Being sent a large sum of money from the UK

[BigJoe]

Hi,

Will this be taxed by the Australian government?

 

Many thanks,

Edited November 13, 2022 by BigJoe

[Marisawright]

Depends who it's from and why you're receiving it. 

[BigJoe]

Gift from the Company im leaving. It's basically for long service.

[Ausvisitor]

2 hours ago, BigJoe said:

Gift from the Company im leaving. It's basically for long service.

Well it's taxable in the UK if you receive it before you leave the UK for Australia

If you receive it in Australia after leaving the UK it is taxable is AUS.

You can't avoid tax mate...

[rammygirl]

From an employer it won’t be considered a gift, it is pre tax income so yes it will be taxed at marginal rate. You might be able to put some into super though at 15% if you have allowances left (you can carry some forward).

[BigJoe]

2 hours ago, Ausvisitor said:

Well it's taxable in the UK if you receive it before you leave the UK for Australia

If you receive it in Australia after leaving the UK it is taxable is AUS.

You can't avoid tax mate...

I understand I cannot avoid tax, but this sum will be given to me several months after I leave the UK. So I will not be employed by that employer.

I'm just trying to understand what slice the Australian goverment will take when the funds are transferred to an Australian bank account.

 

[Ausvisitor]

1 hour ago, rammygirl said:

From an employer it won’t be considered a gift, it is pre tax income so yes it will be taxed at marginal rate. You might be able to put some into super though at 15% if you have allowances left (you can carry some forward).

Actually I had a rethink about this, and it would be taxed in the UK because there is no way a legal employer would make a payment of this type to an employee outside of payroll. They'd be fined to within an inch of bankruptcy if they did...

[Ausvisitor]

Just now, BigJoe said:

I understand I cannot avoid tax, but this sum will be given to me several months after I leave the UK. So I will not be employed by that employer.

I'm just trying to understand what slice the Australian goverment will take when the funds are transferred to an Australian bank account.

 

I'm not sure under what grounds they would "give" you this money?

I can see that maybe some creative dubious director has thought hmmmm we can save some national insurance here if we just send them cash.

Well they can try, but when they get audited and can't explain why they made a payment related to employment outside of payroll they will be in deep doo-doo (as will you if you haven't declared it and they follow the paper trail to you)

[Ausvisitor]

8 minutes ago, BigJoe said:

I understand I cannot avoid tax, but this sum will be given to me several months after I leave the UK. So I will not be employed by that employer.

I'm just trying to understand what slice the Australian goverment will take when the funds are transferred to an Australian bank account.

 

This is why people should leave creative accounting to the experts.

One of two scenarios will be deemed to be at play here if you accept the money.

1) you are receiving income related to an employment - as such it is taxable and at your highest marginal tax rate (so probably around 42%)

2) you are deemed not to be receiving an employment amount, therefore you must have provided services therefore you must be registered for tax and pay tax on that amount

The third option is the HMRC inspector deems you where both trying to evade tax and slaps a huge fine on you both

In your position I'd be asking why it can't just be paid now through UK payroll and make it easier in everyone

 

Edited November 14, 2022 by Ausvisitor

[BigJoe]

2 minutes ago, Ausvisitor said:

I'm not sure under what grounds they would "give" you this money?

I can see that maybe some creative dubious director has thought hmmmm we can save some national insurance here if we just send them cash.

Well they can try, but when they get audited and can't explain why they made a payment related to employment outside of payroll they will be in deep doo-doo (as will you if you haven't declared it and they follow the paper trail to you)

I'm getting a percentage from the sale of the business after it's sold. But this will happen serveral months after I've left.

I can assure you there's nothing dubious or dodgey going on.

 

[Ausvisitor]

2 minutes ago, BigJoe said:

I'm getting a percentage from the sale of the business after it's sold. But this will happen serveral months after I've left.

I can assure you there's nothing dubious or dodgey going on.

 

Ok rules slightly different here and will depend on how you come to be due this payment.

If you actually own shares in the company that mean you own a percentage and you are getting your percentage in cash then as a non-resident you get taxed quite favourably but will still get stung in AUS if you have already left the UK

 

If you don't own the shares it's still just an employment related payment and subject to payroll taxes (both in the UK and AUS)

 

You really need to talk to an accountant who understands both tax regimes to structure this deal (and your move to Australia) appropriately to time it for the best taxation outcome

[BigJoe]

Just now, Ausvisitor said:

Ok rules slightly different here and will depend on how you come to be due this payment.

If you actually own shares in the company that mean you own a percentage and you are getting your percentage in cash then as a non-resident you get taxed quite favourably but will still get stung in AUS if you have already left the UK

 

If you don't own the shares it's still just an employment related payment and subject to payroll taxes (both in the UK and AUS)

 

You really need to talk to an accountant who understands both tax regimes to structure this deal (and your move to Australia) appropriately to time it for the best taxation outcome

Hi, yes I have shares.

I thought this would be the case, our accountant is currently in discussion with my sisters accountant in Brisbane,

Fingers crossed they don't take too much, it's my deposit on a new home.

Appreciate your help and advice.

[rammygirl]

8 hours ago, BigJoe said:

I understand I cannot avoid tax, but this sum will be given to me several months after I leave the UK. So I will not be employed by that employer.

I'm just trying to understand what slice the Australian goverment will take when the funds are transferred to an Australian bank account.

 

It doesn’t matter when you transfer it to Australia the tax is triggered when you receive the amount regardless of which bank or currency it is in. 
it would have been quicker to ask about receiving cash from sale of shares in the first place rather than a “ gift”. 
You need a decent accountant/ tax advisor either one that can advise on both countries law or two that actually talk to each other. 

[Ken]

On 14/11/2022 at 23:35, BigJoe said:

Hi, yes I have shares.

I thought this would be the case, our accountant is currently in discussion with my sisters accountant in Brisbane,

Fingers crossed they don't take too much, it's my deposit on a new home.

Appreciate your help and advice.

That would make it a capital gains tax issue not an employment income issue. The good news on that is you are only liable for Australian tax on the gain on a foreign asset made after you became tax resident in Australia (that's if you're a citizen or permanent resident - it's completely exempt if you're on a temporary visa). If the price has already been agreed before you leave the UK. there will be no gain at all to be taxed in Australia. If the price hasn't been agreed before leaving the UK and you can't determine the value at the date you leave the UK, the gain would need to be apportioned across the whole period of ownership leaving just a (presumably tiny) proportion relating to your time in Australia of which only 50% would be taxable (assuming your total ownership period in or out of Australia exceeded 12 months). 

Had it been employment income and not a capital gain there be no apportionment (it's taxed on the receipts basis) and there's no 50% discount.

UK tax is a different issue. It's CGT and it's a UK asset so your being outside of the UK doesn't make it tax free (like it would be for employment income), but there are exemptions for employee share schemes that may apply.

As @rammygirl has already told you, transferring money from one bank account to another has no tax implications (I'm sure you are aware you can move money backwards and forwards between your current account and your savings account as much as you like, it doesn't create any income - the same applies even if the bank accounts are in different countries) what matters is receiving the income in the first place.