minutes ago, Maddyowen said:

So even thou he pays tax on his pensions in the UK he will then be taxed again in Australia if its over the threshold? 

Not necessarily.  There is a taxation agreement to ensure people don't pay tax twice, but it's not up to him to decide.  He needs to do a tax return so the ATO can decide.

What he should do is declare his pensions, then also declare the tax he's already paid in the UK.   They'll calculate the Australian tax due, then deduct what he's already paid in UK tax, then he has to pay the difference, if any. 

[paulhand]

It would be worth speaking to an expert on this issue … @Alan Collettis your go-to guy. 

[Alan Collett]

15 hours ago, Marisawright said:

Not necessarily.  There is a taxation agreement to ensure people don't pay tax twice, but it's not up to him to decide.  He needs to do a tax return so the ATO can decide.

What he should do is declare his pensions, then also declare the tax he's already paid in the UK.   They'll calculate the Australian tax due, then deduct what he's already paid in UK tax, then he has to pay the difference, if any. 

Sorry - that's not right.

The UK - Aus Tax Treaty provides that the pension income is solely taxable in Australia.

A foreign income tax offset should not be claimed for the UK tax deducted from the UK pension under PAYE.

Best regards.

[Marisawright]

8 minutes ago, Alan Collett said:

Sorry - that's not right.

The UK - Aus Tax Treaty provides that the pension income is solely taxable in Australia.

A foreign income tax offset should not be claimed for the UK tax deducted from the UK pension under PAYE.

Best regards.

So that means he'll pay tax in the UK, but he can't declare that tax in his Australian tax return, so he'll get taxed  again in Australia on the same pension? I thought that's what the double taxation agreement was meant to avoid.

Edited February 24, 2022 by Marisawright

[Alan Collett]

Just now, Marisawright said:

So that means he'll pay tax in the UK and then get taxed again in Australia? I thought that's what the double taxation agreement was meant to avoid.

No, there's a process to undertake so no tax is deducted in the UK - in essence a form is to be prepared and submitted to the ATO that leads to the issuing of a NT (No Tax) PAYE Coding by HMRC, so the pension is received on a gross basis.

At the same time any tax already deducted under PAYE since the individual became subject to Aus tax only under Article 17 of the Treaty should be claimed from HMRC.

FYI here is Article 17 from the UK-Aus Tax Treaty:

ARTICLE 17

Pensions and annuities

1 Pensions (including government pensions) and annuities paid to a resident of a Contracting State shall be taxable only in that State.

2 The term "annuity" means a stated sum payable periodically to an individual at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth.

Best regards.