Tax in Australia and then here in UK whilst working away?

by **Jlovesey** on Sat Jan 07, 2012 1:18 pm

Our daughter and her boyfriend left the UK in May to travel the world with the intention of concluding their travels in Australia with a 6 months stay and working their way around various cities (In Aus) before returning home in May this year.The Boyfriend has now been offered a job for a period of one year and the questions are;

He has been told that the job will not incur any tax (we find that hard to believe), its a recruitment job so is most likely commission earnings.. and will be around 150-200k (aus $), so firstly, will he pay tax on that in Aus? Why could there be a possible loophole?

Secondly, any earnings they save and then bring back to the UK, say around £40k how does the tax work here in UK on that? Would he pay tax on anything brought back in after being away from UK for approx 1 - 2 years?

by **Peter D** on Sat Jan 07, 2012 1:38 pm

Did they register as UK Non Resident via a P85 when the left the UK, It sounds like they are temporary non resident. They will have to check in Aus with regard to Aus Tax. There is a Dual Taxation Treaty so they will not get taxed twice. Regards Peter

by **Jlovesey** on Sat Jan 07, 2012 4:06 pm

Thanks Peter, thats very helpful.

We are trying to advise them on this as they seem to think they can earn a good salary for a year and then come home to UK with no tax penalties. I think they would pay tax on any money brought into UK, is that correct?

by **Peter D** on Sat Jan 07, 2012 4:49 pm

No that is not the case. It may fall into split year treatment but a full FY out of the UK then UK IT normally does not apply. Read the HMRC web site on the subject. Regards Peter

by **etf** on Sun Jan 08, 2012 9:50 pm

Somebody leaving the UK in May 2011 would have to be absent beyond 5 April 2013 to have any chance of breaking residence in the UK i.e. the period of absence must encompass a full UK tax year (6 April to 5 April).

If your daughter and her boyfriend return to the UK before a full UK tax year has elapsed, they will remain resident in the UK and liable to UK tax on their worldwide income (it is likely that the boyfriend will be able to claim a credit for Australian tax against his UK tax liability in this event).

HMRC6 is a good starting point to gain further information on UK expatriate tax issues.

If I ever manage to retrieve my website and locate it with its new host, I also suggest you take a look at PWCs Australian tax guide which you can access through the 'useful links' section. It gives a lot of information for people working down under for the first time.

Kind Regards

etf

http://theexpatriatetaxfactory.com