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Taxation of income earned abroad before migrating to Australia

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Hello everyone,

 

I'm an Australian permanent resident on a skilled independent visa (category 189) currently living in Switzerland. I intend on moving to Australia in February 2020 and would like to ask a couple of questions regarding the taxation of income earned (and taxed) in Switzerland. It's important to note that the fiscal year in Switzerland runs from January 1 to December 31.

 

Let's assume the following scenario:

  • I keep working in Switzerland until December 31 2019 and I am taxed on my entire 2019 income by the Swiss tax office
  • In May 2019 I sell the share of an investment property I co-own with my brother and pay capital gains tax in Switzerland
  • In February 2020 I move to Australia, in July 2020 I lodge a tax return with the ATO

 

Now from my understanding I would be liable to pay tax on all income earned between July 1 2019 and June 30 2020, regardless whether it has been earned abroad or in Australia. I may be able to get a credit for the taxes already paid in Switzerland.

 

Assuming my understanding is correct, does that mean that:

  1. Any income earned before July 1 2019 will be irrelevant for the tax assessment in Australia? For example, a performance bonus paid in April 2019 won't be taken into account?
  2. If so, how is the tax offset for the taxes paid in Switzerland computed? Let's say 60% of income was earned before July 1, 40% between July 1 and December 31 2019: Does that mean 40% of the taxes paid in Switzerland will be taken into account?
  3. The sale of my share in the investment property in May 2019 won't incur a tax liability in Australia since the transaction took place before July 1 and was taxed in Switzerland?

 

Thank you for clarifying.

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Best answer

ATO Certified

Anonymous

Replies 0

This forum is not designed to answer issues that are this involved.

 

I suggest the better approach for this is for you to apply for an ATO Private Ruling so you will know how the Australian  taxation laws will apply to your specific circumstances.

  

For assistance in completeing the application for private ruling or general taxation enquiries you can phone or Skype the ATO on +61 2 6216 1111 between 8am - 5pm, Monday to Friday Australian EST and let the operator know you are calling from overseas to request a callback. 

1 REPLY 1

Best answer

ATO Certified

Anonymous

Replies 0

This forum is not designed to answer issues that are this involved.

 

I suggest the better approach for this is for you to apply for an ATO Private Ruling so you will know how the Australian  taxation laws will apply to your specific circumstances.

  

For assistance in completeing the application for private ruling or general taxation enquiries you can phone or Skype the ATO on +61 2 6216 1111 between 8am - 5pm, Monday to Friday Australian EST and let the operator know you are calling from overseas to request a callback. 

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