Oz Based Cx Crew vs The Taxman
 

Hi all,

Quick Q for those based in Oz with Cx. How do you work the tax? eg, Does Cx deduct/withhold from your salary each month and pay it for you, or do you get paid Gross each month and it's up to you to look after it and see the tax man gets his dues?? (or otherwise).

I'd appreciate any input.

Fly safe, all the best,

FB

CX pays you your full gross pay into a HK bank account each month.

Most guys then transfer the entire sum back home, calculate the tax, put it in a separate bank account and then pay the ATO at the appropriate time.

Request further clarification if I may:
-Confirm "appropriate time" is just once per year? I had heard the ATO does it quarterly
- Put aside tax calculated on salary+super+HDP, but not allowances, correct?

This is a nice little tax break: money in a high interest account (say ING) could earn a couple of grand prior to tax time.....

Cheers fellas.

Anything else to add anyone???

"Appropriate time" is either quarterly, or after filing your Australian Tax Return and receiving the demand notice from the ATO.

If you salary sacrifice the full 15.5% pension-received-as-cash into an Australian super fund then it is exempt (obviously) from income tax. So, income tax is calculated on salary + HDP.

VS.

Blogsey...I think Veruka has just said the same thing mate!

Pension tax
 

Hi VS
Are you sure that salary sacrifice of your 15.5% pension from Cathay attracts no Australian tax? I thought that you were limited to 50,000-100,000 A$ per year salary sacrifice and paid 15% tax on that to the ATO. Is your reasoning that, as you will pay 16% at source in HK, by double tax agreement, this will be in effect tax free in Australia? Or do you know some other scheme?

Hi Bonajet,

I think you're right that you are limited to $50-100K per annum salary sacrifice into super, but 15.5% of base salary only equates to around $18K.

Super is taxed "internally" at 15%, so I guess it isn't actually tax free, but my point is that by salary sacrificing the entire amount into super it is exempt of [U]income tax[U]. I am in the process of setting up a custom fund and will then offset franking credits etc against the 15% tax, but best get your own financial advice on that one!

Cheers,

VS.

Just to clarify...
 

Once the first income tax return is lodged, you will subsequently be required to make quarterly PAYG instalment payments. These amounts will be credited against your next year’s tax return.

In terms of salary, you are able to claim certain allowable deductions (eg, professional or union memberships, licence renewal and related medical examination costs, technical publications, etc). If you have a non-working wife you may be able to claim dependent spouse tax offsets, etc.

Theoretically there is no limit on amounts that can be contributed to superannuation, but if you want concessional tax treatment, then the 2008 limit for employer contributions (including salary-packaged amounts) is $50,000. If you’re contributing yourself (ie, personal contributions) and not claiming a deduction for that amount, (employee pilots can't anyway), then the cap is $150,000.

All superannuation funds will utilise franking credits to their advantage. A DIY self-managed superannuation fund can be effective but get good advice before doing it. Annual accounting, tax, audit and statutory fees can be high so you need a decent amount in it to make it worthwhile.

Older pilots should look at the new 'transition to retirement' rules that kicked in last year. After age 55 they can start to draw down a pension that may be concessionally taxed (ie, 15% off their marginal tax rate). At age 60 the amounts may be tax-free.

Rgds

T

So can someone please clarify, for an Aus based pilot.

-Cathay Pay the Gross pay into your HSBC bank account, withholding zero tax (HK or Aus)
-We then transfer $$ back to Aus (I've heard around $15AUD fee).
-After our first tax return, post 30th June, we lodge a tax return. From then on, the ATO sends a bill quarterly (effectively PAYG).
-The 15.5%. Is given as a gross amount in cash, into the HSBC bank account.
-We can then either spend it (presumably after paying income tax on it), or set up some kind of salary sacrifice into an Australian Super fund (or self managed).
-Is OABL an Australian or HK based company?
-Is any HK tax payed, or is it solely to the ATO

Any errors or omissions?