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Where Taxpayers and Advisers Meet

Dual Residency - Help Needed

Mattypuss
Posts:5
Joined:Fri Jul 14, 2017 2:34 am
Dual Residency - Help Needed

Postby Mattypuss » Fri Jul 14, 2017 3:17 am

Hi guys,

I'm new to this forum but I've been reading a number of threads and I can see that there's a heap of expertise available - I'm wondering if anyone would be kind enough to help me shed some light on a specific situation that I find myself in?

I'm a British citizen and I've been living and working in Australia since December 2014. I had UK split year treatment for FY 2014/15 and I was not UK resident for tax purposes in FY 2015/16. However, I worked in both Australia and the UK during FY 2016/17 to the extent that I'm both UK and Australian resident for tax purposes for FY 2016/17. I've run through the OECD Model Tax Convention residence tie-breaker rules for dual residents and I believe that I'm considered overall to be an Australian resident for FY 2016/17 because both my ‘Centre of vital interests’ and ‘Habitual abode’ are both in Australia.

My Australian income for FY 2016/17 comprised salary and bank interest on savings.

Assuming that you concur with my belief that I'm overall an Australian resident for tax purposes for FY 2016/17, my questions are:

1) Do I need to declare my Australian income through my UK tax return?

2) I expect to pay UK tax on my UK income but should I also be paying UK tax on my Australian income?

3) What information should I include in my Residence, remittance basis etc (SA109) form to properly declare my situation?

4) Do I need to complete and submit the claim form for HS302 (claim as a non-resident for relief from UK tax under the terms of a DTA) as part of my UK tax return?

5) Do I need to obtain a Certificate of Overseas Residence from Australia or is this only required if I want to claim relief from UK tax on my UK income?

I asked these same questions to the HMRC Helpline but I spoke with 3 different people and received 3 different answers!

If anybody can help me here, I would be most grateful indeed - many thanks for your time.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Dual Residency - Help Needed

Postby maths » Fri Jul 14, 2017 1:56 pm

However, I worked in both Australia and the UK during FY 2016/17 to the extent that I'm both UK and Australian resident for tax purposes for FY 2016/17.
Are you sure you fall to be treated as UK resident for 2016/17?

Mattypuss
Posts:5
Joined:Fri Jul 14, 2017 2:34 am

Re: Dual Residency - Help Needed

Postby Mattypuss » Fri Jul 14, 2017 5:58 pm

Hi Maths,

When I run through the UK SRT, I'm inconclusive in respect of the automatic tests but I pass 3 of the tie tests (Accommodation, Work and 90-Day). I only need to pass 1 tie test to be UK resident due to me spending >120 days in the UK in 2016/17 and having been UK resident for one or more of the 3 tax years before 2016/17.

I might have misunderstood the SRT but that's the reason for me believing that I'm UK resident.

Just for completeness, when I run through the Australian equivalent of the SRT, I also come out as Australian for 2016/17. This is the reason for my belief that I fall into the 'dual residency' category and so the tie-breaker test applies.

I hope that explains my rationale and many thanks for querying.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Dual Residency - Help Needed

Postby maths » Fri Jul 14, 2017 7:35 pm

It does appear you were UK resident (although note the 90 day tie for 16/17 actually depends upon days spent in UK in either of the two prior tax years).

Typically, you would need to fill in the Residence Supplementary Pages together with HS302 and obtain Certificate of Aussie residence.

Don't include non-UK source income and no UK tax is due on non-UK source income.

Your domicile status is irrelevant.

The above is premised on dual residence resolution in favour of Australia.

It seems likely that the only UK income tax exposure will relate to salary attributable to UK duties (assuming you worked for 183 days or more in UK).

AmanSood
Posts:216
Joined:Mon Jan 09, 2017 4:12 pm

Re: Dual Residency - Help Needed

Postby AmanSood » Sat Jul 15, 2017 12:04 pm

Mattypuss - just to clarify, provided the treaty tie breaker tests result in you being treaty resident in Australia then the UK SRT/residence rules are redundant. You would be taxable on your UK sourced income but there may be some exceptions to this if for example you are in employment rather than self employment and as maths says you spend less than 183 days in the UK during the tax year. But in this case your UK employer needs to ensure they have the right reporting arrangements in place with HMRC.
Advising on UK employment, expatriate and personal taxes
aman.sood@e-taxconsulting.com.
+44 (0) 207 846 0155

Mattypuss
Posts:5
Joined:Fri Jul 14, 2017 2:34 am

Re: Dual Residency - Help Needed

Postby Mattypuss » Mon Jul 17, 2017 8:31 am

Maths and AmanSood, thanks so much for your respective replies - very helpful...

Maths, when you say "Don't include non-UK source income" are you saying that the non-UK source income should be listed in HS302 but the value should not be included in the pay figure at Box 1 of the Employment pages?

AmanSood, I am in employment rather than self-employment in the UK and I was in the UK for 131 days in 2016/17. So, as this is less than 183 days, does this mean that the exception you mentioned applies to me and, if so, are you saying that I would not be taxed in the UK on my UK employment income?

Thanks again for your help guys, it's really appreciated...

Matt

RMC
Posts:435
Joined:Wed Aug 06, 2008 3:35 pm

Re: Dual Residency - Help Needed

Postby RMC » Sat Jul 22, 2017 9:36 am

Howabout putting in the White Space something like ‘Under DTA with Au I am tax-resident there and thus liable to UK tax only on my UK income. Certificate of Overseas Residence can be provided if needed’ and forgetting about Sa109 etc. etc.??

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Dual Residency - Help Needed

Postby maths » Sat Jul 22, 2017 1:34 pm

You can try RMC's suggestion but doubt it will be enough.

Having just reread your initial post, salary attributable to UK duties under your employment will only fall outside any UK income tax charge if the contract of employment was with an Australian employer and you worked in the UK for the tax year for less than 183 days. If contract with UK employer then UK tax payable.
Maths, when you say "Don't include non-UK source income" are you saying that the non-UK source income should be listed in HS302 but the value should not be included in the pay figure at Box 1 of the Employment pages?
Assuming employer re UK duties was Australian (hence DTA may apply) include in HS302 only salary attributable to UK duties plus UK tax paid thereon.

Complete Residence etc Pages to the Tax Return. I would then be inclined not to fill out Employment Pages as there is nothing to enter as in HS302 have excluded UK salary any therefore nothing left to disclose. Make note in white space in Tax Return to this effect.

Mattypuss
Posts:5
Joined:Fri Jul 14, 2017 2:34 am

Re: Dual Residency - Help Needed

Postby Mattypuss » Sun Jul 23, 2017 5:11 am

Thanks very much RMC and to Maths for your help once again...

I'll certainly use the White Space to clarify to HMRC what I'm trying to do and I guess they'll let me know if I've done it wrong!

Maths, just to confirm, my UK duties were for a UK employer (Ltd Co) and lasted <183 days. My Australian income was in respect of duties performed for an Australian employer.

So, from your input, I conclude that I will need to include my UK salary in the Employment Pages and pay UK tax on this UK income as, although I worked for less that 183 days, it was for a UK company.

The only thing that I just can't get my head around is, as long as I can produce a Certificate of Overseas Residence showing that I'm resident in Australia, do I need to mention my Australian income at all on my UK tax return and can I forget all about HS302?

Or, do I need to declare my Australian income by listing it on HS302 but not include the Australian income figure in the pay Box 1 of the Employment pages?

I've asked this latter question to HMRC and they don't seem to be able to give me a clear answer!

Thanks guys... Your help is really appreciated.

AmanSood
Posts:216
Joined:Mon Jan 09, 2017 4:12 pm

Re: Dual Residency - Help Needed

Postby AmanSood » Sun Jul 23, 2017 8:40 am

On the basis that you have confirmed that you are treaty resident in Australia and non-treaty resident in the UK, then you only need to declare your UK source income on your UK tax return. Also in relation to your UK Ltd duties, your employer may have already told HMRC that you meet the conditions for treaty exemption on your UK employment income so worth discussing this with them before declaring your UK salary on your return and paying tax on it.
Advising on UK employment, expatriate and personal taxes
aman.sood@e-taxconsulting.com.
+44 (0) 207 846 0155


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