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Author Topic: Australian Super Income Stream tax in PH  (Read 23923 times)

Offline polix

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Australian Super Income Stream tax in PH
« on: May 14, 2016, 07:42:06 PM »
I missed Marty's thread about 6 months ago about a similar topic which received little feedback, so lets re-roll.

Australia and the Philippines have a Double Tax Agreement (DTA) . There have been various ATO tax rulings regarding this, and here is the guts of one of them ....

"Under Article 18 of the Philippine Agreement, any pension or annuity derived from Australia by a person who is a resident in the Philippines is taxable only in the country of residence."

Thus, as I understand this, if you are an Australian 'non-resident' for tax purposes by residing in the Philippines, you only pay tax on any income stream in the Philippines, and NO tax on it in Australia. Without the existence of this DTA, you would be paying the higher non-resident tax rates in Australia.

From what I have read, the income from Superannuation retirement plans are exempt from Philippine Tax laws. You can get a glimpse of this here under 'Tax Exempt Income' >>

This can also be seen as one of the benefits of a SRRV (though I am not sure why it is listed as a SRRV benefit when this exemption seems to apply to non SRRV holders as well). You can see these SRRV benefit exemptions here >>

So my question is .... if under Australian law (DTA), super income streams are taxable in the Philippines, but at the same time, they are also exempt from taxation in the Philippines under Philippine law, does this mean the perfect zero super income tax bill has been found?

Has anyone got any further info or experience on this topic?

Offline Big Jim

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Re: Australian Super Income Stream tax in PH
« Reply #1 on: May 17, 2016, 05:20:13 AM »
For my personal situation, I don't see what it has to do with the Philippines at all.

I will be withdrawing 5 percent of the superannuation balance each year. that money will stay in Australia and i will withdraw by ATM in the Philippines as needed.

No income is earned or paid in the Philippines.
I used to wonder what it would be like to read other people's minds.

Then I got a facebook account and now I am over it.

Offline polix

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Re: Australian Super Income Stream tax in PH
« Reply #2 on: May 17, 2016, 10:22:54 AM »
Hi Big Jim

From what you briefly described, sounds like you are on an annuity, or perhaps were paid out with a lump sum. Once over 60, most super balances in Australia are tax free, and if yours is, there is little financial gain in seeking to become a non-resident of Australia.

However, if your superannuation pension or annuity is one of those which is taxed at the pension stage, there may be significant financial advantages if you swap your residency to the Philippines, as the Philippines seems not to tax pensions or annuities. In general, the international tax treaty laws overide Australian tax laws, meaning pension/annuity taxation responsibility shifts, in the Philippines case, to the Philippines - where apparently it is tax free.

If you compare the UK-Philippines DTA with the Australia-Philippines DTA in respect to this matter, you will notice one main difference. The UK DTA does not allow public pension/annuities to be taxed in the Philippines, whereas the Australian DTA does. The Australian tax paid in public superannuation pensions could be up to full marginal tax rates, and combned with the recent uncertainty with both major political parties announcing super tax increases and restrictions, a reliance on the consistency of a DTA (which has remained unchanged since 1980) over recently hostile Australian super tax laws may also be an advantage.

Anyway, thanks for the reply.