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Tax for Non-Resident

Discussion in 'Accounting, Tax & Legal' started by jrc77, 1st Oct, 2008.

  1. jrc77

    jrc77 Well-Known Member

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    Next financial year I am looking at being non resident (working/holiday to the UK). Are there any issues that I need to be aware of from a tax perspective?

    I believe any income I receive in Australia (from investments) will be taxed at the highest marginal tax rate. Am I right to assume that I can still use tax deductions (interest on loans for income producing purposes) to offset this income?

    Are there any tax deductions/offsets that are not allowed when you are non-resident?

    Regards,

    JR
     
  2. Billv

    Billv Getting there

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  3. carlosreynolds

    carlosreynolds Active Member

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  4. Rob G.

    Rob G. Well-Known Member

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    Just curious why a working holiday would make you a non-resident ?

    s.6(1) ITAA36 deems that Aussies remain residents for tax purposes at all times whilst overseas unless they establish a "permanent place of abode" overseas.

    That is much more than merely being out of the country for a while. It entails showing a pattern of behaviour of a permanent nature around a fixed "home".

    Cheers,

    Rob
     
  5. jrc77

    jrc77 Well-Known Member

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    Rob,

    Interesting point... can anyone confirm for me?

    My situation is that I am intending to work in the UK for 12-18 months and then return to Australia. I did a similar thing in 2001 and I thought I was non-resident for tax purposes. I find the wording on "http://www.ato.gov.au/individuals/content.asp?doc=/content/64131.htm" confusing but the test at "http://calculators.ato.gov.au/scripts/axos/axos.asp?CONTEXT=&KBS=Resident.XR4&go=ok" seems to indicate I would be resident for tax reasons.

    Regards,

    JR
     
  6. Rob G.

    Rob G. Well-Known Member

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    Doesn't sound convincing with such a short intention.

    Check out tax ruling IT2650.

    Cheers,

    Rob
     
  7. Billv

    Billv Getting there

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    I agree.

    Also, what are you going to achieve by being non resident for tax purposes?

    Cheers