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  • jules_1972
    started a topic Panel warns against expat tax rule

    Panel warns against expat tax rule

    Panel warns against expat tax rule







    Andrew Main | June 23, 2009

    Article from: The Australian


    A CRACKDOWN on how expat Australians are taxed announced by Treasurer Wayne Swan on budget night on May 12 has run into choppy waters in a Senate committee, according to a report tabled yesterday.

    The Senate Economics Legislation Committee noted that the abolition of Section 23AG of the Income Tax Act, which covers people working offshore for between 91 days and two years, was going to create a compliance burden that in some cases was going to be out of proportion to the amount of tax revenue gained.



    The bipartisan committee recommended bringing back at least three exemptions to the new rule, which Mr Swan said would net an extra $675 million in tax over three years to 2013.



    The tax move is aimed at some 11,000 expats who Treasury says are earning at least $85,000 a year and pay "little or no tax at all" in Australia, according to Treasury submissions to the committee. However, it became clear at a recent committee hearing in Canberra that any move to make Australians in that group pay tax in this jurisdiction will cause a lot of them to stay away for longer than two years -- and thus cease to be liable to pay any Australian tax.



    The 23AG exemption was brought in in 1986, and allows expats a tax holiday as long as they are paying tax in another jurisdiction. Its abolition would reinstate the need to pay tax at home, although a FITO (foreign income tax offset) showing that tax was paid offshore would reduce liability.



    The first move is for the ATO to give an exemption that will spare backpackers from the new rule, by exempting the first "X" thousand dollars of offshore income. It also suggested limiting the new rule to "large employers", without defining their scale, and devising ways to prevent expats from being hit by Pay As You Go tax withholding, and corporates from being hit by double taxation of fringe benefits.



    An accompanying note from Coalition committee members Senator Alan Eggleston and Senator David Bushby called for a transition period before the proposal became law, describing the planned crackdown as "a rushed and poorly-thought-out measure on the part of the Rudd government with apparently little or no regard ... given to the difficulties that the proposed short lead-in time to implementation will cause for those directly affected."
    Yasser El-Ansary, general counsel for the Institute of Chartered Accountants in Australia, said his organisation was "disappointed that they haven't made a recommendation that transitional arrangements would be provided for". "Not having such an arrangement will result in a significant financial impost on employees and businesses," he said.



    John Fauvet, a partner at PricewaterhouseCoopers, said the budget proposal had been put together with "indecent haste" with only six weeks being nominally allowed from the date of the announcement to implementation on July 1.

  • jules_1972
    replied
    Originally posted by xphread View Post
    ummm...the majority? (ie - those who dont work overseas and stay there 100% of the time?)

    ...so I guess that includes you at the moment.

    OK, as long as you feel happy with your TAX dollars being spent in the right places then Good Oh.

    I smell a hook here..

    Leave a comment:


  • jules_1972
    replied
    Originally posted by DaveR6 View Post
    Someone posed the question about it being double tax and I explained it. I wasnt giving an opinion on the proposed tax changed.

    But since you ask. It benefits all Australians living in Australia. More tax for the government means more money to be spent on what ever the government sees fit. Be it education, infrastructure, health, defence or retiring government debt. Seems to me like it would help lots of people.

    Obviously, those few who have to pay more, like yourself, wont like it.

    Can you understand what is written below?

    "Alot of people read PSB, some find threads very useful for their
    own interest/background and knowledge.

    The previous posts I have done have been for just that reason.
    TO SHARE INFORMATION and KNOWLEDGE.

    The first post was interesting as it received the comments from people
    who have no clue in regards to overseas workers and PIT.

    Yet there was a couple of posts drawing interest from people who are either in the same predicament or know of someone who is.

    Sharing of knowledge can help others with the possibility of assisting another fellow Australian in their quest to get somewhere in their chosen lives.

    Who knows, one day even you might need a helping hand in regards
    to overseas tax."


    Leave a comment:


  • xphread
    replied
    Originally posted by jules_1972 View Post
    Which percentage?
    ummm...the majority? (ie - those who dont work overseas and stay there 100% of the time?)

    ...so I guess that includes you at the moment.

    Leave a comment:


  • jules_1972
    replied
    Originally posted by DaveR6 View Post
    But since you ask. It benefits all Australians living in Australia. More tax for the government means more money to be spent on what ever the government sees fit. Be it education, infrastructure, health, defence or retiring government debt. Seems to me like it would help lots of people.

    Obviously, those few who have to pay more, like yourself, wont like it.


    Benefits ALL AUSTRALIANS?
    Which percentage?

    And as for me being not liking it, There is LEGAL ways for me to AVOID PIT.
    Last edited by Nath; 24-06-2009, 10:26 AM.

    Leave a comment:


  • jules_1972
    replied
    Originally posted by Griff View Post
    This is the crux of the matter - and where the "being fucked" comes in. What is a fair mode/rate of taxation?

    For me, a minimal flat rate income tax (say 20%), with enhanced consumption tax (also say 20%) seems good... I think such a formula would make this assault on the expat worker a real side-issue and probably a non-starter...

    Love it!!

    But not just on Expat workers, put it on everyone!!!!

    Here one for ya -

    "When you look at the fact that in the first year that GST was introduced the Government raised revenues of $24 billion and that's now projected to increase to $42 billion in the next few years. That's a 9 per cent per annum increase in revenue. From the Government's perspective, a great success."

    Leave a comment:


  • DaveR6
    replied
    Originally posted by jules_1972 View Post
    Very good.

    So in your Simple Words, how does this benefit anyone?
    Someone posed the question about it being double tax and I explained it. I wasnt giving an opinion on the proposed tax changed.

    But since you ask. It benefits all Australians living in Australia. More tax for the government means more money to be spent on what ever the government sees fit. Be it education, infrastructure, health, defence or retiring government debt. Seems to me like it would help lots of people.

    Obviously, those few who have to pay more, like yourself, wont like it.

    Leave a comment:


  • Griff
    replied
    Originally posted by Rider View Post
    You work hard you get payed more, the more you get payed the more you get taxed.
    This is the crux of the matter - and where the "being fucked" comes in. What is a fair mode/rate of taxation?

    For me, a minimal flat rate income tax (say 20%), with enhanced consumption tax (also say 20%) seems good... I think such a formula would make this assault on the expat worker a real side-issue and probably a non-starter...

    Leave a comment:


  • jules_1972
    replied
    Originally posted by DaveR6 View Post
    There is no double tax in terms of having to pay both governments the full amount. You are no worse off than had you earnt all your money in Australia.

    Very good.

    So in your Simple Words, how does this benefit anyone?

    Leave a comment:


  • DaveR6
    replied
    Originally posted by jules_1972 View Post
    Workers will get taxed twice..

    1st in the country work carried out in.

    Yes Tax paid there is offset on income being xferred to Australia.
    Remainder will be subject to Australian Tax at current scales.

    So that equals, twice, right???


    So tell me how it would work if paying tax in PNG at 50%?
    Would the ATO give $$ to the workers??

    Doubt it very much.


    I agree with Arwon, in regards to working in 4 different waters over a period. I also agree on Shove Medicare where it fits, Im very happy to pay an International accredited Health Insurance company that will cover me anywhere on this planet (Except USA!!!!).



    Tell me how it works for Maritime workers???
    Lets take a simple example. Assume in the foreign country you earn $100 are the tax rate is 30%. In Australia the tax rate for that is 40%.

    You cough up $30 to the foreign government. The Australian tax on the $100 at 40% is $40. However, the Aus government gives you a tax credit for tax paid to the foreign government. So you only have to pay $10 to the Aus governemnt. There is no double tax there.

    In the case where the foreign goverment tax rate exceeds the Australian marginal tax rate, obviously no tax would be payable to the Aus government.

    There is no double tax in terms of having to pay both governments the full amount. You are no worse off than had you earnt all your money in Australia.

    Leave a comment:


  • jules_1972
    replied
    Originally posted by DaveR6 View Post
    Thats cause you are correct. There is no double taxing. You get tax credits for what you have already paid overseas. So its not like you are getting taxed twice.
    Workers will get taxed twice..

    1st in the country work carried out in.

    Yes Tax paid there is offset on income being xferred to Australia.
    Remainder will be subject to Australian Tax at current scales.

    So that equals, twice, right???


    So tell me how it would work if paying tax in PNG at 50%?
    Would the ATO give $$ to the workers??

    Doubt it very much.


    I agree with Arwon, in regards to working in 4 different waters over a period. I also agree on Shove Medicare where it fits, Im very happy to pay an International accredited Health Insurance company that will cover me anywhere on this planet (Except USA!!!!).



    Tell me how it works for Maritime workers???

    Leave a comment:


  • DaveR6
    replied
    Originally posted by chew View Post
    My understanding of the changes are that this is a tax offset proposal i.e. If you are in a country paying 15% PIT (personal income tax?) the ATO will be targetting the difference between what you are paying O.S. and what you would be paying in OZ? Where does the double tax reference originate?
    Thats cause you are correct. There is no double taxing. You get tax credits for what you have already paid overseas. So its not like you are getting taxed twice.

    Leave a comment:


  • Arwon
    replied
    why should i pay 47% at all. its not like i use medicare or any other service this country has to offer more than someone earning $40k.

    Leave a comment:


  • Semi
    replied
    Yes it would. It'd be fair in what they're proposing, because you pay less Australian tax with the more you pay overseas tax. its not like you're paying 47% twice.

    Leave a comment:


  • Arwon
    replied
    To take this pay/tax issue to its ultimate conclusion.

    If you worked on a ship doing exploration or whatever and travelled through the teritorial waters of 4 nations, would it be fair to pay tax to all 4 nations and in Australia as well.

    Leave a comment:

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