Tax if on 870 or 600 visa

[partnership]

I presume if you are on a 600 visa and there for a year you do not pay any tax. If you are on the temporary parent visa and getting a pension from Ireland would this be liable to tax or is there a double taxation agreement with Ireland?  If so how much?

[Marisawright]

57 minutes ago, partnership said:

I presume if you are on a 600 visa and there for a year you do not pay any tax. If you are on the temporary parent visa and getting a pension from Ireland would this be liable to tax or is there a double taxation agreement with Ireland?  If so how much?

Calling @Ken!

[Ken]

6 hours ago, partnership said:

I presume if you are on a 600 visa and there for a year you do not pay any tax. If you are on the temporary parent visa and getting a pension from Ireland would this be liable to tax or is there a double taxation agreement with Ireland?  If so how much?

There is a double taxation agreement with Ireland and under the terms of that a pension is only taxable in the country that the recipient resides. Because on a 600 visa the person is a visitor (even where it is a long visit) I would presume they would not become an Australian resident for tax purposes and so as a resident of Ireland the pension would only be taxable in Ireland.

I would however expect that the temporary parent visa would be seen differently (if you showed an intent to remain in Australia and had set up home in Australia and had sold or rented out your home in Ireland) and that you would be treated as no longer residing in Ireland and residing in Australia (for tax purposes) instead. As such you would be taxed in Australia and pay no tax in Ireland.

Ultimately though it's up to the courts to decide who is and who isn't an Australian Resident for tax purposes. At one time the holder of a Working Holiday Visa was always assumed to be non-resident but the courts threw a spanner in the works of that assumption by saying in certain circumstances a WHV holder can be an Australian Resident. You have to look at all the facts in each case and not just at what type of Visa. For example you could have a temporary parent visa but show no intent to remain in Australia and continue to maintain a home in Ireland.

As to the second part of your question - that would depend upon how much the Pension is.

 

PS: Just read up about the 870 visa - it's a different visa to I was thinking of (which is the one that leads on to Permanent Residency) but I don't think it changes the above much. Even if it's only extendable for 10 years you can still be a resident in that period but all the circumstances need to be looked at.

Edited June 13, 2022 by Ken

[partnership]

8 hours ago, Ken said:

There is a double taxation agreement with Ireland and under the terms of that a pension is only taxable in the country that the recipient resides. Because on a 600 visa the person is a visitor (even where it is a long visit) I would presume they would not become an Australian resident for tax purposes and so as a resident of Ireland the pension would only be taxable in Ireland.

I would however expect that the temporary parent visa would be seen differently (if you showed an intent to remain in Australia and had set up home in Australia and had sold or rented out your home in Ireland) and that you would be treated as no longer residing in Ireland and residing in Australia (for tax purposes) instead. As such you would be taxed in Australia and pay no tax in Ireland.

Ultimately though it's up to the courts to decide who is and who isn't an Australian Resident for tax purposes. At one time the holder of a Working Holiday Visa was always assumed to be non-resident but the courts threw a spanner in the works of that assumption by saying in certain circumstances a WHV holder can be an Australian Resident. You have to look at all the facts in each case and not just at what type of Visa. For example you could have a temporary parent visa but show no intent to remain in Australia and continue to maintain a home in Ireland.

As to the second part of your question - that would depend upon how much the Pension is.

 

PS: Just read up about the 870 visa - it's a different visa to I was thinking of (which is the one that leads on to Permanent Residency) but I don't think it changes the above much. Even if it's only extendable for 10 years you can still be a resident in that period but all the circumstances need to be looked at.

Thanks Ken. Am exploring feasibility of going on the 870 (having applied for the 143 first). So we would be there temporarily pending the outcome of the 143 visa. As that visa is likely to take much longer we would end up having to go hope or be on a visitor visa for part of the time. We would probably rent out our house as I would not sell unless I had a permanent visa. As to pension possibly $45 to 50 k per year depending on exchange rate.

[Alan Collett]

The subclass 870 visa is a temporary residency visa, so I would expect (non-Aus source) pension income from the RoI to not be taxable in Australia and to remain taxable in the RoI.

It certainly works that way for those on 870 visas with UK source pension income.

The tax situation changes though once permanent residency has been secured.

Best regards.

 

[Alan Collett]

https://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/Income/Foreign-income-exemption-for-temporary-residents/

ATO commentary on the exemption for tax residents of Australia who are temporary visa holders ...

Best regards.