Expat Oz 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."

[a345xxx]

OH! OH! This is going to be CR#P!

[Watchdog]

It doesn't look like it will effect any non resident citizens, such as the majority of expats would be.
It will effect those who do a stint overseas for part of the tax year only.
Phew, the non income tax is the only reason I'm here in the sand!

[Baileys]

Improving fairness and integrity in the tax system — better targeting the income tax exemption for employment income earned by Australians working overseas

Revenue ($m) 2008‑09 2009‑10 2010‑11 2011‑12 2012‑13
Australian Taxation Office ‑ ‑ 215.0 225.0 235.0

The Government will better target the income tax exemption for foreign employment income, with effect from 1 July 2009. The exemption will apply to income earned as an aid worker, a charitable worker, under certain types of government employment or on projects that are in the national interest. This measure will have an estimated gain to revenue of $675.0 million over the forward estimate period.

The measure forms part of a package of measures to improve fairness and integrity in the tax system.

Currently, certain foreign employment income earned by Australians working overseas for a continuous period of 91 days or more is exempt from income tax. The original intent of this measure was to relieve double taxation, however, in practice little foreign tax may actually be paid on the foreign income concerned.

Instead, foreign employment income will generally become taxable and taxpayers will be entitled to a foreign income tax offset for foreign tax paid on the foreign employment income. This will relieve double taxation for those individuals.

[Baileys]

International tax — review of the foreign source income anti‑tax‑deferral (attribution) regimes

Revenue ($m) 2008‑09 2009‑10 2010‑11 2011‑12 2012‑13
Australian Taxation Office ‑ ‑ * * *

The Government will reform Australia's anti‑tax‑deferral (attribution) regimes which ensure that residents can not accumulate income offshore and thereby defer, or even avoid, Australian tax, with effect for income years on or after Royal Assent to the legislation. This measure will have an ongoing unquantifiable revenue impact.

These changes implement most of the recommendations of the Board of Taxation review of the attribution regimes.

To implement the Board's recommendations, the Government will:

* modernise the controlled foreign company (CFC) provisions and rewrite them into the Income Tax Assessment Act 1997;
* repeal and replace the foreign investment fund (FIF) provisions with a specific narrowly defined anti‑avoidance rule;
* repeal the deemed present entitlement rules; and
* amend the transferor trust rules to enhance their effectiveness and improve their integrity.

The operation of these regimes has, over time, become inefficient, and in light of growing global interactions, poorly targeted. The compliance costs imposed are disproportionate to the integrity risk to the revenue. The reforms will reduce compliance costs for affected businesses and help ensure that Australia's managed funds remain competitive in global financial markets.

The Government will consult on the implementation of these reforms.

[Baileys]

Maybe the most relevant sections above.

Not sure what any of it actually means though...

[Desert Diner]

Instead, foreign employment income will generally become taxable and taxpayers will be entitled to a foreign income tax offset for foreign tax paid on the foreign employment income. This will relieve double taxation for those individuals.

This means Australia will be joining a very exclusive club (the US being the other member) where her citizens will have the pleasure of being taxed no matter where they live and work in the world.

All it means is that your government will tax you on your income (hopefully they will give you an foreign earned income exemption) but will deduct any taxes you already paid on the same income from your host country.

The only ones to really benefit will be Australian tax attorneys!

[Baileys]

If that is the case then it has very serious consequences for those Australians working in the Middle East or those intending to.

[boiler]

This means Australia will be joining a very exclusive club (the US being the other member) where her citizens will have the pleasure of being taxed no matter where they live and work in the world.

Under the US tax code, you are allowed to earn $84,000 before paying taxes. Add up the exemptions and you could earn almost $100,000 before paying any tax whatsoever.

[xny556]

New Zealand IRD taxes ALL of its tax residents on their worldwide income!!

Certain countries have reciprocal tax treaties which mitigates against double taxation.

Australia is only following a worldwide trend in closing down tax dodges !!

[ferris]

Gents, it quite clearly states that the income of residents earned off-shore will be taxed. Therefore, if you are a non-resident as I would assume that most people in the sandpit are, then you will not be taxed.

[yada.yada.yada]

Rest assured the govt lawyers will see that and change the wording to "citizen". When they want their money, they are gonna get it.

[Baileys]

This part with heading.....

Improving fairness and integrity in the tax system — better targeting the income tax exemption for employment income earned by Australians working overseas

Does not mention anything about residents...it says...

Currently, certain foreign employment income earned by Australians working overseas for a continuous period of 91 days or more is exempt from income tax. The original intent of this measure was to relieve double taxation, however, in practice little foreign tax may actually be paid on the foreign income concerned.

Instead, foreign employment income will generally become taxable and taxpayers will be entitled to a foreign income tax offset for foreign tax paid on the foreign employment income. This will relieve double taxation for those individuals.

[Aussie]

Same thread running in Fragrant harbour... similar concerns :{

[ferris]

The Government will reform Australia's anti‑tax‑deferral (attribution) regimes which ensure that residents can not accumulate income offshore and thereby defer, or even avoid, Australian tax, with effect for income years on or after Royal Assent to the legislation.

Baileys, it's from your own post. I just bolded the "residents" bit. What is unclear about this? They are trying to catch people who are still residents, but claim exemption because they earn their income offshore under the 91 day rule. Certainly, commuters (of which there will be quite a few at Cathay) WILL be affected. I cant imagine there are too many commuters in the sand pit.

[kimoki]

I agree, here is the link to the proposed changes to 23AG

http://www.treasury.gov.au/documents/1538/PDF/ED_tax_laws_amendment.pdf

23AG only deals with residents

SECTION 23AG - EXEMPTION OF INCOME EARNED IN OVERSEAS EMPLOYMENT (http://law.ato.gov.au/atolaw/view.htm?locid='PAC/19360027/23AG(1)'#23AG(1))

So it is a big deal for the guys on basings

[Watchdog]

Thanks Kimoki great info :ok:

[Funk]

according to today's Australian newspaper as longs as you qualify as a non-resident for more than 2 years 23AG should not cause any concerns for us Aussie expats...bloody hope so otherwise I will be in a whole world of hurt :eek:

Tax time bomb for overseas workers | The Australian (http://www.theaustralian.news.com.au/business/story/0,28124,25496505-5017978,00.html)

[blueside^]

If you would like confirmation from a horse’s mouth, there is an Oz :8 CPA giving a seminar on this very issue in Dubai next week and you can also book a one on one free meeting with him.

I have the details if you want to PM me.