:unsure: Oooer, have looked through the FAQ section, but can't find any info on this particular variation of tax and pensions...hope someone can advise.
My hubby took early retirement from the NHS, so will be paid a monthly pension, which of course will be taxed here before he gets it. When it is paid into his Oz bank account, will it also be taxed by the Australian govt? Is there a way of paying tax on it to only one country? He will be working for the SA health service so earning a wage as well as receiving this UK pension....ie he's not going to Oz as a pensioner, but as a working man.
Thanks for any advise you may have......fingers, toes and eyes all crossed that there's some way of only being taxed once!!!!

dougie is the tax man on AB but if you ring the Inland Revenue and/or the Dept of work and pensions, I bet they can tell you what to do.


http://www.hmrc.gov.uk/individuals/index.shtml

http://www.dwp.gov.uk/

Gavin

There is a double taxation agreement between the UK and Australia which means you will only be taxed in one country.

Your husband will get tax credits for UK tax paid on his pension

This site may help:

http://www.nhspa.gov.uk

Also look here:

www.ato.gov.au

G

But....can you choose which country you pay tax to? We, too, will also have a monthly forces pension and be earning in Australia. I understand the tax would be higher in Australia than what would be paid in the UK. Is this right??

STEPH

Hi there,
reference the forces pension (i'm due one when i get out in 2007), there is a clause in the Aus tax rules that relates to this type of pension. The double taxation agreement does apply and you can also inform HMIT that you will no longer be resident. Australian tax law counts all you earnings regardless of which country they are from/earnt wheareas UK tax law only counts your income from UK sources (including pay from service overseas). Thats how i've had it explained to me. I'm also starting to get a little twithchy over Aus Tax as it seems to be rather high in percentage terms.

Mark :sigh: :sigh: :sigh:

Steph

I dont think it is possible to choose where you are taxed.
Once you become an ozzy resident they tax your world wide income. We are currently using a financial advisor for pension and other savings transfers so it will be interesting to see what she has to say.
Adrian

You can, however get tax exemptions or credits from the UK so that you only have to pay tax in one country.

As you say Australia taxes your worldwide income.
This is definitely an area for specialist advice

G

There are a couple of forms to fill in for the I.R. when you leave which makes you
tax exempt in the UK.
Quite right about expert advise though. Taxation is a tricky sublect.

Adrian

It would be interesting to hear anything that you find out. Thanks.

STEPH

=> The UK - Australia Tax Treaty specifically addresses pension income paid from a Pension Scheme in the UK to an individual who is a tax resident of Australia: it is wholly assessable in Australia.

=> An individual in this situation should complete and lodge form FD2 with the Inland Revenue so that the payor of the pension in the UK stops withholding tax from the pension under PAYE.

=> Form FD2 can be accessed here.

=> Any tax that is deducted from the pension after you become a tax resident of Australia should not be claimed as a credit against the Aussie tax liability on that income; it should be repaid by the UK Inland Revenue after form FD2 has been submitted.

Best regards.

PS. Although the pension income is assessable in Australia you might be able to claim a tax deduction each year for what is called the Undeducted Purchase Price of the pension. The UPP (in essence) represents the amount of personal contributions paid spread over the remainder of your life, based on tables published by the Australian Government Actuary.

There are a number of Interpretative Decisions published by the Australian Taxation Office on this subject - have a read here if you are interested.

PPS. If anyone wants some assistance with tax and financial planning issues such as those discussed above please feel able to send me an email or a Private Message.

Thanks everyone.....some comforting news shared!! I've been trying to get hold of the Inland Revenue all day.....constantly engaged of course!! <_< Now for my NEXT question....How on earth do you get through to the little "darlings"??????????????????????????????????????????????????????? I'm sure they're deliberately avoiding my call ;) Oh well.....no-one ever said life was easy :P

If you are considered a dual resident for tax purposes then the UK has the right to taxation on any UK pension. As a result of the tie breaker rules contained in the 2003 UK Convention, Australia is unable to tax a UK tax resident on UK income.

Certain defence force pensions are exempt income, although the standard service pension is not one of these.

There is not much you can do about it unfortunately, you will be taxed on your pension and other income - I wouldn't waste your time and money seeing a financial planner unless you are talking megabucks.

You're taxed at 15% up to $21,600 and then 30% up to the next threshold.
The rates are here:

Tax Info

Thanks for that Dougie ......... we lived in hope - it was nice for a while!!!!!

STEPH

I don't think so dougie. Here's what Article 17 of the Treaty says in respect of pensions and annuities (I have emboldened the relevant text):

ARTICLE 17
Pensions and annuities

1 Pensions (including government pensions) and annuities paid to a resident of a Contracting State shall be taxable only in that State.

2 The term "annuity" means a stated sum payable periodically to an individual at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth.

The Treaty can be read here.

Best regards.

Sorry Alan, from your post I am not quite sure of your point.

Please explain

Cheers

Hello dougie.

You said, "If you are considered a dual resident for tax purposes then the UK has the right to taxation on any UK pension. As a result of the tie breaker rules contained in the 2003 UK Convention, Australia is unable to tax a UK tax resident on UK income."

However, the tax treaty says that Australia has the right to tax pension income received by an Aussie tax resident that derives from the UK.

Best regards.

Hi Alan,

The tax treaty does not expressly address Australia's taxing rights.

Other provisions state that where both country of source and residency (ie UK) are the same, the other contracting state (ie oz) is prevented from taxing the income as has not been allocated a taxing right.

Article 17 will not apply where a taxpayer is considered a resident of both the UK and Australia.

Cheers