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Australian resident for tax purposes - leaving Australia permanently

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Hi

I would like to check that I have correctly prepared my 2017 Tax Return via MYGOV.

I was an Australian resident for tax purposes in previous tax years and also from 1st July 2016 to 23rd August 2016.(Left Australia permanently)

I earned income in Australia between 1 July 2016 to 23 August 2016,  but also earned income during the period 24 August 2016 to 30 June 2017.

I am preparing my 2017 Tax Return via MY TAX and would like to check that I have correctly completed the return.

  1. I have included all income earned for the 2017 tax year.
  2. I have checked that I was NOT an Australian resident for the full tax year and, and included the relevant dates.
  3. Taxable income - $3500.00

Tax calculator advises

  • Can claim Tax free threshold for 2 months
  • "No tax payable"

I was under the impression that there was no tax free threshold for a foreign resident, and was expecting to have to pay tax.

Is it possible for someone to provide feedback. I appreciate any help.

Thank you

 

 

 

 

 

 

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Hi Catherine

 

You are right when you say there is no tax-free threshold for a non-resident.  However, because you were a resident for part of the year, you are entitled to a pro-rated threshold.  It should also be noted that in the year you become a non-resident, you are still taxed at resident rates (but subject to a pro-rated tax-free threshold, as mentioned above).  

 

The formula in the tax legislation calculates your tax free threshold to be $14,253 (i.e., $13464 + ($4,736 x 2/12)).  

Therefore, if your taxable income is $3,500 you are well below the tax-free threshold and not liable to tax in Australia.  

 

Whilst I can't comment on the accuracy of the $3,500, note that taxable income:

-   includes income from all sources up until  23 August 2016;

-   includes only Australian source income from 24 August 2016 to 30 June 2017 (any foreign income earned

    in this period is not included in your taxable income).               

-  however some income earned from Australia sources while you are a non-resident is not included in your

   taxable income (for example, interest and dividends) as there are subject to a separate final withholding tax    

   which is generally paid by the institution paying the interest or the company paying the dividend, although noting

   there is no withholding on fully franked dividends.        

 

Hope this helps 

Cheers

NickC 

 

 

1 REPLY 1

Best answer

ATO Certified

Enthusiast

Replies 0

Hi Catherine

 

You are right when you say there is no tax-free threshold for a non-resident.  However, because you were a resident for part of the year, you are entitled to a pro-rated threshold.  It should also be noted that in the year you become a non-resident, you are still taxed at resident rates (but subject to a pro-rated tax-free threshold, as mentioned above).  

 

The formula in the tax legislation calculates your tax free threshold to be $14,253 (i.e., $13464 + ($4,736 x 2/12)).  

Therefore, if your taxable income is $3,500 you are well below the tax-free threshold and not liable to tax in Australia.  

 

Whilst I can't comment on the accuracy of the $3,500, note that taxable income:

-   includes income from all sources up until  23 August 2016;

-   includes only Australian source income from 24 August 2016 to 30 June 2017 (any foreign income earned

    in this period is not included in your taxable income).               

-  however some income earned from Australia sources while you are a non-resident is not included in your

   taxable income (for example, interest and dividends) as there are subject to a separate final withholding tax    

   which is generally paid by the institution paying the interest or the company paying the dividend, although noting

   there is no withholding on fully franked dividends.        

 

Hope this helps 

Cheers

NickC 

 

 

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