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Ask Leon Your Own Question

Leon
Leon, Solicitor
Category: Australia Law
Satisfied Customers: 42960
Experience:  18 years experience. Admitted in New South Wales and the UK.
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Hi, Im currently a UK contractor who runs a Ltd Company.

Customer Question

Hi,

I'm currently a UK contractor who runs a Ltd Company. I've been offered a job in Australia on a 457 Visa and will be employed as resident for tax purposes. I will be on the payroll and pay the Australian PAYG tax rates.

I have a cash reserve in my UK Ltd Company that I want to take out before I leave via a large dividend and leave my company dormant and just ticking over.

My question is around the taxation of my dividends. If I take out the dividend while I am resident in the UK and before I go to Australia, would I be liable for any tax on my dividends in Australia? The Australian tax year starts from the 1st July.

Any advice would be welcome.

Thanks
Submitted: 2 years ago.
Category: Australia Law
Expert:  Leon replied 2 years ago.
Good Evening

My name is ***** ***** I am a NSW Solicitor. Thank you for your question, and will do my best to assist you with your question. 


If you are not in Australia as a resident you will only pay tax on the dividend in the UK under their tax laws.

You have to be a resident in Australia for tax purposes to be liable for tax on the dividends in Australia.

Our financial year is from 1 July to 30 June

You would be liable for tax from the date you arrive onwards.

If you arrive after 1 july and transfer the dividend before 1 july in the UK then you are not required to even disclose the dividend in the UK.

Is that what you plan to do?
Customer: replied 2 years ago.

Hi Leon,


 


Thanks for you answer.


 


Yes - I plan to take a large dividend out of my Ltd company at the end of June as I can use my allowance up to the higher tax band to take it in effect tax free due to the 10% dividend tax credit.


I'll also take a small final dividend out in mid July before I leave for Australia at the end of July.


 


If I understand correctly I will only be liable for tax after the date I arrive in Australia once I become a tax resident there?


 


So for example, if I took a dividend 6 months later then I would be liable for tax in Australia and not the UK?


 


I don't understand the part "then you are not required to even disclose the dividend in the UK."


 


Thanks


 


 


 

Expert:  Leon replied 2 years ago.
Good Evening Matt

Because you are receiving the income before the 1 July you do not have to declare it in Australia.

You only declare income you earn from 1 July to 30 June from the date you arrive.

If you take the dividend once you were in Australia you would be liable in the UK and in Australia.

But if you paid tax on it in the UK, you would get some credit for that tax in Australia under tax agreements between the 2 countries.

But it is best to not do this as you lose out.

My apology it was not supposed to say "you are not required to even disclose the dividend in the UK" it was supposed to say "you are not required to even disclose the dividend in Australia"

Customer: replied 2 years ago.

Hi Leon,


 


Just to clarify our chat:


 


If I move to Australia at the end of July



  • If I take a dividend prior to July in the UK then I don't have to disclose this in Australia as it falls in the previous tax year. I do declare it in the UK

  • If I take a dividend in July but before I move to Australia then I don't have to disclose this in Australia even though it's in the new tax year. I do declare it in the UK for tax.

  • Any income that I receive in the UK prior to moving to Australia does not need to be disclosed on an Australian tax return 2014-15

  • If I take a dividend after I move to Australia then I am liable to tax both in the UK and Australia



Thanks



Matt

Expert:  Leon replied 2 years ago.
Good Evening

Yes that is correct. Transfer in June you do not have to disclose them in Australia because you are not a resident in this financial year. You only disclose in the UK and pay tax in the UK.

Transfer in July you have to disclose them in Australia and if you have paid tax in the UK, with the double tax agreement the UK tax paid you will get some credit in Australia.

Provided you transfer before the 1 July you only have to disclose the income in the UK. Transfer after 1 July then you have to disclose in Australia as well.

I hope this is clearer Matt.
Customer: replied 2 years ago.

Thanks for the answer.


 


So I can be liable for tax in the 2014-15 financial year even before I actually move to Australia and become a tax resident?


 


Thanks


 


Matt

Expert:  Leon replied 2 years ago.
Good Evening

If you transfer the dividends by the 30 June 2014 they will not form part of your income for the 2014/15 financial year.

Only if you transfer on 1 July 2014 and after will you be liable in Australia as you with then be a resident for tax purposes in the 2014/15 financial year.

Customer: replied 2 years ago.

Ok Leon - thanks.


 


I think we are done here.

Expert:  Leon replied 2 years ago.
Good Evening Matt

Good luck with it and all the best

You are very welcome and thank you for using my services. 

If I have missed anything, or you have any further questions please let me know

If there is anything else in the future please do not hesitate to ask.

Please do not forget to leave positive feedback.

Regards
Leon
Customer: replied 2 years ago.

Sorry Leon - I've gone over our conversation again just so I completely understand.


 


On your original response you said "You would be liable for tax from the date you arrive onwards."


 


But your last response seems to indicate I will be liable for tax in the financial year that I arrive in regardless of the date?


 


Thanks


 


Matt

Expert:  Leon replied 2 years ago.
Good Evening

If you arrive in the financial year starting 1 July 2014 any income from any source received from 1 July 2014 has to be declared.

I am sorry to have confused you.
Leon, Solicitor
Category: Australia Law
Satisfied Customers: 42960
Experience: 18 years experience. Admitted in New South Wales and the UK.
Leon and other Australia Law Specialists are ready to help you
Customer: replied 2 years ago.

Hi Leon,


 


I'm happy with the answers you have given.


 


Thanks


 


Matt

Expert:  Leon replied 2 years ago.
Good Evening Matt

Thank you for your kind words and all the best.

Leon
Customer: replied 2 years ago.

Hi Leon,


 


Thanks - I do have a quick question that you may be able to help me with regarding taxation.


 


My company are offering me relocation assistance ( I provide them receipts and they will reimburse me ).


 


Are these treated as taxable income and are to be declared on a tax return?


 


Thanks


 


Matt

Expert:  Leon replied 2 years ago.
Good Morning

If the money is paid to you as part of your package in Australia and paid to you in the Financial year that you are in Australia you will have to declare it and pay tax in Australia

I hope this assists.

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