Hi everyone,

I spent the last couple of days reading your good advice on this forum and others and wanted to clarify a couple of things (apologies if some of it is a repeat from previous posts).

My wife and I currently live in the UK, I am French, she is Australian. My company has now agreed transfer to our Brisbane office and we will be moving early November. We plan to buy a property within few months after we arrive.

Just like most of you the key question for us is whether to sell or rent our UK property. In terms of my position towards Australian tax, I understand that by default - since I will be coming on a 457 Visa - I will be a temp resident, however since my wife is Australian I will be classified as Permanent – is this correct?
On that basis I understand it means I will be liable for Aussie tax on the UK rental income – expenses (mortgage interest+service charge+agent’s fees, etc..) and since my base salary will be > 80k$ I will be taxed @ 42% on this UK income. Is this correct as well ? Since the UK mortgage is on both names could the UK rental income be assigned to my wife only (she will be on a lower income) and therefore pay less tax on it?

Lastly the Government offers grants and stamp duty reductions for Permanent residents going for a first mortgage – by the sound of it we would not qualify either since although I would be seen as permanent resident from a UK income point of view, I would still be seen as temporary resident and wouldn’t qualify for the first home buyer grants (and my wife wouldn’t either because although she is permanent she will be leaving with a temporary resident...). Do you know of these grants and did I get this right re our position towards it?

It just feels wrong that we get neither the benefits of temporary resident for income tax nor the benefits of permanent residents for the Mortgage grants….

Thank you for your help… and see you soon

Fabrice

This message has been edited. Last edited by: Fab,

Hi there,

I can try and answer some of your questions.

As a 457 visa holder you will be 'resident for taxation purposes' - this is different to being a permanent or temporary resident. The ATO taxes everyone the same - if you earn money and live in Oz then they take a slice ! There is however a 'non-resident for taxation purposes' category - if you fall in that group then the ATO takes an even bigger slice ! However as a 457 holder you don't have to declare any overseas income such as rental income.

You will not be branded as Permanent just because your wife is an Aussie.

Strictly speaking I think what would happen with your rental income is that you would each take a share of the rental income. Your wife would declare her half and you would not declare your half !

As for the grants I think your wife will be eligible as long as she has never owned property in Oz before. You haven't said which state you are moving too - the rules may be different state to state but I am sure that in NSW only one of the applicants needs to be a permanent resident or citizen - therefore you WOULD qualify providing you meet the other requirements.

As for tax rates I suggest you look at the ATO website www.ato.gov.au or at earlier posts on here in the Tax and Money Forum - I wrote one not so long ago which explains the taxation system. Basically as from 1st July this year income over $80k will be taxed at 40% - currently it is income over $75k.