Oz Bank - Withholding Tax Citizen overseas

[Fazor]

Hi,

Just a quick question: As of 1st Oct I have been charged the top rate withholding tax on the interest in my bank account in Australia, I have a TFN but wanted to check if its best to give it to them or not? I am currently living outside of Australia. I have no home or any rental earnings there, only earning in Australia is bank account interest, I am am Australian citizen and the last tax return was 2009 as I have been out of the country since then. Can you advise what is the best course of action to take? Thanks

[Jon the Hat]

Are you aware you are supposed to either file a tax return or a declaration that you are out of the country each year?

[Fazor]

My question is regarding supplying a TFN.

[Jon the Hat]

7 minutes ago, Fazor said:

My question is regarding supplying a TFN.

Yes I know, just thought I would mention it as you said you were out of the country for over a decade, and the rules changed in that time.

According to the ATO the bank should only be deducting at 47% if they don't have your overseas address.  

Investing in bank accounts and income bonds | Australian Taxation Office (ato.gov.au)

[Fazor]

I did have a conversation with the tax office when I left to advise them.47% is the top rate for withholding tax. It's only started to be charged from the 1st October. The bank has my Australian address, I'm reluctant to give them my address overseas. So I'm in a bit of predicament. 

[rammygirl]

With an Australian address and no tfn provided they will deduct the tax as you stated but only on any interest earned. 
when we moved back to UK for a few years we simply provided the UK address and contacts and kept the bank account using internet banking. The withholding tax is less but I can’t remember exactly what and as long as that is your only Australian income you do not need to file a tax return. 
The interest and any tax deduction should be declared on a Uk tax return and any overpay will be refunded. Unless you have tens of thousands of dollars still in a savings account you are not going to be talking a huge amount of interest though.

If you do return to Aus make sure the bank has your tfn then it doesn’t deduct interest at source. 
 

Why are you reluctant to provide your correct address? Who’s address are you using in Australia? Equally your tfn?

our bank Westpac had no issue with our overseas address and sent replacement cards etc, although we stopped paper statements!
 

Edited January 9, 2024 by rammygirl

[Marisawright]

12 hours ago, Fazor said:

Hi,

Just a quick question: As of 1st Oct I have been charged the top rate withholding tax on the interest in my bank account in Australia, I have a TFN but wanted to check if its best to give it to them or not? I am currently living outside of Australia. I have no home or any rental earnings there, only earning in Australia is bank account interest, I am am Australian citizen and the last tax return was 2009 as I have been out of the country since then. Can you advise what is the best course of action to take? Thanks

If you are no longer resident in Australia, then you are a foreign investor.  Tell them you no longer live in Australia and change your address to your overseas address. 

As a foreign investor, you are liable to 10% tax on your bank interest, which the bank will withhold.   If that is your only income in Australia, there is no need to complete a tax return in Australia.   In other words, it's much cheaper to be honest.

[Fazor]

12 hours ago, Marisawright said:

If you are no longer resident in Australia, then you are a foreign investor.  Tell them you no longer live in Australia and change your address to your overseas address. 

As a foreign investor, you are liable to 10% tax on your bank interest, which the bank will withhold.   If that is your only income in Australia, there is no need to complete a tax return in Australia.   In other words, it's much cheaper to be honest.

The first year that I left Australia I called the ATO and advised them that I would not be returning for the next few years, I was informed that a tax return would not be required. Was I suppose to do this every year and lodge a "return not necessary form", as this was not explained on the phone contact that I had at the time.

[Marisawright]

10 hours ago, Fazor said:

The first year that I left Australia I called the ATO and advised them that I would not be returning for the next few years, I was informed that a tax return would not be required. Was I suppose to do this every year and lodge a "return not necessary form", as this was not explained on the phone contact that I had at the time.

No, you don't need to lodge a 'return not necessary form'.  You did the right thing.

Where you went wrong is, not telling your bank.  They don't consult the ATO before withholding tax from your interest, they just apply the rules. You didn't tell them you had moved overseas, so their rules say they have to withhold the maximum tax.  

You could supply them with a TFN so they don't deduct the tax every year, but then you're going to have to do a tax return every year. Far better to be honest about being a foreign resident and accept that 10% rate.

[Fazor]

Thank you for your time in replying. 

I have just updated my bank with My tfn, as they started to apply the fullrate of withholding tax on my bank account.

 I earn interest on my bank account and selling my items still in storage in Australia, my question is if I am not expected to do a tax return as I am a non resident what happens to the funds I earn from both these situations? 

Also was I supposed advise the ato every year that I have been outside of the country? 

Thanks for your 

I have just updated my bank with My tfn, as they started to apply the fullrate of withholding tax on my bank account.

 I earn interest on my bank account and selling my items still in storage in Australia, my question is if I am not expected to do a tax return as I am a non resident what happens to the funds I earn from both these situations? 

Also was I supposed advise the ato every year that I have been outside of the country? 

Thanks for your help 

Hi thank you for your time replying, 

I have just updated my bank with My tfn, as they started to apply the fullrate of withholding they have credited back the money they stopped. 

I am confused as my understanding is that I should have been doing a tax return each year I was away as I was earning interest on my bank account and also have been selling items still in storage in Australia but as a non resident I was not expected to.

Also was I supposed advise the ato every year that I have been outside of the country? 

Thanks for your help

 

[Marisawright]

7 minutes ago, Fazor said:

Thank you for your time in replying. 

I have just updated my bank with My tfn, as they started to apply the fullrate of withholding tax on my bank account.

 

Why on earth did you do that?  The correct thing to do was notify them of your overseas address and let them deduct the 10% withholding tax. 

If you give your TFN and have your Australian address on your account, you are pretending to resident in Australia when you're not, which is tax fraud.

If you tell the bank your overseas address and delete your TFN, you don't need to complete a tax return every year.

If you are selling off old furniture to dispose of it and not as a business, the ATO doesn't want to know.  

[Fazor]

25 minutes ago, Marisawright said:

Why on earth did you do that?  The correct thing to do was notify them of your overseas address and let them deduct the 10% withholding tax. 

If you give your TFN and have your Australian address on your account, you are pretending to resident in Australia when you're not, which is tax fraud.

If you tell the bank your overseas address and delete your TFN, you don't need to complete a tax return every year.

If you are selling off old furniture to dispose of it and not as a business, the ATO doesn't want to know.  

Because I thought it was the correct thing to do. The bank now have my UK address, I have deleted the TFN, they are also wanting my NI number in the UK 

Edited January 10, 2024 by Fazor

[Philip]

Just for information, banks will not withhold any tax when the address is in Australia and the interest is less than $120 per year / $10 per month.

[Fazor]

Thanks to those for the clarification on this.

I have now managed to get it sorted, changed my address to Uk on my Oz account and left out the TFN. 

[Ken]

On 11/01/2024 at 08:58, Fazor said:

Thank you for your time in replying. 

I have just updated my bank with My tfn, as they started to apply the fullrate of withholding tax on my bank account.

 I earn interest on my bank account and selling my items still in storage in Australia, my question is if I am not expected to do a tax return as I am a non resident what happens to the funds I earn from both these situations? 

Also was I supposed advise the ato every year that I have been outside of the country? 

Thanks for your 

I have just updated my bank with My tfn, as they started to apply the fullrate of withholding tax on my bank account.

 I earn interest on my bank account and selling my items still in storage in Australia, my question is if I am not expected to do a tax return as I am a non resident what happens to the funds I earn from both these situations? 

Also was I supposed advise the ato every year that I have been outside of the country? 

Thanks for your help 

Hi thank you for your time replying, 

I have just updated my bank with My tfn, as they started to apply the fullrate of withholding they have credited back the money they stopped. 

I am confused as my understanding is that I should have been doing a tax return each year I was away as I was earning interest on my bank account and also have been selling items still in storage in Australia but as a non resident I was not expected to.

Also was I supposed advise the ato every year that I have been outside of the country? 

Thanks for your help

 

If you are a non-resident with Australian income then you are required to lodge a tax return. There is an exemption for interest and royalties on which the 10% withholding tax has been withheld.

[Marisawright]

12 minutes ago, Ken said:

If you are a non-resident with Australian income then you are required to lodge a tax return. There is an exemption for interest and royalties on which the 10% withholding tax has been withheld.

So, the OP does not have to lodge a tax return if his only income is bank interest and the bank has withheld the 10% tax, right?

The OP did say he is selling off the contents of his old home, but he is not running that as a business, he's just disposing of his belongings.  Surely that wouldn't require him to lodge a tax return?

[Ken]

On 14/01/2024 at 15:06, Marisawright said:

So, the OP does not have to lodge a tax return if his only income is bank interest and the bank has withheld the 10% tax, right?

The OP did say he is selling off the contents of his old home, but he is not running that as a business, he's just disposing of his belongings.  Surely that wouldn't require him to lodge a tax return?

Yes, normally no need to lodge a tax return if the only income is bank interest on which the bank has withheld the 10% tax. The only exception is if the ATO ask you to lodge a tax return. Curiously the OP says the bank is withholding 47%. That'll probably be because he's given the bank an address in Australia without providing a TFN. If 47% tax is being withheld then a tax return is required (but will result in a tax refund).

If they are all just personal items and not business assets or investments then no, that wouldn't require him to lodge a tax return.

Edited January 18, 2024 by Ken