Jetstar Singapore Contract
Do what the QF pilots did to CX pilots. Dob them into the ATO.
Nasty. But not as nasty as some of the posts here....
No low cost pilot could afford to buy a house in Singapore to meet non-residency requirements whilst their families sponge of the rest of the law abiding, tax paying low cost pilots in Oz.
Nasty. But not as nasty as some of the posts here....
No low cost pilot could afford to buy a house in Singapore to meet non-residency requirements whilst their families sponge of the rest of the law abiding, tax paying low cost pilots in Oz.
From today's Age.
Residency questions confuse investors
Max Newnham
August 17, 2010
Whether someone is classed as an Australian resident for tax purposes has a major effect on what they pay tax on and at what rate. By the flood of questions sent in from readers both here and overseas the matter of residency causes many problems. Because of the complexities in this area, and because every case is judged on its own facts, professional advice should be sought to ensure you get the right answers.
Q. I have a three year contract in Doha. I rent an apartment there but still have a house in Kiama which my children live in. I receive no income from this. I pay no income tax on my wages in Doha and transfer money into my bank account to pay the mortgage in Australia. It is also an offset account for the loan that we pay bills out of. My accountant advised that I should be classified as a non-resident as I have a three year contract and rent an apartment in Doha. My wife has taken leave without pay and currently does not work in Doha. Do you think I am a non-resident for tax purposes?
A. The question of Australian tax residency can in some cases be very easy, while in other cases it can be extremely hard. At the heart of deciding tax residency is the intention of the taxpayer. Where this cannot be established clearly the Australian Taxation Office applies various tests to work out what a taxpayer’s real intention is.
One of the tests used is to establish where the taxpayer normally resides. The ATO on its web site gives the Shorter Oxford Dictionary definition of resides as, “to dwell permanently, or for a considerable time, to have one’s settled or usual abode, to live in particular place”.
The ATO in deciding where someone normally resides takes account of where a person’s family, business and employment ties are, and where they organise their financial affairs. Also taken into account is where their permanent place of abode is. In other words where their residence is and where their family sleeps at night.
In your case as you have retained your home in Australia, you have not purchased a new home in Doha and are only renting, your wife has not resigned her employment but only taken leave without pay, you have a finite three year contract that is not a permanent placement, and you maintain a bank account in Australia that you pay bills out of, you would more than likely be classed as an Australian resident for tax purposes by the ATO.
Residency questions confuse investors
Max Newnham
August 17, 2010
Whether someone is classed as an Australian resident for tax purposes has a major effect on what they pay tax on and at what rate. By the flood of questions sent in from readers both here and overseas the matter of residency causes many problems. Because of the complexities in this area, and because every case is judged on its own facts, professional advice should be sought to ensure you get the right answers.
Q. I have a three year contract in Doha. I rent an apartment there but still have a house in Kiama which my children live in. I receive no income from this. I pay no income tax on my wages in Doha and transfer money into my bank account to pay the mortgage in Australia. It is also an offset account for the loan that we pay bills out of. My accountant advised that I should be classified as a non-resident as I have a three year contract and rent an apartment in Doha. My wife has taken leave without pay and currently does not work in Doha. Do you think I am a non-resident for tax purposes?
A. The question of Australian tax residency can in some cases be very easy, while in other cases it can be extremely hard. At the heart of deciding tax residency is the intention of the taxpayer. Where this cannot be established clearly the Australian Taxation Office applies various tests to work out what a taxpayer’s real intention is.
One of the tests used is to establish where the taxpayer normally resides. The ATO on its web site gives the Shorter Oxford Dictionary definition of resides as, “to dwell permanently, or for a considerable time, to have one’s settled or usual abode, to live in particular place”.
The ATO in deciding where someone normally resides takes account of where a person’s family, business and employment ties are, and where they organise their financial affairs. Also taken into account is where their permanent place of abode is. In other words where their residence is and where their family sleeps at night.
In your case as you have retained your home in Australia, you have not purchased a new home in Doha and are only renting, your wife has not resigned her employment but only taken leave without pay, you have a finite three year contract that is not a permanent placement, and you maintain a bank account in Australia that you pay bills out of, you would more than likely be classed as an Australian resident for tax purposes by the ATO.
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Hope the suckers, sorry, volunteers, have done their homework on living in SIN, not just looked at the $$$ and the tax rate.
In fact, with the cost of housing alone and the exchange rate, I trust you are getting around 20% more than Oz.
In fact, with the cost of housing alone and the exchange rate, I trust you are getting around 20% more than Oz.
Clockwork Doll
If that is the case I hope they have asked the company for a clause in their contracts indemnifying them against possible double taxation? As they will be working for an Australian company that has a base in Singapore, the ATO will probably rule that the foreign contract is for a finite period of time and therefore are Australian residents for tax purposes. I wouldn’t like paying double taxation on an inferior LCC salary and trying to live in Singapore.
Fact is the only ones that have researched it properly are the ones who are going.
OYY1
Is that YYYYAAAAAAWWWNNNNN because you don’t care or you think I am talking BS? As a non resident pilot who also happens to be an accountant I am very well conversed with Australian taxation law, especially when it comes to the determination by the ATO of residency status. You can yawn all you like but the reality is that any J* pilot who accepts this contract to go to Singapore will find it very difficult to prove their intention was to stay their indefinitely. Fact.
Is that YYYYAAAAAAWWWNNNNN because you don’t care or you think I am talking BS? As a non resident pilot who also happens to be an accountant I am very well conversed with Australian taxation law, especially when it comes to the determination by the ATO of residency status. You can yawn all you like but the reality is that any J* pilot who accepts this contract to go to Singapore will find it very difficult to prove their intention was to stay their indefinitely. Fact.
I understand that the ATO has double tax exemption agreements with most countries where Australians find themselves. I am sure that there would be one for Singapore. Do your homework!!
Frank Burden
I think you need to do your homework sunshine. I am very well aware Australia has a tax treaty with Singapore but that doesn’t stop the ATO taxing you at appropriate Australian tax rates if they determine you to be an Australian resident for tax purposes and then giving you a credit for the tax paid in Singapore after you have paid the full Australian tax. These contracts and the pay scales that J* have offered are based on not paying Australian tax. That assumption in my opinion as an accountant is a false one which may end up costing those that go up there dearly.
I think you need to do your homework sunshine. I am very well aware Australia has a tax treaty with Singapore but that doesn’t stop the ATO taxing you at appropriate Australian tax rates if they determine you to be an Australian resident for tax purposes and then giving you a credit for the tax paid in Singapore after you have paid the full Australian tax. These contracts and the pay scales that J* have offered are based on not paying Australian tax. That assumption in my opinion as an accountant is a false one which may end up costing those that go up there dearly.
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Wot 404 Titan said,
I agree with Titans comments totally, I have been through the system checking out a SIN base and I can assure you that you get double hit!
simple really! Anyone taking it risks all!
I agree with Titans comments totally, I have been through the system checking out a SIN base and I can assure you that you get double hit!
simple really! Anyone taking it risks all!
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How do you demonstrate an indefinite commitment to gain non tax residency status when you've only signed a fixed term contract, all the while on LWOP from your Aussie job?
When you live....
waren9
You answered your own question "whilst on LWOP from your Aussie job"
You're on leave, therefore you intend to go back. Resign and it might be different....
UTR
You're on leave, therefore you intend to go back. Resign and it might be different....
UTR
Crikey Titan, I sure hope anyone so narcisticly ambitious, trusting of Jetstar management, having absolutely no concept of (or simply doesn't care!) the way a desperate management are trying to screw their pilots, or have been living in a cave while all this debate goes on, are reading your's and Gnadenburg's words.
Great post 'Doll. Resorting to personal attacks on only your 4th outing. You're either management, or one of the above described. If you are heading to Singapore, Please, please don't take Titan's sage advice. Enjoy your poverty!
Great post 'Doll. Resorting to personal attacks on only your 4th outing. You're either management, or one of the above described. If you are heading to Singapore, Please, please don't take Titan's sage advice. Enjoy your poverty!
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I believe that this may be a "full time position" with a Singaporean based company. (Rather than a "fixed term" contract). Thus showing intent to live away from Australia. However those on LWOP from JQ may still have trouble with the "intent" argument!
Do a bit of research and discover the wondrous world of Conor McKathy....Ryanair fame,architect of the tax minimisation program in Europe...pilots do not have a base and they are in countries 10 days at a time and their rosters are structured that they do not pay tax anywhere. Conor has helped AirAsiaX and Jetstar and went to college with Alan Joyce....Wake up and smell the roses..guys. This is sophisticated stuff that has not been thought up overnight. The difference is Ryanair pilots are paid a decent salary...as opposed to Jetstar. Need I say more..sit tight and be united and you will be rewarded, rush in and you live with what you get.
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Doesn't personally affect me, but nevertheless, out of curiosity, it took about 30 seconds to complete the ATO Residency Determination Calculator.
Tax Tools -
CONTEXT=&KBS=residency_leaving.XR4
Determination of residency status – leaving Australia
Residency status
Version 2.0.0
You are not an Australian resident for taxation purposes following your departure from Australia.
You provided the following information
Are you under 16 years of age? No
Are you or your spouse an eligible employee in the CSS or a member of the PSS? No
Are/were you an Australian resident for tax purposes immediately before leaving Australia? Yes
Are you a temporary resident leaving Australia to live in another country (or countries)? No
Are you an Australian resident who is emigrating to live permanently in another country? No
Where were you born? Australia
What do you consider to be your home country? Australia
Will you spend the majority of your time based in any one place while overseas? Yes
How long will you be based in that place while outside Australia? 2 to 5 years
What accommodation will you occupy most of the time that you are in this place? Rented dwelling house, flat, etc
Are you a dependent child? No
Are you travelling with or joining family members (e.g. spouse, dependent children) overseas? All family members
Do you plan to return to Australia more than four times every year? Yes
What are your plans for your Australian home? Sell ASAP / Already sold
How often do you expect to visit Australia while you are based overseas? At least every 3 months
You should keep a copy of this decision for your taxation records.
Tax Tools -
CONTEXT=&KBS=residency_leaving.XR4
Determination of residency status – leaving Australia
Residency status
Version 2.0.0
You are not an Australian resident for taxation purposes following your departure from Australia.
You provided the following information
Are you under 16 years of age? No
Are you or your spouse an eligible employee in the CSS or a member of the PSS? No
Are/were you an Australian resident for tax purposes immediately before leaving Australia? Yes
Are you a temporary resident leaving Australia to live in another country (or countries)? No
Are you an Australian resident who is emigrating to live permanently in another country? No
Where were you born? Australia
What do you consider to be your home country? Australia
Will you spend the majority of your time based in any one place while overseas? Yes
How long will you be based in that place while outside Australia? 2 to 5 years
What accommodation will you occupy most of the time that you are in this place? Rented dwelling house, flat, etc
Are you a dependent child? No
Are you travelling with or joining family members (e.g. spouse, dependent children) overseas? All family members
Do you plan to return to Australia more than four times every year? Yes
What are your plans for your Australian home? Sell ASAP / Already sold
How often do you expect to visit Australia while you are based overseas? At least every 3 months
You should keep a copy of this decision for your taxation records.
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OYY1
Before you get too smug, I suggest you try doing the assessment again and answer every question identically EXCEPT for this question:
Answer "rent out"
You'll find that you're an Australian resident for taxation purposes! Or are you seriously suggesting that to work for this mob in Singapore you should first sell your home in Oz...
DIVOSH!
Before you get too smug, I suggest you try doing the assessment again and answer every question identically EXCEPT for this question:
What are your plans for your Australian home?
You'll find that you're an Australian resident for taxation purposes! Or are you seriously suggesting that to work for this mob in Singapore you should first sell your home in Oz...
DIVOSH!
Or are you seriously suggesting that to work for this mob in Singapore you should first sell your home in Oz
OYY1
All the ATO calculators are guides only. They are not a ruling and anyone thinking they can use one as such will be crucified by the ATO’s lawyers in any court. It clearly states this on the ATO web sight and there is also precedent in the courts.
neville_nobody
And that is why the calculators can lead you astray. In most instances Australian citizens living abroad can own property in Australia and rent it out and still be classed as non residents for tax purposes. You can even, in most cases, keep it vacant if you like and use it as a holiday home.
busdriver007
That type of scheme is asking for trouble in my opinion and it certainly wouldn’t be viable out of Singapore with the laws there and J*’s schedule. The ATO would probably consider you an Australian resident for tax purposes simply on the grounds that you aren't a resident anywhere else so therefore you are a resident here. Catch 22.
GIMGOTOS
Doesn’t make any difference if it is permanent or fixed term, working for an Australian company or Singaporean, if the said pilots are on LWOP from J* Aus, they show intent to return. The only way to fix that is to resign from the Australian company without the prospect to return in seniority. Also will any promotion require them to return to Australia? Is there one or two seniority lists? Is there the prospect of Australian pilots who were employed directly onto the Singapore base transferring to Australia without resigning first?
All the ATO calculators are guides only. They are not a ruling and anyone thinking they can use one as such will be crucified by the ATO’s lawyers in any court. It clearly states this on the ATO web sight and there is also precedent in the courts.
neville_nobody
And that is why the calculators can lead you astray. In most instances Australian citizens living abroad can own property in Australia and rent it out and still be classed as non residents for tax purposes. You can even, in most cases, keep it vacant if you like and use it as a holiday home.
busdriver007
That type of scheme is asking for trouble in my opinion and it certainly wouldn’t be viable out of Singapore with the laws there and J*’s schedule. The ATO would probably consider you an Australian resident for tax purposes simply on the grounds that you aren't a resident anywhere else so therefore you are a resident here. Catch 22.
GIMGOTOS
Doesn’t make any difference if it is permanent or fixed term, working for an Australian company or Singaporean, if the said pilots are on LWOP from J* Aus, they show intent to return. The only way to fix that is to resign from the Australian company without the prospect to return in seniority. Also will any promotion require them to return to Australia? Is there one or two seniority lists? Is there the prospect of Australian pilots who were employed directly onto the Singapore base transferring to Australia without resigning first?
Kids, to resolve the tax issue, you need Jetstar to ask the ATO for a private tax ruling that covers all of the commonest family arrangement combinations you guys would contemplate.
Jetstar would have to supply the ATO with details of the contracts, working conditions, Jetstars intent, terms and conditions, future contracts, etc. The ATO will then crunch through all that detail and issue a binding private ruling that specifies exactly how pilots accepting a Jetstar contract will be treated by the ATO.
The ruling is binding on the ATO. Jetstar should provide each of you with a copy of the ruling for you to satisfy yourself about your tax status.
Be aware that once Jetstar has done that, neither Jetstar nor you personally can make any variation to your contract or terms and conditions without going back to the ATO and ensuring that the private ruling still applies.
...This needs to be a condition of your contract: "Jetstar will not do anything that will prejudice the validity of the ATO private ruling and will indemnify any pilot whose status for Australian taxation purposes by any action of Jetstar or changes to Australian taxation law or determinations of tax status in Australian courts. "
P.S. Even the simplest and apparently inconsequential changes to a contract or stipulated behaviour, terms and conditions can and will void a private ATO ruling.
If Jetstar can't or won't get you a private ATO ruling, then don't go.
My guess would be that the ATO will tell Jetstar to go **** themselves and that you will be paying full Australian tax. Even if there is a loophole, be aware that the ATO will close it through legislation if they believe they are losing too much money.
...Seen it all done.
Jetstar would have to supply the ATO with details of the contracts, working conditions, Jetstars intent, terms and conditions, future contracts, etc. The ATO will then crunch through all that detail and issue a binding private ruling that specifies exactly how pilots accepting a Jetstar contract will be treated by the ATO.
The ruling is binding on the ATO. Jetstar should provide each of you with a copy of the ruling for you to satisfy yourself about your tax status.
Be aware that once Jetstar has done that, neither Jetstar nor you personally can make any variation to your contract or terms and conditions without going back to the ATO and ensuring that the private ruling still applies.
...This needs to be a condition of your contract: "Jetstar will not do anything that will prejudice the validity of the ATO private ruling and will indemnify any pilot whose status for Australian taxation purposes by any action of Jetstar or changes to Australian taxation law or determinations of tax status in Australian courts. "
P.S. Even the simplest and apparently inconsequential changes to a contract or stipulated behaviour, terms and conditions can and will void a private ATO ruling.
If Jetstar can't or won't get you a private ATO ruling, then don't go.
My guess would be that the ATO will tell Jetstar to go **** themselves and that you will be paying full Australian tax. Even if there is a loophole, be aware that the ATO will close it through legislation if they believe they are losing too much money.
...Seen it all done.
Have a look at this part Examples of residents and non-residents
Basically try to be Bronwyn. Obviously easier if you're single, but if you:
1. Stay away for an extended period, +3 years seems to be satisfactory.
2. Establish a home overseas with your family.
3. Don't have accommodation available in Australia.
4. Don't have a car registered in your name.
5. Cut as many ties as possible. eg club memberships, store accounts etc
Then you should qualify as a non resident.
However if you:
1. Spend significant time in Australia.
2. Maintain a home there.
3. Have a wife/children living and working or attending school in Australia.
4. Conduct your life in a similar manner to someone living there permanently, running a business or serving on a committee for example.
Then you will probably get caught in the tax net. Just staying out of the country for more than 180 days each year won't cut it anymore, you need to make a clean break and ESTABLISH your life overseas for an extended period. This doesn't mean you can't go back ever again. Definately worth an hour with a good accountant BEFORE you leave.
BTW Canadians need to surrender their driving licence and any shop accounts to qualify as non residents of their country. I wouldn't be surprised if the ATO tighten up to a similar extent in future. Salami tactics, slice by slice. Rather than have an out cry if they announce tax on expats, they will simply make the rules progresively more restrictive to achieve the same result.
Basically try to be Bronwyn. Obviously easier if you're single, but if you:
1. Stay away for an extended period, +3 years seems to be satisfactory.
2. Establish a home overseas with your family.
3. Don't have accommodation available in Australia.
4. Don't have a car registered in your name.
5. Cut as many ties as possible. eg club memberships, store accounts etc
Then you should qualify as a non resident.
However if you:
1. Spend significant time in Australia.
2. Maintain a home there.
3. Have a wife/children living and working or attending school in Australia.
4. Conduct your life in a similar manner to someone living there permanently, running a business or serving on a committee for example.
Then you will probably get caught in the tax net. Just staying out of the country for more than 180 days each year won't cut it anymore, you need to make a clean break and ESTABLISH your life overseas for an extended period. This doesn't mean you can't go back ever again. Definately worth an hour with a good accountant BEFORE you leave.
BTW Canadians need to surrender their driving licence and any shop accounts to qualify as non residents of their country. I wouldn't be surprised if the ATO tighten up to a similar extent in future. Salami tactics, slice by slice. Rather than have an out cry if they announce tax on expats, they will simply make the rules progresively more restrictive to achieve the same result.