Residency for tax purpose – Part 20
Annuities, pensions and superannuation from your previous country
Most Australian residents must pay tax on foreign pensions and annuities. This is the case even if the country that made your payment has already withheld tax from it.
You may be entitled to deduct the part of your annual pension or annuity income that represents your personal contributions being returned to you. This is called the undeducted purchase price.
You may claim a foreign income tax offset if your foreign pension or annuity is taxed both in Australia and in the country that paid it.
Pensions and annuities are usually taxable only in the country of residence of the recipient. If your payment has also been taxed in a country with which Australia has a tax treaty, you may be entitled to a refund of that tax from that country. You may also be able to arrange not to have tax withheld from future payments from that country. You can do this by supplying a tax relief form or a certificate of residency or status.
You may be able to transfer super from a foreign super fund to a complying Australian super fund or yourself. Whether you can make these transfers will depend on the rules of the super fund you are making the transfer from.
If you transfer super, you pay income tax on any earnings on your foreign super that have accrued since you became an Australian resident or terminated your foreign employment. But you don’t have to pay any tax if you make the transfer within six months of either of these events.
Overseas properties you own
As an Australian resident, any income or capital gains you make from your overseas properties is generally taxable in Australia. It must be declared in your Australian tax return. If you have paid tax in another country on that income or gain, you may be entitled to a foreign income tax offset.
Offshore bank accounts
Some tax authorities in other countries don’t require you to report interest earned overseas, but Australia does. If you hold bank accounts in other countries, you must report any interest or other income earned from these accounts in your Australian income tax return. You may have to pay additional charges if you don’t do this.
Paying tax and lodging a tax return
After the end of the Australian income year (30 June), you lodge an annual tax return to tell ATO how much income you received and tax you paid. ATO then send you a notice of assessment and your tax refund if you’re entitled to one.
You must lodge a tax return if any of the following apply:
- tax was deducted from any payments (such as wages) made to you during the financial year
- you are an Australian resident and your taxable income was more than the tax-free threshold
- you are a foreign resident and you earned more than $1 in Australia during the financial year
- you are leaving Australia permanently or for more than one financial year
- you wish to claim any tax deductions.
- you are a foreign resident and your only Australian-sourced income was interest, dividends or royalties from which non-resident withholding tax has been correctly withheld
- you are a working holiday maker (417 or 462 visa holder) and your taxable income for the year is less than $37,001.