Tax Residency

[EmNew]

Just want to share our experience :

 

We arrived in Sept 2015 and have both submitted and been assessed on our 2016 tax returns here in Australia. We needed to apply for a Certificate of Residency from ATO for some policy payouts from South Africa, and did the written application as advised on the ATO website. We received a letter back that our request  was denied as we were not tax resident in Australia according to their records.

 

It turns out that you need to inform ATO that you are indeed tax resident and they update your profile accordingly on their side ( no provision for this on your MyGov login profile amendments ). Only then do you apply for the tax residency certificate.

 

Hope to prevent someone else making same mistake we did as that 28 day turnaround ex ATO has now turned into 56 days, to the annoyance of our broker at Exchange4free......

[Lynnor]

Noted. Thanks for the helpful info 

[Hugo2]

Good day, very valid point. Is it fair to name and shame Exchange4Free?

 

Sadly this is my perception - the suggestion is that X4Free was annoyed. So would I be, as it is logic did NOT prevail? 

 

They are not the only one "guilty" of this. When you use a company mainly based in SA, you always find small Oz nuances SA based firms did not know of. I find this daily when we quote. The reply: good price but we choose the firm that promised the quickest turnaround. But then the clients only discover the unexpected delay a little later. 

In fairness to all service providers, I suggest that taxpayers err in this regard. How can one imagine to receive an official confirmation of status if you, the immigrant to a new country, made very little or minimum effort from your side? Now we blame the login page not alerting you. It is a log in for millions; they are not going to cater for a handful Saffas not applying their mind to the process! 

As you have not yet filed a return what did you expect them to base the outcome on? You do not know what you do not know! Do not expect the ATO to know what you neither told not filed with them. Is this such a difficult concept?

General advice: Over and above notifying them, obtain a Tax Administration Act (South Africa) section 223 letter from your tax practitioner in SA explaining why you are no longer tax resident in SA, but tax resident in Oz. Send this letter to the ATO the day you have your tax number or the day you update them with your new address. Attach PR or Australian Passport. 

 

Then apply for TRC online, and then only as the ATO now knows what you know!

For the record: I have no link to X4Free, I question the logic of taxpayers and the "surprise. look on receipt of a decline.

Why blame the service provider if you did not think through the process and the demand you made on a government where you are just elevated from guest to resident

 

Now EmNew, the elephant in the room: Did you notify SARS that you left and is no longer tax resident? Do not wait until the RA is cashed out that is too late! 

Edited September 23, 2016 by Hugo2

[EmNew]

@Hugo2 - I did not realise my post came across as a name and shame ......

 

I was merely pointing out that our expected turnaround was 28 days with the Australian Tax Office, but now with our rejection and re-application it was 56 days, and that was causing some consternation with our broker, who is needing this final piece in the puzzle....... So the issue isn't Exchange4free at all, but the doubled turnaround time with Australian Tax Office due to our incorrect assumption. 

 

Also if you read my post again , you will see that I stated that we had submitted our 2016 return AND been assessed thereon. That is why I assumed that we would be flagged as tax residents in Australia

 

 

 

 

[Mara]

I think Hugo needs to read your post again, before he gives you another blasting.....

[Hugo2]

9 hours ago, EmNew said:

@Hugo2 - I did not realise my post came across as a name and shame ......

 

Also if you read my post again , you will see that I stated that we had submitted our 2016 return AND been assessed thereon. That is why I assumed that we would be flagged as tax residents in Australia

 

1

1

 

Quote

I read that, and that is why I commented.

 

I found that comment  (having filed) indicative of the little research you did!

 

 

 

Quote

 

If you read the ATO page leading the ATO's TRC page, you could not have overlooked the obvious. They say as I said: they will reply on what they know. If you think tax filing in Oz is indicative of tax resident you did very  little or ineffective research. See below what you overlooked and now you blame someone that did not tell you? Why would log in page tell you if the leading pages already told you

 

I have posted repeatedly on this forum that tax filing with ATO is not tax residency as a 457 new arrival is a temporary resident in ATO terms. In your mind you may be permanent but in ATO mind you are a temp resident

 

What information is required for a certificate of residency?

The certificate will be issued or the tax relief form will be certified only when all the following requirements are met:

• the name and tax file number (TFN) or Australian business number (ABN) supplied in the request matches ATO records
• lodgment of Australian tax returns are up to date
• the individual or entity is known to us as a permanent resident for income tax purposes.

 

 

 

 

Edited September 23, 2016 by Hugo2

[Hugo2]

9 hours ago, EmNew said:

@Hugo2 - I did not realise my post came across as a name and shame ......

 

 

1

 EmNEw

It came across is finding fault with others. If only you did some research you would have find the quote below, in several of my posts / links uploaded over the last 5 years. Free gratis! 

https://www.ato.gov.au/Individuals/International-tax-for-individuals/In-detail/Foreign-income-of-Australian-residents/Foreign-income-exemption-for-temporary-residents---introduction/

From 1 July 2006, you will not have to pay tax on most of your foreign income if you:

• are an individual who is an Australian resident for tax purposes
• satisfy the requirements of being a temporary resident.

Who is a temporary resident?

You are a temporary resident if:

• you hold a temporary visa granted under the Migration Act 1958
• you are not an Australian resident within the meaning of the Social Security Act 1991
• your spouse (if applicable) is not an Australian resident within the meaning of theSocial Security Act 1991.

If at any time on or after 6 April 2006, you have been an Australian resident for tax purposes but not a temporary resident, you will not be entitled to the temporary resident exemptions from that time, even if you later held a temporary visa.

The Migration Act provides that a temporary visa is a visa to travel to and remain in Australia:

• during a specified period
• until a specified event happens
• while the holder has a specified status.

Temporary visas are distinguished from permanent visas which allow a person to remain in Australia indefinitely. For more information on immigration issues, visit the Department of Immigration and Border Protection website at immi.gov.auExternal Link

Under the Social Security Act 1991, an Australian resident is generally a person who resides in Australia and is either an Australian citizen or holds a permanent resident visa. Taxpayers who hold a protected special category visa and were in Australia on or before 26 February 2001 are also considered to be Australian residents for the purposes of theSocial Security Act 1991.

There are other requirements relating to residency for special category visa holders.

For more information on residency for social security purposes, see the Centrelink website at centrelink.gov.auExternal Link

How are you affected if you are a temporary resident?

If you are an Australian resident for tax purposes and meet the requirements to be a temporary resident, the temporary resident rules mean:

• Most of your foreign income is not taxed in Australia except income earned from employment performed overseas for short periods while you are a temporary resident. This income is subject to income tax and would still be declared in your return for the year in which you earned it. Where you paid tax in a foreign country, you may be entitled to claim a foreign income tax offset when you lodge your tax return.
• If a capital gains tax event occurs on or after 12 December 2006, a temporary resident is not liable to capital gains tax (nor is treated as having made a capital loss) unless the asset is 'taxable Australian property'.
• If a capital gains tax event (such as the sale of an asset) occurred between 1 July 2006 and 12 December 2006, a temporary resident was not liable for capital gains tax (nor was the temporary resident treated as having made a capital loss) unless the asset had a 'necessary connection with Australia'. Special rules apply to capital gains on shares and rights acquired under employee share schemes (For more information employee share scheme refer to Foreign income exemption for Australian residents and temporary residents - employee share schemes).
• Interest you pay to foreign residents (for example, foreign lenders) is not subject to withholding tax.
• Controlled foreign company record keeping obligations are partly removed.

[Hugo2]

I will once again try and explain the issue at hand:

 

Filing an annual tax return is not indicative of being tax resident. You need to claim or state your position. If you on a PR or Oz Passport you are most probably Oz tax resident and claim TRC status as a resident but you need to consider the double tax treaty agreement (DTA) as the tie breakers may surprise you! 

 

Herewith some terms in ATO English, the SARS English and then the tax consequences in either country

 

ATO resident = SARS resident = pay tax in home country on worldwide income = treaty rules apply file for TRC ruling

 

ATO temp resident = SARS non-resident = pay tax to ATO on Oz source income only and to SARS on SA income only = not able to claim treaty position i.e. TRC will be declined

 

If you filed with ATO and you did not show you paying tax on worldwide income, then they will assume you temp resident until you submit proof of you tax status as full ATO resident

 

See my first comment as to what you should send to the ATO before you apply for a TRC as they will only confirm what they know. Knowing your tax number and your Oz address are not adequate info! 

[EmNew]

16 hours ago, EmNew said:

 

Hope to prevent someone else making same mistake we did 

@Hugo2 , not sure how ending my post as per above quote from it doesn't show that I am not finding fault with others .... I clearly state we made a mistake ........

 

( I shouldn't really react to this thread anymore, but if anyone skim reads this post and the replies , they too might get total wrong impression of intent and situation I was trying to convey )

[Mara]

@Hugo2 kudos to you for all the assistance you have given and that you are still giving on the forum.

 

I honestly just think that you were a bit out of line here! Your post, as far as I am concerned, is extremely condescending, especially for those of us that are not familiar with this area of the law. If you were to ask 100% of the forum members that are starting this process, 99,5% of them would have assumed the same as @EmNew, including me!

 

If you are having a bad day, please take it easy, sit back, relax, and take a deep breath. Once you have recovered, shake your head, at yet another silly forum member that just assumes things, and then gently tell them that they are wrong, and tell them what to do.  That would be the gentlemanly way of doing things.

 

It does not help hitting someone over the head and telling them how they have not done enough research. RESEARCH only works, if you actually know what you are searching for and IF you know what words to put in the SEARCH block, otherwise you will only get garbage out of it.

 

We are all here paying it forward.... I have been doing this for 23 years, imagine the amount of times I have had to repeat myself, the amount of times I have given the answer, yet again, and actually told the forum member that I just Googled it for them...

 

With that, I think we need to shake hands, give thanks, and MOVE ON!!!

 

Once again, Hugo, thank you for all the assistance and sage advice you offer, free of charge (as you kindly pointed out), on the forum.

[Brad76]

Wow....not sure what all the fuss is about!!! Haven't read the whole story but I think EmNew's post pre-meltdown was pretty honest and straightforward! Not sure how bashing Ex4Free comes into play??

 

It's also easy to assume the ATO will just know you're a tax resident, particularly when you're fresh off the boat. Per the ATO website under residency there's a quick and simple test for tax residency...

 

https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=AreYouAResident&anchor=AreYouAResident#AreYouAResident/questions

 

One question regarding relocation and settlement - result your are a resident for tax purposes.

 

I think berating somebody for making that assumption is a little unfair.

 

Yes Hugo, I think their are many on here that have derived much benefit from the depth and breadth of your knowledge on south african tax and exchange control matters and of course the free advice on offer. That said, there's also something else that's free (unless I'm mistaken), the publicity for your business!!

 

 

Edited September 24, 2016 by Brad76

[RYLC]

Shew @EmNew sorry you had to get such an unsolicited bash. Hope it doesn't put you off posting in the future. As @Mara shared, she has been repeating info and re-explaining patiently and thoughtfully for many, many years. You didn't deserve such aggressive treatment, particularly when you weren't asking for advice but merely sharing your misunderstanding of the process. Thankfully the crowd you have chosen to help you with the financial migration process haven't given you similar treatment.  Just wondering whether they are active on this forum and can give them a shoutout for others going through the same process in the future. 

[Dill]

Well I know who I WONT be using for any taxation or financial matters after that unnecessary, misinformed and condescending little outburst! 

[RedPanda]

So after all the BOLDLY PRINTED larger text giving good information...

Is the bottom line that Medicare knows exactly when you are a resident, straight off the network that logs your landing card from the airplane, but ATO know nothing unless you tell them directly, on their own website, that doesn't link 100% with myGov?

In other words, if we are here permanently, do we need to expressly tell ATO?

(No, I'm not being sarcastic, I really need to know this, because nobody tells you, and reading the stuff up online is like so much legalese. And I am not a stupid person.)

[RedPanda]

Thanks for posting this @EmNew, if you didn't I would have thought ATO are as clued up as Medicare.

[Hugo2]

1 hour ago, RedPanda said:

So after all the BOLDLY PRINTED larger text giving good information...

Is the bottom line that Medicare knows exactly when you are a resident, straight off the network that logs your landing card from the airplane, but ATO know nothing unless you tell them directly, on their own website, that doesn't link 100% with myGov?

In other words, if we are here permanently, do we need to expressly tell ATO?

(No, I'm not being sarcastic, I really need to know this, because nobody tells you, and reading the stuff up online is like so much legalese. And I am not a stupid person.)

 

 RedPanda

 

the reason is Medicare has resident and not a resident whereas ATO has resident, temp resident and foreign investor (non-resident). For Medicare there is no interaction with other jurisdictions, it an Oz affair only. For ATO, only residents (permanent residents) can apply for the TRC. If you are ATO temp resident your TRC is issued by SARS (assuming you are ex SA) or HMRC (assuming you ex UK)

[Hugo2]

8 hours ago, RYLC said:

Shew @EmNew sorry you had to get such an unsolicited bash. Hope it doesn't put you off posting in the future. As @Mara shared, she has been repeating info and re-explaining patiently and thoughtfully for many, many years. You didn't deserve such aggressive treatment, particularly when you weren't asking for advice but merely sharing your misunderstanding of the process. Thankfully the crowd you have chosen to help you with the financial migration process haven't given you similar treatment.  Just wondering whether they are active on this forum and can give them a shoutout for others going through the same process in the future. 

 

X4Free is indeed active and very supportive on this forum

[ottg]

Getting an ATO certificate is given in this link:

https://www.ato.gov.au/individuals/international-tax-for-individuals/in-detail/residency/certificates-of-residency-or-status/?page=6#How_does_a_resident_request_a_certificate_of_residency_or_status_

It requires various information to be lodged and among others the TFN which suffice. Although I did a phone call just to made sure about it and received it in less than the stated 28 days. You have to send a letter with the required information to the ATO - address given in above. No online application. Guess perhaps the difference is based on if you lodged in the past an ATO tax return as EmNew landed in Sept 2015 and perhaps the tax return 2015/16 is WIP.

 

The ATO posted the certificate and it states:

Certificate pf Residency; Income Tax Assessment Act; This is to certify that XXXXXXX of address yyyyyyy being a resident of Australia for income tax purposes within the meaning Australia - South Africa convention, is liable to pay Australian income tax in accordance with the requirements of teh Income Tax assessment Act 1936 on their worldwide income ................

 

The certificate is valid for 1 year. It states if the circumstance change then its no longer valid (i.e change of address, etc)

[Mara]

I, for one, have found this whole discussion, most interesting. The most amazing part, is the fact that in all the years that I have lived in Australia, it is the very first time I have ever heard this mentioned! We certainly never declared ourselves tax resident and neither has anybody I have come across either personally or in my working life.

[GenDemo]

19 hours ago, Mara said:

I, for one, have found this whole discussion, most interesting. The most amazing part, is the fact that in all the years that I have lived in Australia, it is the very first time I have ever heard this mentioned! We certainly never declared ourselves tax resident and neither has anybody I have come across either personally or in my working life.

Yeah, when I remember, I ask people about this. And everyone has said that they have never declared themselves tax residents, nor have they advised SARS that they are no longer tax residents...so this is all just REALLY confusing...I'm gonna phone the ATO tomorrow and hope I can get to someone who know what's going on.

Thnx to @EmNew for bringing this up...I think it is quite important.

Edited September 26, 2016 by GenDemo
Grammer

[Hugo2]

21 hours ago, Mara said:

I, for one, have found this whole discussion, most interesting. The most amazing part, is the fact that in all the years that I have lived in Australia, it is the very first time I have ever heard this mentioned! We certainly never declared ourselves tax resident and neither has anybody I have come across either personally or in my working life.

 

 

Mara

the process is unique to expats that wish to have their SA sourced pensions/living annuities (once retired and receiving benefits) tax exempted in SA or for taxpayers undergoing a formal emigration process to extract their retirement annuities from SA funds. If you formally emigrate and leave your RA's in SA and only extract pension and provident fund lump sums, the process is not required. So, unless you a pensioner benefiting from an SA fund or a formal emigrant extracting RA in a lump sum before retirement age, there is no need to apply for TRC. 

 

See http://citizen.co.za/855737/formal-emigration-versus-relocation/

Edited September 26, 2016 by Hugo2
Added a link

[Mara]

Hugo, thanks for that explanation, makes a lot more sense to me now!