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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am in a dilemma. I am a UK resident having returned

Customer Question

Hi - I am in a dilemma. I am a UK resident having returned from 24 years living in Australia. My income is still through the internet for work based in Australia .Although I have permanently left Austalia my accountant tells me I must still make an Australia tax return. The inland revenue in UK tells me as a permanent resident I must make a UK tax return for income earned abroad - although they don`t double tax me (reciprocal arrangement with Australia) I am still having to pay out double accountancy fees. If I am a permanent resident in UK - why can`t I just pay my taxes here as an overseas worker.
Kind Regards
Paul Higgs
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello Paul, I am Keith, one of the experts on Just Answer, and happy to help you with your question. Firstly there is no such Department as the Inland Revenue. It was merged with HM Customs and Excise some years ago to form Her Majesty's Revenue and Customs (HMRC).

There is a Double taxation Treaty between the UK and Oz which precludes the same income stream being taxed in both jurisdictions. This is achieved by means of tax credits, the tax paid in one country being allowed as a tax credit against the liability in the other. The Treaty does not, however, protect the individual from differences in tax rates.

I can understand your problem as Australian Income Tax for non residents is at 32.5%.

At present you are stuck between the proverbial rock and the hard place. I suggest that you contact the Australian Taxation Office with a view to resolving the situation. However, I suspect that like all revenue offices the world over, their view on life tends towards the jaundiced. Normally one would expect an UK resident not to have to bother with other jurisdictions' taxation systems, but this is not always the case. I have an old work colleague who now lives in France where his UK injcome, all derived from UK Governmnet pension schemes, is tax free in France, but his State Pension is taxed under French taxation. Thus he has to make returns in two countries, so you are not alone.

I submit that your solution at thuis stage is to get the Australian Taxation Office to agree that you no longer need to make returns in Oz.

I do hope that I have been able to show you a way forward in this matter which may ease your present administrative inconviences.

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Customer: replied 2 years ago.

Hello Keith,

Many thanks for your answer. One thing I can`t understand is that in Oz many workers earn their income overseas (mainly in mining industry) but they only have to declare their income in their country of residence - Oz.

I realized about the treaty between the UK and Oz regarding no double taxation - my problem was having to pay 2 accountants and the amounts of paperwork involved.My situation is worsened by the fact that a have a partnership with my wife in Oz - so it`s 3 tax returns to ATO. I`m dissolving the partnership next month to simplify things.

I`ll pursue the ATO on your advice and let you know the outcome.

Many thanks for your help

Kind Regards

Paul Higgs

Expert:  bigduckontax replied 2 years ago.

Delighted to have been of assistance Paul and I would be most interested in the line taken by Australian Taxation Office in the longer term in due course.

I fully appreciate your current concern haveing to pay two sets of accountants; in my experience these do not come cheap; in fact considerably more expensive than Just Answer!

Please be so kind as to rate me before you leave the Just Answer site..

Expert:  bigduckontax replied 2 years ago.

Thank you for your support, Paul.

Regards

Keith

Customer: replied 2 years ago.

Hi Keith,

What I failed to mention was that I have mortgaged property in Australia and therefore have to make a tax return but I don`t see it as being very fair when I have to declare all my income along with my wife`s income in UK (she`s on min. wage) and then be charged 32.5% tax after expenses.

I`ve managed to avoid the 50% cgt on my properties as I have 6 years before that cuts in (which was our residence for 11 years) Our second property has actually gone down in value.

Many thanks again

Regards

Paul

Expert:  bigduckontax replied 2 years ago.

Australian Capital Gains tax does not apply to the family home. As I understand it husbands and wives are separately taxed in Oz as they are in the UK. I am somewhat confused as to the 32.5% tax rate; presumably that is the Austra;lian rate which, in any event, is allowed as a tax credit against your UK liability.

There is nothing to be dome about you Australian tax return unless the Taxation Office agree that one need not be completed in future.

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