Hello ATO, I have a very similar question to someone else from a few Q's ago, but I'm hoping to clarify a bit further as I've been given polar opposite advice by 2 groups of accountants.
I lived in Australia for around 10 years or so. Originally from UK. I moved back to UK in December 2025. I was told by an expat accounting group that I would have a split year. I'll pay tax in Aus for the half I was there and half to the UK for the other half.
To confirm: I am moving permanently back to UK. I have family here, daughter goes to school here now etc.
My employer is Australian, has an ACN, clients all Australian.
They pay me in AUD, to my Aus bank account, and they still now withhold my tax as I was told I would just get a refund when I put in a tax return, which I would then put to paying tax in the UK.
I receive Superannuation. My contract is still the same one, showing I work in Aus but am completely work from home. I have emails etc showing employer agreed to me moving countries but never got an updated contract (I could request one if needed).
All my work (100%) is now performed in the UK since Dec 2025.
One accountant (expat specialists) said I would going forward pay tax in the UK.
My other accountant that I've had for years is saying no, because my income is Australian sourced from an Aus company, I will need to pay tax in Aus (I'll get a Medicare levy rebate or something) and I'll then be credited against paying tax in the UK. My understanding of the double tax treaty is different from the accountants, and I'm curious how the ATO would view this. I obviously want to do the right thing. Though I have to say just using common sense, I surely should pay tax in the country I'm living in! Anyway... the accountant said this after I pointed out the double tax agreement article 14: As your employment contract:
- Does not outline you as a foreign resident with appropriate foreign resident withholding rates
- Is between you and an Australian Company with a registered Australian Company Number
We are inclined to determine that the income earned from [company name] to be Australian sourced income and hence reportable in your 2026 Tax return
I do note that your employment contract does also allow for work at other locations as you had previously mentioned
Applying this to back to Article 14 of the Australian-UK double tax agreement; your interpretation of paragraph 1 is correct, but referring to paragraph 2 of the article – which states that “remuneration derived by a resident of a Contracting State/Country in respect of an employment exercised in the other Contracting State/Country shall be taxable only in the first-mentioned State/country” if:
- The recipient is present in the other state/country for periods not exceeding 183 days and
- The remuneration is paid by, or on behalf of, an employer which is not a resident of the other state/country; and
- The remuneration is not-deductible in determining taxable profits of a permanented establishment which the employer has in the other state/country.
Applying these to your current circumstances, while you would fulfill point a, the caveat here would be points B & C as [company name] would be an Australian Tax Resident and would report your wages.
Based on this, it is our determination that the incomes received from [company name] are to be deemed Australian Sourced income and hence, taxable in Australia. ---- I'd love your opinion on this, as I have now had totally opposite opinions on which country should tax me :( Thank you!
