Tax on SA Salary earned while in Aus

[Pell]

Please help!

If one earned a salary from SA after moving to Australia, paid tax on it in SA, then declared it on the Aus tax return as target foreign income - I have been told that tax needs to be paid AGAIN in Aus. I know that SA and Aus have a double taxation agreement BUT if the income is taxed in both SA and AUS, WHO and HOW does one recover the tax overpaid from? One would be out of pocket for the tax paid twice, at least for a while, wouldn't they? It makes it difficult financially to pay tax in both countries, even if future recovery is probable.

I have asked tax advisors in AU and have not had a definite answer on the mechanics of it.

Many thanks!

Edited August 27, 2015 by Pell

[21yearsoutofrsa]

You disclose on your Australian tax return how much tax you paid in RSA and that amount will be automatically deducted from Australian taxes payable. (Assuming you are an Australian tax resident)

This is a 2 line reply to your question and therefore is not comprehensive, but shows you which direction you have to go.

[Gerhardk]

19years is correct, you disclose it in Australia. You should receive the tax paid in South Africa as a credit so no double tax. However with the different year-ends (SA vs Australia) is the difficulty. The ATO website and the ATO guide NAT 72923 refer as an example of evidence a notice of assessment before you can claim a credit in Australia.

So practically if you receive salary income say from Jan to June 2015 from South Africa, only Jan and Feb should at this stage be taxed in South Africa (by SARS) and you should get this as a credit when completing your Australian June 2015 tax return. In theory you cannot at this stage claim the tax that was withheld from your salary for March to June 2015 since you may get it back on assessment of February 2016 tax return from SARS - so it is not final at this stage, unless you financially emigrate and lodge a final tax return. Since it is self-assessment system in Australian nothing stops you from claiming the tax withheld in South Africa (March to June 2015) now (June 2015) and when your SARS February 2016 tax return is finalised you amend the June 2015 Australian tax return. I think the correct approach is to not claim the credit for March to June 2015 now, lodge your Australian June 2015 tax return, pay tax and once assessed by SARS for February 2016 and there is tax payable in South Africa, amend the Australian June 2015 return. So either way an amendment of your June 2015 may be required, it depends if you are happy with the risk of claiming a credit now when it is not claimable yet.

Your alternative is of course to only lodge your June 2015 ATO tax return after you have lodged your February 2016 SARS tax return and received an assessment.

Link to ATO guide:

http://law.ato.gov.au/atolaw/view.htm?docid=SAV/FOROFFSET/00001&PiT=99991231235958#FTSPECIAL(AMENDMENT)(RULES)(FOR)(FOREIGN)(INCOME)(TAX)(OFFSETS)

Please note this is not advice.

[Pell]

Many thanks 19years and Gerhard!!

Have now read about it and it makes sense, have gone through the examples as well.... all good now. Panic station closed.

It is actually so easy I should run and hide.

Edited August 27, 2015 by Pell

[Hugo2]

Good day to all

the critical question is: PR/ Passport? or 457/Work Permit

If you are on a work permit and you received salary from SA for work done in SA, ATO may not tax - treaty and ATO unilateral rules since 2006. If work was done whilst in Australia, then ATO may tax and will have to pass a credit for SA tax paid if any - strictly speaking there should be no SA tax

Assume SARS did collect tax, file in SA and ask SARs for a refund based on the 183/60 rule as you are tax resident (SARS has first right to tax) but SARs will apply unilateral 183/60 day exemption

If you are on a PR and were so at the time the income accrued from SA then SA may only tax if you were in SA in that that year for more than 183 days. If not, SARS must refund. The 183/60 day rule is not available for tax non-resident

[MelG]

on this topic of earnings - apart from work done in Australia for SAfrica, and paid in Rands - if one decides to rent out their South African property, is only interest deductible as an expense, and not the full bond repayment? This could show quite a profit and possibly push one into an SA tax bracket - would one then have to declare this as a taxable income, regardless of how many days in/out of the country?

..and then apply the above methodology ..

[21yearsoutofrsa]

All expenses relating to the property, so interest (not the capital portion), agent fees, repairs and maintenance, utilities not paid by the tenant, and insurance are ones that quickly come to mind.

And then there's the whole Capital gain issue.

[GenDemo]

I have a similar situation. I am busy looking at it as well. We are on a PR (189) visa, but only arrived in mid-May, so this further complicates the things in terms of timing. I bought myself a "Tax for Australians for Dummies" book yesterday.

[Gerhardk]

GenDemo, your situation is quite common. You probably became a tax resident when you arrived mid May so for the 2016 ATO tax return you will include your worldwide income. Any taxes paid say in RSA after this period should be a credit in Australia.

 

Let me know if you have specific questions.

[GenDemo]

3 hours ago, Gerhardk said:

GenDemo, your situation is quite common. You probably became a tax resident when you arrived mid May so for the 2016 ATO tax return you will include your worldwide income. Any taxes paid say in RSA after this period should be a credit in Australia.

 

Let me know if you have specific questions.

Thnx @Gerhardk, I'll definitely take you up on that. I am just doing some reading in my dummies book. So far, from the book, it seems very similar to SARS e-filling.