Affects of resident and non-resident status

[Kelly Gaddes]

I am an Australian citizen but a resident of the UK. I own a main home in the UK (have worked here the last 20 years) as well as a flat which was my PPR but is now rented. From Mar 07 to Feb 08 my family and I visited Australia and I worked self employed for 3 months. Both properties in the UK were rented out whilst we were away.

I now have to submit tax returns in both Australia and England. I think I might qualify for much reduced resident tax rates in Australia but am worried about the implications on my UK properties if I do so. Overall the income from my UK properties made a rental loss during the year. Can anyone advise me what the UK tax implications might be of me claiming Australia resident tax instead on non resident?

many thanks
Kelly

[tax me less!]

You would not have broken UK residence under UK domestic ruiles so would be taxable here on worldwide income including self-employment.

In a broad sense Aussie tax is higher than UK so the Aussie tax position should be neutral.

You may get a better global answer by comparing claiming treaty residence in Australia during the time concerned but you would need to work through both scenarios in both countries to decide.

[JSK TAXATION]

Kelly,

The issue of residence is not relevant since income from property in the UK is taxable in the UK whether the owner is resident or not.

Had you become resident in Australia, then the UK would have had primary taxing rights on the income and Australia secondary. Tax in Australia would then have been calculated after giving credit for UK tax.

John S King
Chartered Tax Adviser
www.taxation-advice.com