Guest Bonniebuster Posted October 19, 2008 Share Posted October 19, 2008 Am considering leaving my UK pension to be paid in the UK then transferring it on an ad hoc basis. What are the tax implications of that in Oz. I realise that I'll pay UK tax etc. (and `suffer' the vagaries of the exchange rate) but I've also heard that UK/Oz have a reciprocal tax arrangement; is this correct? Is anyone else in a similar situation and can give BTDT advice/experience. VMT in anticipation. Link to comment Share on other sites More sharing options...
Guest BullcreekBob Posted October 19, 2008 Share Posted October 19, 2008 Firstly I'd say that you should get proper paid financial advice and do not rely on opinions offered on a web site, not even mine Your visa type in Aust is important. If you are on a temporary visa (457 etc) then there is a strong likelihood that you do not need to declare overseas income to the Aust government. If you are on a permanent visa, then you are likely to be considered a resident of Australia for taxation purposes. If that applies to you, then the money you earn in the UK or anywhere else is considered to be part of your total income and will need to be declared to the Aussie tax authorities. They in turn will include that income in assessing your taxable income (usually the same thing) and you then pay tax on it. If you can show that you paid some tax on that income to UK authorities, then that amount is discounted from your Aussie tax bill. Aussie tax rates are generally higher than the UK so it's likely you'll need to pay additional tax here. It makes no difference if you bring the money into Australia or not, your tax liability is based on your total worldwide income. The Aussie tax office will give you a published schedule of currency conversion rates for you to use, or you can use actual exchange rates if you brought the money here. If you leave the income (and other capital) in a UK and there is a currency movement in your favour, you could be assessed Aussie capital gains tax. If there is a detrimental move in exchange rates, you might be able to claim the currency losses as deductions when your taxable income is assessed. Finally, did I say that you should get professional advice from a professional that you can sue if they told you the wrong thing. You haven't paid me, so you cant sue me if I'm wrong. (Which I'm not - but this is very general non specific information I have shared with you. I do not know your personal circumstances. Add any other standard disclaimer clauses here !! Link to comment Share on other sites More sharing options...
Guest Bonniebuster Posted October 19, 2008 Share Posted October 19, 2008 Hi Grumpy Bob (I immediately liked your style!) Many thanks for that succinct info. I have a sub-class 100 permanent visa so all you said would apply I expect. I just wanted to get an initial idea but I understand what you're saying about professional advice. Very many thanks. Link to comment Share on other sites More sharing options...
Guest Liam Posted October 19, 2008 Share Posted October 19, 2008 More General Advice Another point to take into conisderation is that if you transfer the funds over to Australia and access them as a pension stream after your preservation age or as a income stream or lump sum after age 60 then the income is not taxed at all and after age 60 it does not even have to be reported on your tax return. Also with the Aussie dollar nice and low at the moment, you can take out the exchange rate risk for the future. As Bob said, get some professional advice on your particular circumstances......that's what pays my mortgage! Honestly, you have to take advantage of the system you plan to live under and make the most of opportunities to make minimise (not avoid) tax and make your capital/pension last as long as possible. best wishes Liam Link to comment Share on other sites More sharing options...
Guest Posted November 17, 2008 Share Posted November 17, 2008 More General Advice Another point to take into conisderation is that if you transfer the funds over to Australia and access them as a pension stream after your preservation age or as a income stream or lump sum after age 60 then the income is not taxed at all and after age 60 it does not even have to be reported on your tax return. Also with the Aussie dollar nice and low at the moment, you can take out the exchange rate risk for the future. As Bob said, get some professional advice on your particular circumstances......that's what pays my mortgage! Honestly, you have to take advantage of the system you plan to live under and make the most of opportunities to make minimise (not avoid) tax and make your capital/pension last as long as possible. best wishes Liam Liam Hi. I understand that this is still very much a grey area as the "tax free" element applicable to Australian superannuation is not, as conveyed to me by the ATO, relevant to pensions sourced in, and paid from, UK into Australian bank accounts ie it only affects Australian superannuation funds. This, of course, places me (and, by inference, many others) in a far worse place than our born and bred Australian counterparts and could be construed as discriminatory. The 2003 Double Taxation Treaty between UK and Aus is currently under its 5 year review and the above situation has been brought to the review board's attention as this is the first Australian tax year that it is relevant and I am certain that both tax authorities were unaware that this particular situation had arisen. Article 25 of the current Treaty concerns Non-Discrimination and is probably relevant in this ie a taxpayer moving from one contracting State to the other should not be penalised in their tax liablility by making that move - or words to that effect !! We will await the result of the review before considering any further actions. Regards Jim ps as if there wasn't enough grief re non index-linking of UK state pensions here in Australia !! Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.