Want to claim overseas wage as an exempt income? Think again.

3IX37

Previously before s.23AG changes, few people would’ve worried about their residency status in relation to their overseas employment incomes, they could have claimed it as an exempt income under old s.23AG as long as they worked there more than 90 days.
Now since Jul 2009, this legislation has been significantly trimmed so that overseas wages can only be exempted under few very limited circumstances. (basically only when you work for government or charity, otherwise you overseas wage will be taxed)
Following by this change more litigations of residency are expected. People would start to think ways to argue their overseas wages are derived when they are non-resident.
Sneddon case is the first case since the change.
Brief background of this case:
        Taxpayer Mr Sneddon was working for an Au company in Qatar for the year ended 30 Jun 2009, from where he derived wage $ AUD 52,030.55.
        ATO issued an amended assessment on this income, contends this should be an assessable income
        Taxpayer argues it should be exempted under s.23AG. If not, this should not be taxed as it was foreign source income while he was a non-resident for that tax year in dispute.
Despite the obvious facts that the relevant tax year in this litigation was 30 Jun 2009, which was before the law change, and even under old s.23AG, Qatar was excluded from the exemption, what I personally take away from this case are:
        ATO does not seem to only target people with high individual wealth, as the dollar amount in this litigation was only $ 53K p.a wage.
        For the ordinary concept test: Having your AU residential premise under construction or renovation while you are overseas might still means your ordinary place of reside is in AU, as it is still available to you at your discretion.
        Once the ordinary concept test passes, you are in. As an Australian tax resident, you are taxed world-wide income sources. ATO does not need to look at whether you have a permanent place of abode overseas.
        Even you can prove your ordinary place of reside is not in AU, you still need to prove that you have a permanent place of abode overseas. Moving around from city to city or country to country will not help you in this case.
        And don’t keep bank account, telephone account and club membership in AU active if you decide to move overseas and claim as a non-resident.
        With lately intensive cross reference checking and investigation by ATO, more and more residency litigation are well expected.

Reference:
http://www.austlii.edu.au/au/cases/cth/AATA/2012/516.html

Declaration: This above are only my personal view, I do not hold any legal responsibility if anyone is acting or planning his or her tax affairs on this information.

m2thez

看不太懂。。。
does not affect me after all

lee2267

这个在西澳很流行。。简单说来就是税局并不是看你有没有在澳洲待满183 天/年 的rule。。
就算你2年甚至5年不在澳洲。。只要你满足ordinary concept test。。你还是澳洲税务居民。。全球收入要交税。。

以前的163 现在的888 签证持有人例外。。

ordinary concept test 税法只是给出了大体的定义； 比如财产家庭房子小孩在澳洲。你人在国外上班。。就算全年在国外上班。
你还是要按照全球收入在澳洲交税。。但是正是应为没有具体及准确定义， 所有这类都是案例分析。。所以都是arguable的。。。。

3IX37

lee2267 发表于 2012-9-28 19:53
这个在西澳很流行。。简单说来就是税局并不是看你有没有在澳洲待满183 天/年 的rule。。
就算你2年甚至5年 ...

Thanks for your feedback. it is always good to have some support, especially a professional one :)

You are right. I agree with you and this precisely is why i want to raise the awareness of this topic.

Because the residency is an arguable issue, it therefore is a planable one.  And because it is planable, it therefore has a necessity of consultation. We have seen so many cases lost their arguable grounds simply because they did not plan well at the start.

The awareness i want to raise here are:

1) the s.23AG is no longer available for those AU residents working overseas. if one negotiated his remuneration plan with his employer based on old s.23AG. He, then, needs to re-plan it as soon as possible.
2) if one wants to claim he is a non-resident for his offshore sourced income while he is overseas, he needs to plan well to establish his arguable case.

Furthermore, 183 days rule is for inbound cases, which is for those people want to argue they are residents after they arrive AU.

What in dispute here is  for outbound, for those leaving AU residents working and/or living overseas and wanting claim they are non-residents for their overseas income for the period in dispute.

khengco

Would  double taxation arise in this case?

3IX37

khengco 发表于 2012-9-29 11:11
Would  double taxation arise in this case?

A very good question.  AU has a FITO (foreign income tax offset) regime is working with international tax treaties to mitigate the risk for taxpayers to be double taxed. Basically it allows to reduce one's AU income tax to the extend the amount of tax he pays overseas.

but things to note are
1)  it has to be a treaty country. (China is one of them who have tax treaties with AU)
2) it has to be paid, not accrued. one can only reduce the amount of foreign tax paid in the year.
3) it is not refundable, the foreign tax credit can only reduce one's Au income tax liability, the excess amount cannot be refund.

so in theory, it is possible for one to get economically double taxed, but the risk is mitigated.

cycwong21

3IX37 发表于 2012-9-29 11:55
A very good question.  AU has a FITO (foreign income tax offset) regime is working with internatio ...

China is one of them who have tax treaties with AU.


Are you sure?

3IX37

cycwong21 发表于 2012-9-29 12:01
China is one of them who have tax treaties with AU.

absolutely, please refer International Tax Agreement Act 1953, s.11S in your tax legislation for more information. and if you have the latest version of Au tax legislation, the treaty contents and articles are in Australia's Double Tax Treaties section.

lee2267

cycwong21 发表于 2012-9-29 12:01
China is one of them who have tax treaties with AU.

sure..但是从目前的操作层面-对个人来讲。。不是很现实。。。除非你在国内上市公司做。。那你一定要申报。。
如果你是小公司。。这个就是见人见智了。。
国内的管工资的这方面的是应该是国税。。不是地税。。。

double taxation 目前中澳之间还是停留在 上市公司和 非上市的国企（如5矿什嘛的）。。。

cycwong21

學習了:si9

3IX37

i guess the confusion here is DTA (Double tax agreement), this China signed it more than 20 years ago. and TIEA (Tax Information Exchange Agreement). We all know how much Chinese government loves its own information, so i don't think they have signed this. (Even after 2011 treaties review, i haven't heard any news about it). But things are changing, sometimes faster than we could possibly imagine.

Since 1995, China has been working very closely with OECD and its member countries. Once it becomes a member country, who knows then.

the below is some light reading from OECD website for people who is interested.


Highlights
China is one of the many non-member economies with which the OECD has working relationships in addition to its member countries. In October 1995, the OECD Council agreed on a programme of dialogue and co-operation with China. Since then, the OECD has contributed to policy reform in China by sharing its member countries’ experiences in a range of areas. In response, China puts its own policy experience on the table for scrutiny and discussion by OECD member countries. The OECD Council at Ministerial level adopted a resolution on 16 May 2007 to strengthen the co-operation with China, as well as with Brazil, India, Indonesia and South Africa, through a programme of enhanced engagement. While enhanced engagement is distinct from accession to the OECD, it has the potential in the future to lead to membership.

......

khengco

3IX37 发表于 2012-9-29 11:55
A very good question.  AU has a FITO (foreign income tax offset) regime is working with internatio ...

明白了。谢谢你。

marilyn_ma

歪个楼，因为专业人士都在这里，问个问题。澳洲所有财务数据保留5年追诉期。那么到2013年6月30日前，需要保留的是08年7月1日后的数据，对吗？

3IX37

marilyn_ma 发表于 2012-9-30 11:52
歪个楼，因为专业人士都在这里，问个问题。澳洲所有财务数据保留5年追诉期。那么到2013年6月30日前，需要保 ...

if you are talking about the retention period for expenses substantiation, which expense is deducted from your tax return. Yes, Div 900 requires taxpayer to retain the records for 5 years. I believe the general practice is count from the issue date of NOA (notice of assessment) .

Please note the retention period will automatically be extended when there is a dispute until it is resolved. and also note if the taxpayer is a company, there are other record keeping requirements from other Jurisdictions, eg. ASIC, etc.

JohnnySu

marilyn_ma 发表于 2012-9-30 11:52
歪个楼，因为专业人士都在这里，问个问题。澳洲所有财务数据保留5年追诉期。那么到2013年6月30日前，需要保 ...

要求是5年 但很多情况下你都需要一直保留原始文件 譬如 你有资产一直在折旧, 有carried forward loss 或者是持有其他的CGT资产都应该保留原始的文件 与其花时间搞清楚什么保留什么不保留还不如前部放一个地方 以防万一:)

JohnnySu

khengco 发表于 2012-9-29 11:11
Would  double taxation arise in this case?

简单来说 基本上是不会DOUBLE TAXED 的 因为在国外已经交过的税在澳洲是可以作为CREDITS的.:)

对与这个主题我要讲的是 没有太多人会围绕FOREIGN EMPLOYMENT INCOME 来做tax planing的文章 一般是有必要在国外工作的人才会涉及到这个问题 根据个人的情况申报本来就没有多少创造性可言 没有什么claim 不claim 的问题存在. 怎样正确的申报是会计的工作 个人的话想太多也没用

3IX37

marilyn_ma 发表于 2012-9-30 11:52
歪个楼，因为专业人士都在这里，问个问题。澳洲所有财务数据保留5年追诉期。那么到2013年6月30日前，需要保 ...

I forgot to mention one thing, if your company is making a tax loss, you need to keep all the records until the retention period of the year expires, in which the tax loss is fully recovered. For instance, if you made a tax loss in 2005, and it was not recovered until 2010, then you need to keep all the record for 2005 until 2015, if that makes a sense.