Expat Pilots to be Taxed?

[BeerBaron]

Income tricks of the rich targeted | The Australian (http://www.theaustralian.news.com.au/story/0,25197,25471124-5017016,00.html)

"Currently, certain foreign employment income earned by Australians working overseas for 91 days or more is exempt from income tax to remove the risk of taxing the same income twice.

However, the Government noted that Australians earning income overseas generally paid little tax to foreign governments. So from July 1, those earning income offshore will be entitled to a tax offset for any income tax paid overseas, but will still be liable for Australian income tax."

[T101]

Congratulations! What a country...

[luvmuhud]

After skimming through the Australian Treasury release at Better targeting the income tax exemption for Australians working overseas (http://www.treasury.gov.au/contentitem.asp?NavId=&ContentID=1538) ,
I think the new laws are aimed at Australian Residents earning foreign income, not expatriates.

I'll nervously continue investigating!


lmh

[bekolblockage]

I wish you were right but I've got a horrible feeling.
There'll be an awful lot of nervous HK Chinese with Aussie citizenship if it is really their intention to tax non-residents.
Judging by the amount they think they'll recoup, it seems we're :mad:ed.

[luvmuhud]

Have a look at the website link. The word document at the bottom of the web page is the amendment for Senate approval, and it refers to a change to the 23AG ruling......I don't believe this will have any ramifications to Australians who are non-residents for tax purposes. Obviously, there'd be a fairly rapid flood of expats back to Aus if we suddenly found ourselves paying Aussie tax rates. Hopefully this won't happen.

lmh

[canonball1]

Tax will only apply to 'residents'. To be deemed resident you must meet requirments of days, intent etc under ATO guidlines. Most people living full time in HKG do not need to waste energy even thinking about this. Examples of residents and non-residents (http://www.ato.gov.au/individuals/content.asp?doc=/content/36280.htm)

[bekolblockage]

On further reading, I believe you are correct. Section 23AG does not relate to persons declared as non-residents for tax purposes.
Phew! (I hope)

[Aussie]

Like Tax in Aus isnt already high enough.... Then this. Thanks ATO!

[FOCX]

What the budget measure kills are Australian residents who are sent O/S by their employer for a period greater than 90 days but not long enough to claim themselves non-resident under an old agreement where the employer states they are going to benefit from their employees time away, so the ATO agrees to this, the resident goes away with no tax. Generally, at most countries where they end up (UK) tax rules mean they don't pay tax there either so walk away with lots in their pocket.

The ATO is simply stopping this sort of abuse, if you go you'll now pay oz tax with a credit for any foreign tax paid. I had a mate who went to London for 6 mths under said agreement earnt 150K and paid no tax in either country legally!

[Sir Donald]

Some one's gotta feed the rifraf.
Make them work Rudie!

[Phlap1]

Nah
Give them all another $900 bucks, stimulate the economy.
How generous these pinko,lefty,trendy,bedwetter LABOR
morons are, this guvmint is doing more damage than Gough.
It will take generations of expat taxpayers to sort this mess.
Sad thing is, the pensioners, dole bludgers, and half the
population that work for the 3 tiers of guvmint will re-elect
these idiots again and again.
LABOR is already talking up an early election, this will give
them a mandate to crank up expat tax, and further screw
anyone with the temerity to work or save. The lucky country
my arse, only for the LABOR followers, God help expats and
all that provide for themselves.

[Gnadenburg]

If you are a non-resident this won't affect you. Yet, why are so many expats in Hong Kong maintaining Australian residency status ? I see little advantage in it.

From Steve Douglas whose head you would recognize from watching the footy on Australia TV.

Australian Treasurer Wayne Swan announced in his Budget on the 12th May 2009 that a number of anti tax avoidance measures would be introduced including changes to the Foreign Income rules.

The proposed changes scrap the current tax exemption on Foreign income by Australian residents doing offshore work stints of 90 dyas or more, where they are exempt from tax on this income provided they pay tax in the country of earning.

The new changes will make these earnings taxable in Australia with a full tax credit for any tax paid in the offshore country.

This has caused a stir in the Expatriate community as many Australians living and working aborad feared that this may mean their offshore earnings may now be taxable.

This is not the case, as the changes only apply to people living in Australia and venturing overseas on short term work assignments.

Australians genuinely living overseas on a long term basis are classed usually as Non Residents for tax purposes and therefor the changes to the exempt income rules will not affect them as they did not apply in the first case.

For many Australians currently commuting for work offshore, there may be motivation for them the move permanently overseas in order to not have there incomes taxed in Australia under the new rules.

[GE90115BL2]

If I was a commuter with a family in Oz I'd be worried. As for the rest of us it's not applicable.

[weido_salt]

T101

"Congratulations! What a country..."

They do some stupid things admittedly.

They seem to think everyone on earth wants to go to Australia, so they have demanded visa's from residents of most countries for visitors. Unfortunately every Australian visiting most countries now, is required to have a visa. Don't you think they have shot themselves in the foot with this one?

[air pressure]

It seems clear from reading the Gov's tax proposals that they are condidering seriously taxing the assets of Australians overseas, just like the US does with their citizens.

[Frogman1484]

No they are not!

This is clear it only applies if you are living in Australia!

[simmer]

"No they are not!

This is clear it only applies if you are living in Australia!"

For now. Thick end of the wedge inexorably follows the thin end.

[Frogman1484]

Then it might not!!! why worry about something that might never happen.
:ok:

[404 Titan]

air pressure & simmer

Sorry but as a former accountant I see no sinister plot by this government to introduce world wide tax for Australian citizens. All they are doing is essentially the closing of a tax loophole. This exemption was originally allowed only because it was assumed that the tax payer would be paying the tax on foreign earned income overseas. As it turned out most weren’t as the foreign tax authorities were generally considering the Australians as non resident for tax purposes. End result was no tax was being paid anywhere.

[caneworm]

Don't want to throw kero on this potential fire, but it would also be unwise to think it'll be ok. The (new) policy is still being drafted and I wouldn't underestimate these Labor S-o-B's.
If they go down the U.S. IRS path, sh!ts'll be trumps.
Forget about the 23AG & 91/180 day rules, (in all likelyhood these will change/disappear) only when the legislation is available for scrutiny will we know what we're up against.

[Teal]

Forget about the 23AG & 91/180 day rules,These are long standing tax principles and laws, around which, Double Taxation Agreements (Treaties) have been put in place with dozens of countries. The changes should only affect persons who are residents of Australia for taxation purposes only, but are working overseas, generally on short term assignments. Expats overseas for longer terms will generally be non-residents for tax purposes.

cheers

[404 Titan]

caneworm

Labor doesn’t control the Senate. There are already a few items in the budget that the Coalition with support of the conservative independents will block. They will also block anything else that is varied from the budget without their consent.

Am I worried about worldwide tax for Australian citizens? No. The government has already made it very clear the intent of this budgetary item. I never have nor will I ever believe in conspiracy theories unless irrefutable evidence is available to me. It is abundantly clear here there isn’t any.

[Air Profit]

Always entertaining listening to people who believe that Tax Law will remain stable and uniform over long time frames. As the world slips into the greatest economic collapse of the modern era, governments will become ever more deperate to obtain any and all income that they can. Simple question: if it is ok for the US to tax it's citizens world wide, why would it not be an obvious step for other governments? It will not be long before there is an announced change in Aus pertaining to the taxation of worldwide assets. Time will tell who is right. :confused:

[404 Titan]

Air Profit
Always entertaining listening to people who believe that Tax Law will remain stable and uniform over long time frames.
I never said it did. I do have a fair idea how the tax laws in Australia have changed over the years having been an accountant. Quite frankly it amuses me those that get on here and dribble on about conspiracy theories like this. Almost all prove to be unfounded.
Simple question: if it is ok for the US to tax it's citizens world wide, why would it not be an obvious step for other governments?
For the record the US doesn’t tax all non residents. For those that do fall into the narrow band that do, they are in the minority.

The fact is 95% of governments don’t and won’t because they can’t. The main reason the US can get away with it is because of their economic clout in enforcing it in foreign jurisdictions and knowing that most Americans are very reluctant to ever give up their citizenship.
It will not be long before there is an announced change in Aus pertaining to the taxation of worldwide assets.
This is pure speculation on your part that can’t be backed up with any factual evidence.

[Air Profit]

As I said, time will tell who's right. You have to be right all the time...I only have to be right once.:ok:

[caneworm]

404,
There's no conspiracy theory here, it's going to happen. The extent & magnitude remains to be seen and it beggars belief how anyone can say, at this stage, that it will not affect them.
A simple change in the wording in the tax legislation, from Australian resident to Australian citizen may be enough to make life interesting for us.
Instead of proclaiming (several times now) that your an accountant and "she'll be right", perhaps you should be offering advice on how best to prepare for the worst whilst hoping for the best.

[404 Titan]

caneworm
There's no conspiracy theory here, it's going to happen.
Says who? You? Care to back this up with facts rather than just your opinion?
A simple change in the wording in the tax legislation, from Australian resident to Australian citizen may be enough to make life interesting for us.
First of all it will take more than just a simple change in the wording from “Resident” to “Citizen” to allow it to happen. Secondly I can count at least three times in the past when governments have discussed doing just this and it was advised to them by Treasury that the revenue raised would be far outweighed by the cost of trying to enforce it to make it worthwhile. Unlike the US that has several million of its citizens living abroad we only have several hundred thousand. If you then remove those that earn less than about AUD$85000.00 (yes that’s right, American expats that earn less than about USD$85000.00 abroad don’t pay world wide tax) and spouses who probably don’t work at all, you are left with a very small core of Australians you can actually tax. Lastly most Australian expats work in the UK where the tax rates are comparable to Australia. With a reciprocal tax treaty between Australia and the UK, how much tax do you thing would be raised?
Instead of proclaiming (several times now) that your an accountant and "she'll be right", perhaps you should be offering advice on how best to prepare for the worst whilst hoping for the best.
Now I am fairly fortunate. My wife has dual citizenship. If push came to shove I would drop my Australian citizenship in a heart beat if the Australian government tried it on. It should also be pointed out that, with the exception of HK most other countries will allow foreigners to become citizens when they have lived and worked there long enough. I doubt any Australian government would potentially risk loosing the huge tax windfall that is currently generated when Australian expats finally retire and move back home.

[Air Profit]

Titan.....of course, we all know how rational governments can be when they get desperate...don't we? What you seem to believe is so unthinkable is everyday reality for 400 million Americans. I'd be a bit more concerned about what's coming if I were you...

[404 Titan]

Air Profit

Unlike the US government, I wouldn’t classify the Australian government as desperate. Yes they will be running a deficit for a number of years, but they are also starting from a base of no government debt.

First of all the population of the US is 260 million not 400 million. Of the approximately 3 million US expats less than 500000 pay world wide tax as most live and work in countries that have higher marginal rates of tax than the US and also have tax treaties. Of the 300000 thousand Australians that are expats, most live in the UK where the tax rates are similar to Australia and with the tax treaty with the UK most wouldn’t be liable for Australian tax. Remember world wide tax isn’t double taxation. Just like the US does with its expats, they would get a tax credit for tax paid in their country of residence. So with this information at hand, how much tax do you think the Australian government would get if they were to legislate world wide tax and how much do you thing it will cost them to collect it? A hint. The cost of collecting it will be more than the revenue raised. This is straight from the Treasury Department who advise the Federal Government and this is what they have told them. Until the population of Australian expats significantly increases, it isn’t worth the government’s limited resources to try and tax them. That is the hard and cold facts.

[FOCX]

Titan some advice, save your breath!!

The US Gov was responsible for 911 & Elvis still lives and pays tax on his world wide income. :E

You guys are reading too much into this!

[Frogman1484]

On Sat Australian, the treasury has admitted that the cancellation of 23 AG is going to cost them more money to enforce than the money they will collect. They have admitted in the article that the reason they do not peruse tax of Australians overseas is that it is too costly to enforce.:ok:

[Loiter1]

I thought Elvis got an exemption as he lives with the Aliens for more than 180 days of the years. :ok:

[Air Profit]

Frogman, funny how you guys can't see the contradiction in what you are saying (and what the Aus govt is saying). The Gov says that cancelling 23AG is going to 'cost them more than they raise'... Sure, but they STILL went ahead and changed the tax system in a major way (..and frankly, I don't believe their claims about it costing them more than they raise). If they made this change, then what is going to stop them from making other major changes? Also, nothing difficult in making the change. The Govt only has to enact a law making it illegal to not declare overseas income, and pay tax on same....as per the USA. I am at a loss why you seem to think that this is somehow an impossiblilty...?? It is all quite simple and easily enforced in the US. I can't see why it couldn't also be in AUS. :confused: The other reason you are ignoring is in respect of percieved 'fairness'. If they raise taxes on Aus residents, they would need to show that Australians who have left are not exempt, otherwise it creates an implied persuasion to leave Aus to escape paying one's 'fair share'. Eventually governments will see that they must include all their citizens in the tax net so as to not be favouring those who pay nothing, but still return to Oz later in life with their 'booty'...:=

[Frogman1484]

Why have they not done it so far?:ok:

[Air Profit]

We've only seen phase one of the world economic collapse. Wait until we reach phase three... Without hashing out the detail, when this debacle is over the Governments of the world will be buried with unsustainable debt. The only answer (well...to politicians that is) will be to institute a range of crippling tax increases. If you think Australia will somehow sit this out, I have some swamp land in Louisiana you may be interested in! Watch for phase two of the crisis to hit sometime between July and Sept. Enjoy. :ugh:

[Lowkoon]

Do those crystal balls clang when you walk?

[Kontract Killer]

Phase three?

Phase two will start long before July - second round of SLS in the new year anyone!

Even less income to give back in taxes :rolleyes:

[Big Picture]

Yes, like many of the new tax measures announced by the Labour party in the last budget there is still no detail on the rules and compliance issues in regard to this policy and many more new measures designed to tax hard working individuals to pay for mindless spending. With only two weeks prior to the implementation of these policies we can only hope that they get their s..t together ASAP.

The labour party love to spend money and they have turned a $26B surplus into a $40B deficit in record time, purely to be able to say they have narrowly avoided a "technical" recession. They now need to recoup the money they have spent, or at least pay the interest on their borrowings which must now be close to $5b/ year.

Those that say that it doesn't really matter which party is in power, wake up! The labour party will bank roll any minority group it can to get re-elected. Lets hope they haven't sunk the nation to unsalvageable lows prior to the wider community waking up to them.

So I guees now all we can do is wait, we can't tax plan because no details have been released. Its wonderful working with professionals isn't it!

[Teal]

I say again - these changes only affect those on short-term assignments overseas who remain residents of Australia for tax purposes. Some law firms and legal job agencies are jumping up and down because of the many lawyers who work overseas on lucrative, tax-free, short term assignments who will be impacted by these changes. I personally know several lawyers who from time-to-time love jetting off to places like the Cook Islands, Fiji, Vanuatu, Indonesia or Dubai for a stint of tax-free legal work (usually drafting local legislation or lecturing at a university). On the other hand, Aussies based overseas for extended or indefinite periods usually elect to become non-residents for tax purposes. In that situation they only have to pay tax (including non-resident withholding tax) on their Australian investment income.