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Aussie with tax trouble
Anonymous
Posted: Monday, July 26, 2010 1:23 AM
Aussie with tax trouble. So a friend of a friend has been in yachting for several years, stopped doing tax returns and avoided paying taxes all this time. A year ago he bought an investment property on the Gold Coast, rented it out and now has been discovered that he is owing or may owing back taxes and be given a tax penalty for not filling his taxes, paying his taxes and has no valid way to confirm his income and abilty to purchase the investment property and maintain the mortgage. Because he sent all his pay home during the past years there is a record of his tax free income. Now he is worried about a tax audit and how this will affect his past income, not paying his taxes and the future for him and his investment property. What should he do, is there anyone that has had an audit by the tax department and gotten away with not filling out tax forms each year, whilst also sending money home and owning property there. I guess this friend of a friend came unstuck the moment he filed his taxes and claimed the invetment property with the tax department, who appear to now be questioning the situation with his CPA.
Haya
Posted: Monday, July 26, 2010 11:18 AM
Joined: 02/04/2010
Posts: 19


This friend of a friend is f-ed up (or about to get).  Good luck.

rodsteel
Posted: Monday, July 26, 2010 6:35 PM
Joined: 25/06/2009
Posts: 275


Anon,

 

Relevevant issues for the affected party??

 

Rod

 

P.S. In any case, since they did not file, they should work through a local tax attorney (that specializes in non-resident taxation?).

 

>>>

 

Definition of Tax Residence:

A person is considered to be tax resident in Australia if:

They are domiciled in Australia, and do not have a place of abode elsewhere.

They are not domiciled in Australia, but have been there either continuously or intermittently for 183 days over the previous fiscal year.

They are resident and go abroad, but the term of employment is less than 2 years, and the individual intends to return to Australia.

They have a permanent home, habitual abode, or close personal and economic ties in Australia.

 

Non-Resident Taxation:

While resident individuals are liable for tax on their world-wide income, generally non-residents are only taxable on Australian sourced income and taxable Australian assets. However, the definition of 'Australian sourced' income is quite far reaching, and includes:

Income earned by a branch or permanent establishment (usually a physical presence for more than 6 months in the fiscal year is taken as a permanent establishment) located in Australia and owned or part owned by the non-resident.

Income earned from a contract accepted by an Australian agent authorised to accept contracts on behalf of non-residents.

Income earned from contracts signed in Australia, or to be performed there.

Income from contracts in which the implied or express law is Australian, or in which the currency of payment is Australian dollars.

Income from contracts whereby one or both of the parties resides in Australia.

Rental income from Australian property paid to a non-resident.

However, a non-resident employee will not pay tax in Australia if his employer is resident in another country, with which Australia has a double tax treaty, and the employee is in the country for less than 183 days in the fiscal year.

http://www.lowtax.net/lowtax/html/offon/australia/aus_expat.html

 


Dan Heath
Posted: Monday, July 26, 2010 8:52 PM
Joined: 02/08/2009
Posts: 4


Ouch! First things first. Your friend hasn´t avoided anything. At best the tax payment has been delayed. If your friend had of completed the ATO - Taxpayer Leaving Australia Form (downloadable for the ATO website or www.yachtcrewmanagement.com) and gone through all the necessary procedures then the story would have been very different. Basically, the ATO keeps a track of those individuals who in the past had submitted tax returns - and then all of a sudden "disappear". Your friend then continued to send money to Australia from a foreign bank account - which alerts the ATO - they then cross check this against outstanding tax returns. "But I work on a boat - in international waters " I hear people scream... According to the ATO if you are an Australian resident for tax purposes you pay tax in Australia on your employment income from "foreign service" unless it is exempt from foreign tax..... SERVICE ON A BOAT IN INTERNATIONAL WATERS IS NOT FOREIGN SERVICE because the international waters do not form part of the territory of a foreign country. Your friend has made a big mistake in trying to slip under the radar, sending money home and buying an investment property - renting it out and i assume not being taxed on the rental income. Plan ahead. Consider structuring your affairs. or in your friends case.... pay the penalty. Dan Heath Yacht Crew Management www.yachtcrewmanagement.com
Anonymous
Posted: Wednesday, July 28, 2010 2:13 AM
why do so many people think that just because they are out of the country that they are non residents?? go onto the ATO website and read so of the examples of what they define as a non resident.. it also says that if you are a non resident in Australia that you must pay tax in the country that you are residing, and since you are on a boat in no defined country then the ATO still consider you to be a resident on Australia.. Do you not think that all the loop holes have been closed by now.. their are examples of residence that went overseas continuously for 7 years and came home to be told they were an Aust resident the entire time and had to pay tax on all their oversea income for that past 7 years.. as said previously, not filling a tax return every year sets off alarm bells with the ATO, and sending money home was another big no no.. and as for buyingan investment property, atleast wait a few years after working back home again... it atleast looks more legit.. if you don't understand the ATO website then go see a lawyer (as I did) that specialises in tax law.. for a few hundred dollars they will give you the REAL run down and you will be shit scared like I was.. avoiding the ATO isn't just as simple as jumping on a plane and leaving the country.. one of the very few ways of not paying tax in AUSTRALIA, is to pay tax in another country your friend WILL be in BIG trouble if the ATO contact him.. be warned...
Anonymous
Posted: Wednesday, July 28, 2010 2:15 AM
Rod and Dan above have summed it up perfectly, with the definition of non resident etc and that fact that the payment of Aust tax has simply been delayed.. the friend went about it in all wrong ways
bird
Posted: Wednesday, July 28, 2010 9:45 AM
Joined: 03/07/2010
Posts: 1


My missus working in tax at the moment and basically you must be able to prove that you have a contract with a minimum 2 years working abroad. Also let your bank or investment companies know that you are a non resident for tax purposes. They will then put aside a 10% withholding tax on any dividends or interest earnt. If you can prove this and have your paper work up to date they are not concerned with you. Good luck
Anonymous
Posted: Wednesday, July 28, 2010 4:29 PM
Someone said, "Your friend hasn´t avoided anything.  At best the tax payment has been delayed".  What a crock!  Delayed????  Delayed until when????? . . . . until he/she gets caught?!!!  Before anyone starts giving me crap like "you don't know the entire story", then feel free to give more details, as this post is vague at best and author has opened themselves up to much interpretation by the reader .  Consequently, my response is based solely on what is presented thus far (and has lot

You have to be domiciled somewhere in the world.  Just because you're on a boat does not allow you to avoid taxes.  The information in this post is very vague.  If this crew member is an Australian, then he should be paying taxes to Australia.  If (and we don't know from this post) the U.S. gov't (assuming "goal coast" refers to Florida gold coast), is asking him/her to pay taxes to the U.S gov't (because he/she is now on the books because of the property purchase on the gold coast), then the easiest way to argue the point to the U.S. gov't is to prove that you're paying income taxes to your "domiciled" home gov't (in this case Australia).  If this individual has not paid taxes on his/her income to the Australian gov't, then you'd be hard pressed to argue that taxes are not owed to the U.S. gov't.

For example, say you're in the U.S. Navy, but you're stationed overseas for a period of time . . . . the U.S. armed services member is still considered to be domiciled in the U.S. and is still required to pay taxes on their income to the U.S. Federal Gov't AND STATE TAXES TO THE "DOMICILE" STATE OF RECORD.

As another example . . . . you sell your home in Massachusetts and live the life of a nomad in an RV.  You're still required to pay income taxes to the state of Massachusetts, as you have not done anything to change you're domicile to somewhere else  (domicile refers to, for example, where you:  hold a driver's license, where you vote, where you have bank accounts, where you live when you're not out of the country or AND OUT OF YOUR STATE OF DOMICILE (in an RV, on a boat or in the military.)  Saying you live in Florida (a state in which there is no "state" income taxes) is not enough to avoid taxes to the Massachusetts gov't. 

Bottom line . . . . just because you're on a boat, does not mean that you can get away from paying income taxes (if your domiciled country and/or state has income taxes)!!! YOU HAVE TO BE DOMICILED SOMEWHERE !!!

Had this individual been paying his/her taxes in the first place, they would not be in this predicament in the first place.  It does not matter where you are (or better yet, where you are not) at any given time . . . .your "domiciled" country (and, at least in the U.S., "state") have the expectation of EVERYONE PAYING TAXES . . . .

To give advice to someone on how to avoid (or continue to avoid) paying any taxes at all on their income is also guilty of a criminal action.

Anonymous
Posted: Thursday, July 29, 2010 7:22 PM

I'm sure the orginal poster was refering to the Australian Gold Coast, not Florida.

And the U.S. tax system is different to pretty much every other system out there as it's the only one that's not residency based.


Anonymous
Posted: Monday, August 2, 2010 11:26 AM
Where is the best place to be domiciled for Australian crew? I have heard France has some attractive Tax rates - but who would be the best qualified to give expert advice? Can any one suggest a good Tax specialist or Financial Advisor either in Europe or Australia? Considering the lack of paperwork in the yachting industry how does the ATO decide how much you earn/owe? And how much would they invest in tracking an individual for relatively low amounts compared to big business tax avoidance?
 
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