I worked in Oz last year and was advised to enter a salary packaging scheme. I did to the maximum allowable before Fringe Tax Benefit kicked in.

I worked there on a visa for 12 months before returning to the UK. I was Oz 'resident' for tax purposes and the 12 months straddled 2 UK tax years.

On return to the UK my accountant is a little confused about how to treat the salary sacrifice for UK tax. He says that I have to add up my gross UK income to the gross Oz income and use that for the starting basis for the tax return for eac of the 2 years.

But:-

Should I be using the total gross amount from my employer before deducting the salary sacrifice amount or the total gross amount after deducting the sacrifice on the understanding that I have 'sacrificed' that part of the salary and therefore never earned it. Or does the UK tax office not recognise Oz sacrifice schemes?

My accountant seems more confused than me!

HB

Since no one has replied that might be better informed than me I will give you my thoughts on this subject.

As you are a UK citizen who did not become tax exempt you remain liable in the UK for your world wide income.

The salary you earned in Oz was the gross amount and this is what you must declare in the UK as your income.

Salary sacrifice is merely a tax device in Oz to shelter your income from the higher tax brackets by agreeing to transfer it straight to your super where it will be taxed at lower rates. However it is still your income.

Presumably now that you have left Oz you have claimed back your super contributions so you have in effect ended up with the income albeit taxed at lower rates.

You will be allowed an offset for Oz tax you have paid once your UK tax is calculated.

Hope this helps.