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TaxRobin
TaxRobin, Tax Consultant
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Experience:  International tax
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My daughter has a 457 Working VISA to work in Australia.She

Resolved Question:

My daughter has a 457 Working VISA to work in Australia.She will work for UNDER 6 months
Aug14 to Feb15 so not deemed a resident for Australian tax purposes.
Looking at HMRC DT2659 she should not pay Australian tax on employment income but is
liable for UK income tax on those earnings. However HMRC Digest of Double Taxation treaties issued August 2013 suggests double taxation relief not available to temporary resident visa holders which seems a conflict of guidance.
Question is should she only pay UK income tax on Australian employment income or pay Australian non resident income tax but get a credit from HMRC when calculating UK
tax liability on UK and Australian income.
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello,
Your daughter would lodge a return in Australia and claim a credit in the UK for taxes paid in Australia as a nonresident.
Your daughter will be taxed in Australia on the income if she is there for 183 days or more.
The general effect of the double taxation treaties is to exempt employment income from Australian tax where the nonresident employee is present in Australia for 183 days or less, generally in the income year. Certain additional requirements must also be met under most double taxation treaties; for example, the employee must remain a resident in the home country, the remuneration should be paid by a nonresident of Australia and the remuneration should not be a deductible expense in calculating the taxable profits of an employer in Australia.
Short-term assignees who wish to rely on DTA relief from Australian tax should obtain advice to ensure that relief is appropriate given the Australian Tax Office's (ATO) view that where the taxpayer is
working for the Australian business (as opposed to working in Australia on behalf of the foreign employer) the ATO may not allow such DTA relief. Who her employer is will decide if she is allowed the relief from Australia tax.

Your daughter would lodge her Australian return and if she does have tax then when she files her UK return she would be allowed a credit in the UK. Generally the employer is going to withhold tax from her at nonresident rates.
The resident country (UK for your daughter) allows for credits when they tax and the other country (Australia) taxes.

May I suggest your daughter retains the services of a tax professional in Australia when she has completed her stay.
Customer: replied 2 years ago.

Dear TaxRobin


Thank you for your reply. My daughter is a doctor who will work for and be paid by an Australian hospital and be there less than 183 days and remain a resident of the UK as not deemed a resident of Australia.


So to be clear ,it seems she will pay Australian income tax on her Australian employment income as a non resident but be able to get this Australian tax back when submitting her UK tax return which will include the Australian employment income and australian income taxes paid-correct?


Thank you


John

Expert:  TaxRobin replied 2 years ago.
Hello,
Yes, your daughter will lodge a return in Australia and pay as a nonresident.
When she lodges (or files) her UK return she will receive credit for the taxes that are actually paid in Australia, or more correctly any tax that is not refunded to her.
The UK will not refund any of her taxes paid, but the credit will subtract from the UK tax that would normally apply.
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 13568
Experience: International tax
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