Hi
we are quite scared as we have been to see a 'professional' tax and pensions adviser here in Aus. My husband has a UK company pension, which he is currently drawing. We are told now he is a permanent resident, he is liable for tax in Aus on the pension. However, the pension can't be transferred because he is already drawing it and it would lose too much and all its benefits. However, because it is still paid in the UK from a UK company, it is still liable to UK tax, we are told, even though he is no longer resident in the UK. Then the shocker was that we are told he will have to pay tax both in the UK 'and' in Australia.
We thought he would pay one or the other. Surely he can't be expected to pay tax twice - it would ruin us as would leave little to live on.
Any thoughts please.

G'day

Living as a PR in Aust he has two choices 1) pay tax here or 2) try to fool the Aust Tax Office. I'd suggest only taking option 2) if you're happy to be deported.

However, you don't have to pay double tax, any tax you pay in the UK can be used as a tax credit here so you will only need to pay the difference between UK and Aust tax. Sadly the Aust tax rates are higher than the UK ones so further taxes will definately be taken.

Cheers
Bob in Bull Creek

Thanks for that info Bob. Not great news but not as shocking as we thought it might be. I think we will have to go and see someone other than the bloke we saw, as he didn't seem to know what we should do and how to do whatever we need to do.
Cheers

Bob correct me if I am wrong !

I think all you need to do is ensure that you lodge a UK tax retuen every year to cover you for the UK pesion income and then pay the tax due in the UK.

Once you know how much tax you have paid in the UK you can then safely complete your Oz tax return, detail the UK earned income (converted to Oz dollars) and then also include the tax paid in the UK (converted to Oz dollars) as a tax credit. This will all be added into the melting pot along with any Oz income you may have and Oz tax already withheld.

Is it more difficult than that ? Is it any different to declaring any other form of UK income (eg rental income).

Permanent visaholders who are tax residents of Australia should complete UK Revenue form FD2 so that UK source pension income is paid on a gross basis (ie no tax deducted in the UK).

You can obtain form FD2 from the UK Revenue website (www.hmrc.gov.uk)- type FD2 into the search box.

Tax is then payable wholly in Australia.

Note that tax that has been paid in the UK under the PAYE system since you have been a tax resident of Australia holding a permanent residency visa should be repaid to you, as it ought not be claimed as a credit against any Australian tax liability.

The above flows from the Tax Treaty between the UK and Australia.

Feel able to contact me via our Perth telephone number if you think you might need some formal assistance completing forms, etc - 08 9261 7762.

Best regards.

Colin,

UK source pension income in the hands of a non-UK tax resident individual is treated diferently to rental income and other types of investment income - in the case of those who are tax residents of Australia the Tax Treaty then confirms which jurisdiction has the right to tax the income.

Best regards.

quote:

Originally posted by Colin Hanna:
Bob correct me if I am wrong !

I think all you need to do is ensure that you lodge a UK tax retuen every year to cover you for the UK pesion income and then pay the tax due in the UK.

Once you know how much tax you have paid in the UK you can then safely complete your Oz tax return, detail the UK earned income (converted to Oz dollars) and then also include the tax paid in the UK (converted to Oz dollars) as a tax credit. This will all be added into the melting pot along with any Oz income you may have and Oz tax already withheld.

Is it more difficult than that ? Is it any different to declaring any other form of UK income (eg rental income).

Thank you very much Alan for specific information of which I don't know how we would have become aware of otherwise.
I anticipate that we will be contacting you directly for assistance.
Thankyou.