Author Topic: Australian Non- Residents Tax  (Read 3071 times)

Offline Marty

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Australian Non- Residents Tax
« on: November 21, 2015, 12:32:07 PM »
In Australia Residents pay income tax:
$0 - $18,200 - No Tax
$18,200 - $37,000 - 19%
$37,000 - $80,000 - 32.5%
$80,000 - $180,000 - 37%
$180,000 and up - 47%

We also have Non-Resident tax:
$0 - $80,000 - 32.5%
$80,000 - $180,000 - 37%
$180,000 and up 47%

Non-Residents are people who live in Australia less than 6 months per year - Expatriates in other words.

There is a loop-hole which reduces your tax and that is any money you pay into superannuation is only taxed at 15% once you are over 55 and once you turn 65 it reduces to 0%.

My question is once I retire and move to the Philippines can I channel my income through my superannuation fund and then effectively reduce my Non-Residents tax rate to 15% and once I turn 65 will it be reduced to 0%?

If that doesn't work can people suggest ways they use to reduce their tax bills on income from Australia?

Offline Travelling Bob

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Re: Australian Non- Residents Tax
« Reply #1 on: November 22, 2015, 09:33:28 AM »
In Australia Residents pay income tax:
$0 - $18,200 - No Tax
$18,200 - $37,000 - 19%
$37,000 - $80,000 - 32.5%
$80,000 - $180,000 - 37%
$180,000 and up - 47%

We also have Non-Resident tax:
$0 - $80,000 - 32.5%
$80,000 - $180,000 - 37%
$180,000 and up 47%

Non-Residents are people who live in Australia less than 6 months per year - Expatriates in other words.

There is a loop-hole which reduces your tax and that is any money you pay into superannuation is only taxed at 15% once you are over 55 and once you turn 65 it reduces to 0%.

My question is once I retire and move to the Philippines can I channel my income through my superannuation fund and then effectively reduce my Non-Residents tax rate to 15% and once I turn 65 will it be reduced to 0%?

If that doesn't work can people suggest ways they use to reduce their tax bills on income from Australia?


I can not suggest ways to reduce your tax .  My understanding is you will not be able work here unless you have work permit. There is not enough work here for the locals and the wage is very very low compared to our wage, like day  rate is about $A6, yes thats right. Workers building roads thats their rate

Bob

Offline Marty

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Re: Australian Non- Residents Tax
« Reply #2 on: November 23, 2015, 04:07:41 PM »
Thanks Bob but I think your missing the point of my question.

Say I was your average working drone in Australian earning $50,000 per year and paying Australian Residents tax - assume no tax deductions. I would be paying $7797 tax per year.
Say I as a working drone then turn 55 and then start channeling all but the tax free part of my income through my Superannuation. I would then be paying $4770 tax.
I then later turn 65 and channel all but the tax free part of my income through Superannuation. I would then be paying $0 tax.

Now think about an Australian Expat who has income from investments and pensions and say they earn him $50,000 per year, he has to pay Australian Non-Residents tax on that income at 32.5%. His tax bill will be $16,250.
That is $1355 Australian or $1000 US per month he is paying in tax.
Do you think he would be a fool if he did not ask how he can minimize this?
That is all I am asking as I am sure this has occurred to other Australian Expats out there and hopefully some of them have found ways around it or to minimize it.
Legal ways please, I don't want the Australian Tax Office seizing my assets and freezing my pensions.

Also when I retire to the Philippines it will be to retire and if I need some work done I will quite happily pay a local to do it for $6 a day. I have no intention of working in the Philippines unless it is a hobby like home brewing, recreational gardening or recreational fishing.

Offline iamjames

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Re: Australian Non- Residents Tax
« Reply #3 on: November 23, 2015, 05:04:51 PM »
My tax was paid in Ireland. My pension was earned and is paid from Ireland. On this basis I cannot claim Non-resident status. I tried  :'(

Offline Marty

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Re: Australian Non- Residents Tax
« Reply #4 on: November 24, 2015, 04:03:03 PM »
G'day James, I take it your Irish.
I was looking at the news today and the US government are worried that the US drug company Pfizer are planning to buy the Irish company that owns Botox which has its HQ in Ireland. They US government think Pfizer will try and move its HQ to Ireland.
Apparently the US company tax rate is 25% and in Ireland it is 12.5% and Pfizer will save $2,000,000,000 in taxes by making the move.
May be I should try moving my pension to Ireland, 12.5% sounds pretty good to me compared to 32.5%.

Offline iamjames

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Re: Australian Non- Residents Tax
« Reply #5 on: November 24, 2015, 10:03:18 PM »
Yep Marty - many companies like google, microsoft, paypal, facebook etc are using Ireland as a loophole to dodge tax. They actually end up paying maybe 5% in some cases. The purpose is to bring in more foreign investment to create jobs. The logic is that the tax is generated from the workers salaries.

On the non-resident issue I think it is only ''earnings'' abroad that would be allowed for non-resident as long as you can produce proof that you have paid tax abroad. You pension or entitlements from Australia would continue to be taxable in Australia.


Offline mikbal

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Re: Australian Non- Residents Tax
« Reply #6 on: November 25, 2015, 02:30:45 PM »
     I don't know if this helps or is even applicable but it's the only thing I could find on the ATO website:

"Your super

If you are an Australian citizen or permanent resident heading overseas, your super remains subject to the same rules, even if you are leaving Australia permanently. This means you cannot access your super until you reach preservation age and retire, or satisfy another condition of release."

https://www.ato.gov.au/individuals/international-tax-for-individuals/going-overseas/when-you-leave-australia/

Offline Leinster Lad

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Re: Australian Non- Residents Tax
« Reply #7 on: November 25, 2015, 04:13:14 PM »
Marty,
my understanding is that you are only allowed to "deposit" a certain amount of $$ into your super each year. ( $25K or $30K ??? )
The amount depends upon your age. ( there is a cut off point, around 50 or 55 )
All money deposited INTO your super fund is taxed at 15%.
All "interest" earned on the money in your super fund is taxed @ 15% until you reach retirement age. ( this depends on when you were born ). After that, any earnings are TAX FREE.
This is one of the "loop holes" that the current Govt. is talking about removing.

This is a VERY cloudy subject and you will be well advised to do some serious research.
The ATO are VERY unforgiving !!!!

Offline Lee2

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Re: Australian Non- Residents Tax
« Reply #8 on: November 25, 2015, 08:13:37 PM »
Here is an article I found that might be worth reading.
Quote
Six tips for paying less tax
http://www.afr.com/personal-finance/six-tips-for-paying-less-tax-20150821-gj4dnt
:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.

Offline Marty

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Re: Australian Non- Residents Tax
« Reply #9 on: November 28, 2015, 08:16:17 AM »
Thanks Fellas. FYI I'm 57 born in 1958 and so a lot of the tax and pension perks apply to me with regards to superannuation.

But "all bets are off" as the Federal Government who have been eyeing off superannuation as a potential increased source of tax income are planning on changing the rules, but hopefully they wont be too greedy because the main reason they initially encouraged people into superannuation was to reduce the Federal Governments old age pension tax bills by encouraging more people to become self-funded retirees who only drew a part old age pension or no old age pension at all.

I think it is time I spoke to a Financial Adviser with experience in helping set up expat income streams that minimize tax liability.
Please could the moderators allow people to post recommendations for Financial Advisers in Sydney Australia who have the relevant expertise in this field?

That Transition To Retirement superannuation scheme sounds really cool.
From people I have spoken to say you can work 4 days a week and still earn the same amount as if you were working 5 days a week.
3 day weekends every week sound pretty good to me, I'm just wondering should I take the Friday or the Monday off.

I'm really disappointed that I did not get any concrete advice from Australian Expats on how they avoided having to pay the Non-Residents tax rates. I guess they are either Fly In Fly Out (FIFO) expats (legal) who spend less than 6 months a year overseas or haven't declared their Non-Residency to the tax office (illegal).
At least I got more response than the poor bloke who raised this issue in 2010 on this site who got no replies.

When I find a definite legal solution to my problem I will post the answer here so may be others can use the advice to help them set themselves up financial for retiring and living overseas. But like I said before "all bets are off with regards to superannuation as the rules are about to change.

 


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