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Old 12.08.2011, 11:25
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Paying tax on interest earned in Australia

Hi,

I'm thinking of transferring some Swiss Francs to Australia, because higher interest is paid there.

But will I have to pay tax on the interest I earn in Australia? I think it depends on whether my wife and I are "foreign residents" of Australia.

I've googled a bit and I think that if we are "foreign residents", the relevant tax is the "Non-Resident Withholding Tax (NRWT)" e.g. from here: "As a foreign resident you will: ... have 10% of any interest earned from your Australian bank accounts withheld for tax. This interest is not included as assessable income. You must advise the Australian financial institution of your overseas address so that this tax can be withheld, otherwise tax will be withheld at the higher rate of 45%"

Do I understand correctly? Has anyone had experience with this situation before?

Cheers,
Roy
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Old 12.08.2011, 11:39
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Re: Paying tax on interest earned in Australia

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Hi,

I'm thinking of transferring some Swiss Francs to Australia, because higher interest is paid there.

But will I have to pay tax on the interest I earn in Australia? I think it depends on whether my wife and I are "foreign residents" of Australia.

I've googled a bit and I think that if we are "foreign residents", the relevant tax is the "Non-Resident Withholding Tax (NRWT)" e.g. from here: "As a foreign resident you will: ... have 10% of any interest earned from your Australian bank accounts withheld for tax. This interest is not included as assessable income. You must advise the Australian financial institution of your overseas address so that this tax can be withheld, otherwise tax will be withheld at the higher rate of 45%"

Do I understand correctly? Has anyone had experience with this situation before?

Cheers,
Roy

Wow,
I haven't heard it expressed like this before.

When I left Australia my accountant told me that I would not be considered an Australian resident any longer.

As I had no source of income there would be nothing to be taxed.

Interest on any money that was taxable still had to be over the minimum AUD$5,000 before it qualified as tax in a tax bracket........ so that's a LOT of money to generate that sort of interest.


As far as I am aware, I am a foreign resident of Switzerland, I earn and pax tax here. I have no official 'income' in Australia other than the interest in a bank account.

I think you still have to lodge a tax return annually, but only to show that your only Australian generated income was the interest.



If you find out more on this, please post on this thread.

(I have also taken advantage of the exchange rate and transferred money home)
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Old 12.08.2011, 12:01
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Re: Paying tax on interest earned in Australia

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Interest on any money that was taxable still had to be over the minimum AUD$5,000 before it qualified as tax in a tax bracket........ so that's a LOT of money to generate that sort of interest.
This is incorrect, according to the same ATO page: "As a foreign resident you will:...not be entitled to the tax-free threshold."

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I think you still have to lodge a tax return annually, but only to show that your only Australian generated income was the interest.
This is also apparently incorrect, from the same ATO page: "All Australian-sourced interest...are subject to the withholding tax provisions as a final tax and should not be included in your tax return."

Here is another wording of my original quote from the ATO: "Your Australian financial institution will withhold 10% of any interest you earn in the accounts you hold with them. You don't need to include your Australian interest in your assessable income. However, you need to advise your Australian financial institution of your overseas address. If you don't, they must withhold 45% of any interest you earn."

I'd be interested to know when and how this 45% gets withheld in the case that you don't notify your financial institution. Also, if you forgot to notify them originally but then do notify them at some point, can they/would they backdate the withholding (at 10% or 45%) from the date you became a non-resident?
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Old 21.09.2011, 10:28
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Re: Paying tax on interest earned in Australia

I contacted my bank but I got no reply. We'll see what happens.
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Old 21.09.2011, 13:33
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Re: Paying tax on interest earned in Australia

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I contacted my bank but I got no reply. We'll see what happens.
Its 10% as a withholding tax for non residents on interest earned in bank accounts. You notify the bank of your residency status, they take the 10% on your behalf for the ATO. All banks usually need is proof of overseas address.
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Old 21.09.2011, 15:19
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Re: Paying tax on interest earned in Australia

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But will I have to pay tax on the interest I earn in Australia?
Why yes, in Switzerland obviously. Also, your worldwide assets count for wealth tax purposes. Whether or not the Tax withheld by Australia count as a tx credit in Switzerland is a matter for the Swiss-Australian Double Taxation Treaty, if there is one (I'm too lazy to look it up now).
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Old 28.10.2019, 09:07
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Re: Paying tax on interest earned in Australia

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Why yes, in Switzerland obviously. Also, your worldwide assets count for wealth tax purposes. Whether or not the Tax withheld by Australia count as a tx credit in Switzerland is a matter for the Swiss-Australian Double Taxation Treaty, if there is one (I'm too lazy to look it up now).
There is a Double Taxation Treaty between Australia/Switzerland
And the interest rate has dropped progressively over the years. From 6% to around 1 % for an investment account!
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Old 28.10.2019, 09:34
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Re: Paying tax on interest earned in Australia

I'm not Australian and English is not my first language but I'm pretty sure you are not a "foreign resident" if 1) you are Australian and 2) you don't live in Australia

Usually, worldwide income (and wealth btw) would be taxed in Switzerland.
If it's already taxed in Australia, it might be exempt (or deducted) in Switzerland and just counted in to determine your tax bracket.

All that should be determined by the tax treatee between the 2 nations (I'm sure there is one). Dig it up or ask a fellow OZ or perhaps ring the swiss office of an Australian (yours?) bank ?
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Old 28.10.2019, 10:01
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Re: Paying tax on interest earned in Australia

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I'm not Australian and English is not my first language but I'm pretty sure you are not a "foreign resident" if 1) you are Australian and 2) you don't live in Australia

Usually, worldwide income (and wealth btw) would be taxed in Switzerland.
If it's already taxed in Australia, it might be exempt (or deducted) in Switzerland and just counted in to determine your tax bracket.

All that should be determined by the tax treatee between the 2 nations (I'm sure there is one). Dig it up or ask a fellow OZ or perhaps ring the swiss office of an Australian (yours?) bank ?
For tax purposes in Australia he is a " non resident ". Assuming he has resident status in Switzerland

https://www.ato.gov.au/Individuals/i...esidencystatus
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Old 28.10.2019, 10:37
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Re: Paying tax on interest earned in Australia

Yet another ancient thread resurrected. Why?
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Old 28.10.2019, 11:18
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Re: Paying tax on interest earned in Australia

my bad, where I'm from a "non resident" is someone who lives abroad.
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Old 28.10.2019, 12:05
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Re: Paying tax on interest earned in Australia

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Yet another ancient thread resurrected. Why?
None of your business!!!!
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Old 28.10.2019, 12:05
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Re: Paying tax on interest earned in Australia

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my bad, where I'm from a "non resident" is someone who lives abroad.
Yes. Right!
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Old 28.10.2019, 12:12
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Re: Paying tax on interest earned in Australia

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Yet another ancient thread resurrected. Why?
And do I see a rule that one can't comment on an old thread. Get a life!!!
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