Share this content
5

Australian/UK tax residency

Tax residency issues AUS/GBP and double tax treaty

Didn't find your answer?

I have a client who has been living in Australia and has a temporary Australian visa. As such, according to Australian tax rules, he is only taxable on his Australian sources of income. The client spents majority of the time in Australia and up to 0-10 days a year in the UK. As such he is classed as an UK non-resident and taxed only on UK sources of income. When reading double tax treaty between UK and Australia, it would appear that he should be then taxed in the UK on his worldwide income. Please can someone confirm that this is the correct way of taxing the individual. How should this be disclosed on the tax return? Many thanks for any hints and advice.

Replies (5)

Please login or register to join the discussion.

My photo
By Matrix
25th Nov 2019 12:45

If you have already determined under domestic law that he is only taxed on his UK source income then why are you looking at the treaty?

Thanks (0)
avatar
By David Heaton
25th Nov 2019 14:34

The UK-Australian treaty only applies to matters that involve both states, so the residence tiebreaker in the treaty does not apply to anything in the UK that is not relevant to Australia. If you have concluded that the UK statutory residence test makes him non-resident under UK law, he can only be taxable in the UK on UK-source income. Or are you doubting the residence status?

Thanks (0)
Replying to David Heaton:
avatar
By Blee
25th Nov 2019 15:39

Hello David,

Thank you for the reply. No, I do not have any doubts about being the non-resident in the UK. The Australian accountant confirmed that the client is only taxed on his Australian sources of income, because he helds temporary visas and that is the rule in Australia. I am just left wondering where will be the client taxable on his worldwide income if it is not in Australia?

Thanks (0)
Replying to Blee:
avatar
By David Heaton
26th Nov 2019 15:56

That will depend on where he earned the income. He may be taxable nowhere on his total worldwide income, but most countries tax income earned there unless there's a treaty negating the tax charge, and the way out of a charge is to be resident in the other treaty state. That won't apply here, so the dependent personal services rules (article 15 in the OECD model convention) won't rule out a host country tax charge. 30 days of presence are sometimes enough. If he had a series of projects in different states, he may be taxable in some or all of those states. Or he may not - it depends on their various tax laws.

Thanks (1)
Replying to David Heaton:
avatar
By Blee
26th Nov 2019 16:16

Thank you David, this is very helpful.

Thanks (0)
Share this content

Related posts