expatriates working in Qatar - The tax confusion.

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yes you're right, forgot that bit

"I also know that UK expatriates pay no tax though on their interest earned from savings in UK banks"

Only up to their 'personal tax allowance' - anything above that is taxed.

I am pretty sure that UK and Aussie expats have to pay income tax on any rental property they own in their respective countries, regardless of whether they are resident or non resident of their own countries. It's 20% tax in the UK, but you can deduct outgoings like mortgage interest and expenses. I also know that UK expats pay no tax though on their interest earned from savings in UK banks. Not sure about Australia, but I do know that the ATO charges capital gains tax (eg on the sale of an investment ptoprty in Oz) at a higher rate if you are an Aussie non-resident, I think the rate is 29% tax on the gain.

there's a book called "the aussie expat - the luckiest person on earth".

it gives a good view on how to minimize and save on tax.

There's information about income tax for UK ex-pats here http://www.hmrc.gov.uk/incometax/tax-leave-uk.htm

..it is very clear, probably the only one simple thing in tax rules :-)

You pay tax in the country where you live (you are resident).

S.

Thanks guys you have been helpful. fubar you managed to sound qualified :P

Once you are established as a non-resident - you do not pay tax on monies earned outside Australia. Check out the wb pages listewd above.

Life is just a mirror, and what you see out there, you must first see inside of you.

I forgot to say, clearly I have no qualifications (or, you could say, business) to provide legal and financial advice to you. I am merely giving you advice.

Please speak to a solicitor to get reasoned legal advice that is tailored to your own personal situation.

I am just suggesting that you would, in my opinion, satisfy the criteria provided by the ATO to be deemed 'non resident' and hence the income derived in a foreign country as a non resident is not subject to taxation under Australian law.

Nope.

Self assess yourself and make the judgment that you are non-resident for taxation purposes, based on the reasoning that you are living away from Australia for an indefinite period.

If you keep an Australian bank account and the interest earned is inconsequential, perhaps just don't lodge a tax return at all.

The people for whom this sort of thing is an issue are those living in Qatar but:

On a short term, definite assignment to Qatar, and/or

Paid from an Australian company/bank account, and/or

Still employed, in a part time, full time, directorial etc way.

Taxation ruling TR98-17 contains an extensive discussion of the meaning of resident and resident of Australia.

http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR9817/NAT/ATO/00001

In the UK you send in a form to tell them you're non-resident and you stop paying tax from the day you leave the country.

And while you are still earning money in the UK (through bank account interest or rental income for example) you have to keep filing a tax return, unless they tell you otherwise.

My main concern is actually when and how do I pay the tax. I myself, do not intend to return to live in Australia ever, but I generalised my topic a little because I know most people are in Qatar to earn money, and then return home. However I do intend to keep an Australian bank account. Do I lodge a tax return every end of financial year still, and for how long? Because obviously they will not have deemed me a non-resident automatically since they only figure it out on a case to case basis. Do I pay tax for 5 years, and then contact the ATO and ask whether they have decided if I'm a non-resident yet and pay me a rather large tax refund?

Let's start with some basic propositions. Australian residents must pay Australian income tax on any and all income that is not otherwise exempt: s 6-5(2) of the Income Tax Assessment Act 1997 (ITAA97). That includes money derived from foreign sources. Non--Australians must pay income derived from Australian sources: s 6-5(3) (see http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s6.5.html). You are also required to include in your Australian assessable income any amount that is considered to be statutory income: s 6-10. We'll come back to the concept of statutory income shortly.

The definition in s 6 means it is important to determine whether you are an Australian resident for the purposes of ITAA97. The definition of the expression in s 995-1 of ITAA97 unhelpfully says, in effect, you will be a resident for the purposes of ITAA97 if you would have been a resident for the purposes of the Income Tax Assessment Act 1936 (ITAA36). That section suggests a resident is:

"(a) a person, other than a company, who resides in Australia and includes a person:

(i) whose domicile is in Australia, unless the Commissioner is satisfied that his permanent place of abode is outside Australia; [or]

(ii) who has actually been in Australia, continuously or intermittently, during more than one‑half of the year of income, unless the Commissioner is satisfied that his usual place of abode is outside Australia and that he does not intend to take up residence in Australia;..."

I'm assuming (ii) doesn't apply to you, so we are left to ask: Do you reside in Austalia? That is a question of fact, and the term "reside" is given its ordinary meaning. To determine whether you are a resident, the Comissioner would typically take into account factors like:

your usual place of abode (in your case, Doha);

the location of your family (if any, including wife, children, parents etc);

where you keep your personal effects (with you in Doha, I imagine);

the purpose, frequency and duration of visits;

your nationality and citizenship (presumably Australian); and

any social ties you have with Australia.

You may still be considered to be domiciled in Australia if you were born there. Arguably, you have elected a new jurisdiction to serve as your permanent home or place of abode, ie Qatar. The factors relevant to determining your place of abode are listed in income tax ruling IT 2650, which is available online. (It also includes a discussion of the other part of the definition in s 6 that was covered in TR-98/17.)

If you are sending money back to Australia, the ATO will find out about it. If it is being held in an Australian bank account, for example, it will accrue interest that will be considered to be assessable income.

Is that a start?

If you continue to have bank accounts and investments in Australia you will have to pay tax on them, even if you are declared not a resident. But there is a $6000 tax free threshold, so if they don't exceed that, then you're fine. That tax is a given.

From what I can tell, is that you have to give them enough evidence to show you are no longer a resident of Australia for tax purposes. But the thing is, can you stop paying tax while you are away, and then they decide on your return? Obviously they can not decide whether you will be a resident or non-resident before you even leave. Doesn't make sense to keep paying tax indefinitely for perhaps years, and then the government declare you a non-resident and have to pay it all back. Argh so many questions lol.

Hi Miss X

I am investigating just this point at the moment. Three pointers:

This is a site (Queensland based based) called ban tacs: http://www.bantacs.com.au/booklets/Overseas_Booklet.pdf. It will serve as a starter.

The second site you need to visit is the ATO web page:

http://www.ato.gov.au/individuals/content.asp?doc=/content/64131.htm where they have a residency test. It is not conclusive but will give an indication.

You can ask the ATO for a ruling but the decision would be binding. check out: http://law.ato.gov.au/atolaw/view.htm?docid=ITR/IT2650/NAT/ATO/00001

and IT 2650 for examples of rulings.

The third visit is to an accountant who specializes in International tax.

There are some in Sydney - google them.

I have my appointment next week (Gold Coast)- but over the phone my accountant says, even though we have a 2 year contract, we will be liable for tax as we have accounts and investments in Australia. I am also seeking a second opinion.

I will let you know more in a fortnight.

The goal of life is living in agreement with nature.

No worries mate, good luck.

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I say what I like and I bloody well like what I say

Hi MissX, I have got a meeting with a tax expert in

Mid April, if you don't get any definitive answers

I will ask for you.

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I say what I like and I bloody well like what I say

It depends on the country you originate from and the tax regieme they impose.

Almost every country is different

It all depends on your home country. For the UK, you have to be out of the country for a complete tax year (April to April).

Your best bet is to seek professional advice from a tax expert in Australia, or from the Australian government themselves. I expect that, like the UK, they have comprehensive information on their website regarding tax for expats.