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Where Taxpayers and Advisers Meet

Foreign Income

nigenlack
Posts: 4
Joined: Sun Mar 18, 2018 9:03 am

Foreign Income

Postby nigenlack » Sun Mar 18, 2018 9:25 am

My wife and I own 2 properties in Australia and have been filing tax returns to the ATO for 12 years. During this period we have had to pay no tax and accumulated a tax credit of over A$100k each.
Unfortunately we were not aware that during this period we were also required to submit a UK tax return indicating that we had foreign income.
We recently have been making a profit on the properties however because we have a large tax credit in Autralia we still do not pay tax. We are looking at selling the property in the few years and will bring the funds back to the UK.
Can anyone provide advice on the best way forward and if we would still be liable to any UK tax even though we are in credit with the Australian tax office.

GlobalTaxAdviser
Posts: 633
Joined: Fri Dec 05, 2014 1:18 am

Re: Foreign Income

Postby GlobalTaxAdviser » Sun Mar 18, 2018 12:14 pm

Hi

Unfortunately, you will not be able to utilise the tax credits in the UK and will have to pay tax on any UK Rental profits

nigenlack
Posts: 4
Joined: Sun Mar 18, 2018 9:03 am

Re: Foreign Income

Postby nigenlack » Sun Mar 18, 2018 2:29 pm

Hi, you indicate that we will have to pay any tax on UK rental profits, does this mean any profit on the rental from Australian rental even though we are in deficit?
I understand that the rental property that we have in the UK will have to have the tax paid as we are submitting annual tax returns on these and paying the required tax on any profit, but the foreign property is not being submitted to the UK Tax and only Australian Tax Office.
I am looking at informing the UK Tax that I have been submitting returns to the Australian Tax and have not been required to pay any tax on the income due to initially being in deficit and now having tax credit in Australia. Can this credit be used for the Australian property only tax return in the UK as it all relates to these properties only?

maths
Posts: 7593
Joined: Wed Aug 06, 2008 3:25 pm

Re: Foreign Income

Postby maths » Sun Mar 18, 2018 5:19 pm

Unless you are non-UK domiciled and subject to UK tax on the remittance basis any rental income arising on property in Australia is subject to UK tax.

The income and expenses need to be converted into UK £; this then produces either a profit or loss for UK tax purposes. UK tax rules apply not those in Australia.
It is possible for a loss to be produced for Australian tax purposes but a profit for UK tax purposes.

Had you paid any Australian tax on the profit this could be used to reduce any UK tax charge. Australian tax credits are of no use here in the UK.

nigenlack
Posts: 4
Joined: Sun Mar 18, 2018 9:03 am

Re: Foreign Income

Postby nigenlack » Sun Mar 18, 2018 8:43 pm

Many thanks for the information it is very useful. Just one more question if anyone is able to answer.
Is there a time limit for how far back you can claim, as if it is from the start I will still have a lose for the UK tax submission and will not owe any tax?

maths
Posts: 7593
Joined: Wed Aug 06, 2008 3:25 pm

Re: Foreign Income

Postby maths » Sun Mar 18, 2018 9:20 pm

What exactly do you want to claim for?

nigenlack
Posts: 4
Joined: Sun Mar 18, 2018 9:03 am

Re: Foreign Income

Postby nigenlack » Sat Mar 24, 2018 8:54 am

I am wanting to ensure that all my credit is accounted for as it is allowable under UK tax and has been recorded by the Australian Tax. If this is the case we still will be in credit with the UK tax. Can all the allowable credit be usedeven though not previously recorded by us in UK?

GlobalTaxAdviser
Posts: 633
Joined: Fri Dec 05, 2014 1:18 am

Re: Foreign Income

Postby GlobalTaxAdviser » Sat Mar 24, 2018 10:48 am

You cannot use the Australian credits in the UK


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