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  1. #1
    Thailand Expat
    Mendip's Avatar
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    Undeclared rental income in Australia

    I wasn't sure where to put this... mods, please move if desired.

    I'm hoping that with such a diverse membership someone may have some experience/advice...or know someone who has had similar... thanks in advance if so.

    I lived in Perth WA for a couple of years before moving to Thailand, and during that time bought an apartment during the so-called rejuvenation of inner city Perth.

    This apartment has been let through an agency since 2013, and... well... I don't seem to have declared any income. It's been a busy few years, I've been distracted, etc etc, but all said and done I didn't address the issue to start with and time slipped by... and now have six undeclared tax years, and well on my way to the seventh.

    Recently this has started playing on my mind, and with my daughter's future very important to me I'm wanting to sort this out and become legal. One day I may come to sell the apartment and I'm sure with the capital gains I'll be liable to, the tax authorities may well dig a bit deeper. And to be honest, I just want this off my mind.

    Just some details... I'm a British citizen and have never been in the Australian tax system. I have no tax history, no tax id and have never worked in Australia. I think it would be extremely unlikely I'd ever go back to live there, but occasional visits would be nice. My daughter has tri-citizenship, including Aussie. I think an apartment in East Perth may well be useful to her in the future, maybe for accommodation during further education if she goes that way.

    I've just spent a morning organising nearly 7 years worth of rental statements and End of Year Statements provided by the letting agents in Perth, but what's the next step?

    Does anyone have experience of this? Are the Australian tax authorities likely to catch up with me?
    Is there such a thing as an amnesty if I approach them and come clean? What kind of penalties could I expect on top of what I assume wold be huge interest charges.

    My rough plan now is to approach Australian accountants and put this to them, and see what they suggests. I don't just want to needlessly waste money though, as I'm sure the wrong accountancy firm could spend hours over this and fleece me.

    Any advice please?

  2. #2
    Thailand Expat AntRobertson's Avatar
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    Quote Originally Posted by Mendip
    Just some details... I'm a British citizen and have never been in the Australian tax system. I have no tax history, no tax id and have never worked in Australia.
    Up until I read that part I was thinking: 'ATO... He's screwed!'

    Anyways you're obviously non-resident for tax purposes so that's a good thing though I'm not 100% on how that relates to property, capital gains taxes and all that (and am always wary about offering advice on taxation in any event).

    I would also presume that the letting agents have been taking withholding tax or whatever off what they've sent you? Maybe approach them and ask as a first move, I'm sure they would've dealt with similar scenarios previously.

  3. #3
    Hansum Man! panama hat's Avatar
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    Quote Originally Posted by Mendip View Post
    My rough plan now is to approach Australian accountants and put this to them, and see what they suggests. I don't just want to needlessly waste money though, as I'm sure the wrong accountancy firm could spend hours over this and fleece me.
    Better to err on the side of safety, but I'd suggest to follow Ant's suggestion re the RE agents

    Quote Originally Posted by AntRobertson View Post
    Anyways you're obviously non-resident for tax purposes so that's a good thing though I'm not 100% on how that relates to property, capital gains taxes and all that (and am always wary about offering advice on taxation in any event).
    Usually non-residents get taxed at a higher rate . . . cgt and all the other stuff is a nightmare

    Quote Originally Posted by AntRobertson View Post
    I would also presume that the letting agents have been taking withholding tax or whatever off what they've sent you?
    Not necessarily, and if they have they would have sent Mendip and annual account summary . . . I think

    Quote Originally Posted by AntRobertson View Post
    Maybe approach them and ask as a first move, I'm sure they would've dealt with similar scenarios previously.
    Probably the best suggestion.

  4. #4
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    I think you should sell it and repatriate the profits by using hawala. The problem is of course when you try to bank the dosh in your country of residence, particularly if it is within the western regulatory system. So, perhaps best to deposit in Thailand in cash and as evidence of provenance show documents relating to your property sale and Australian bank receipt.
    This is the best way to avoid the scrutiny of the Ockers otherwise simply sell, bank the proceeds and transfer bank-to-bank in Bangkok and hope for the best.

    Volunteering information to the tax authorities in your position is stupid.

  5. #5
    Thailand Expat David48atTD's Avatar
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    Quote Originally Posted by Mendip View Post
    I ... have never been in the Australian tax system. I have no tax history, no tax id and have never worked in Australia. I think it would be extremely unlikely I'd ever go back to live there, but occasional visits would be nice. My daughter has tri-citizenship, including Aussie.
    Dodgy Dave suggests, as one strategy ...

    SELL IT ... Perth property market is recovering, interest rates are low.

    You have never been in the Aussie Tax System (no TFN ... Tax File Number) ... but it does beg the question ... do you have an Aussie Bank Account?
    And, to get such an account, you need a TFN (tax id)

    My background is in Property

    Maybe better to continue this through a PM?

    ---

    Oh ... and don't worry, your potential crimes will not reflect on your angelic Lassie!
    “Someone is sitting in the shade today because someone planted a tree a long time ago”

  6. #6
    Thailand Expat
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    ^^^ There is flat rate of 32.5% on rental income for non-resident landlords in Australia. That is on profit, so strata management fees etc could be offset.

    The agency definitely hasn't been witholding tax... what I don't know is whether they are duty bound to report their clients to the tax authorities.

    ^ I've been mulling over selling the place and just seeing what happens re tax. Unfortunately Perth real estate is on it's knees just now and the apartment is down 30% on it's value of six years ago. Ain't hindsight a wonderful thing!

    Sending Aussie dollars back to the UK is favourable exchange rate wise... but as you say, provenence. I believe bank accounts can be opened in Singapore with a large enough deposit. That would be preferable to me as I wouldn't want to make a large deposit in Thailand.

  7. #7
    Thailand Expat
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    ^^ Yes Dave, I have an account with ANZ but wasn't aware I had a tax number.

  8. #8
    Thailand Expat David48atTD's Avatar
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    ^^ "the apartment is down 30% on it's value of six years ago" ... Aussie Real Estate falling by 30%?

    Is that in Australian Dollar Terms?

    PM me ... let's chat.

  9. #9
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    Quote Originally Posted by Mendip View Post

    I wouldn't want to make a large deposit in Thailand.
    Aahh, if only the rest of us had taken heed......

  10. #10
    Your local I.Q. Monitor
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    The Fall in Perth is probably due to the mining boom which produced a temporary housing bubble. The downturn in mining has hit many towns that had inflated house prices from the mining boom.

  11. #11
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    Pretty sure you can offset your capital loss against your rental income, and there are also a few bells and whistles you can throw in- like deducting the cost of your Perth trips because you were inspecting the apartment (obviously), repairs real & imagined etc. Talk to a tax accountant there, tell him your situation. Not one of the big firms- they cost an arm and leg- a recommended small or medium sized firm. Oh, that's deductible too.

    Doesn't seem to me you are in a real pickle tax wise- you may find you owe nothing at all, maybe even have carried forward tax losses. You might cop a fine, but not much in the scheme of things.

    Or you can try to go dodgy, but don't get caught. Or, why not put up your daughter there, if she's gonna live in Perth and you don't want to sell? You can even will it to her, and your tax offences die with you.

  12. #12
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    A letter marked "Without Prejudice" to your letting agents explaining the situation and asking for their advice would be my first move. Then see what they come up with. I used to run a letting agency in the UK and the last thing one wants to do is lose a long term customer.
    42

  13. #13
    or TizYou?
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    Quote Originally Posted by Mendip View Post
    ^^ Yes Dave, I have an account with ANZ but wasn't aware I had a tax number.
    You don't need to provide a TFN to open a bank account.
    If you don't provide TFN, then they will just take withholding tax from any interest that they pay (which is probably less than half of fuckall)

  14. #14
    Hansum Man! panama hat's Avatar
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    Quote Originally Posted by David48atTD View Post
    You have never been in the Aussie Tax System (no TFN ... Tax File Number) ... but it does beg the question ... do you have an Aussie Bank Account?
    How else wold the real estate agency bank the income - so yes, needs a tfn


    Quote Originally Posted by Mendip View Post
    I believe bank accounts can be opened in Singapore with a large enough deposit. That would be preferable to me as I wouldn't want to make a large deposit in Thailand.
    You can open an offshore bank account in Singapore, like with HSBC . . .

    I have a normal bank account in Singapore, with credit and debit cards but that's because I worked there for eight years . . . (Roight, guvna, what's it worf to you keeping your dosh in me account?)


    .
    .
    .
    .
    .

    .
    (Um, just kidding in case someone is listening in)

    Singapore has become very, very strict in their banking regulations - don't count on them being an 'easy' go-to

  15. #15
    Thailand Expat TheRealKW's Avatar
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    I just had an account in Indonesia frozen for possible money laundering, I wouldnt risk it with a house sale. I'd I'm pretty sure asking someone to deposiit money into a Singapore account will be flagged if and when you do sell it.

    follow the advice of the others, talk to a small firm tax agent, get it all sorted - it's not a huge problem. If it's down 30% then don't sell, keep it for another decade and see what happens.

  16. #16
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    Can you not just transfer the property into your Daughters name?

  17. #17
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    From personal experience, opening a bank account in Singapore is damn tough now. You need PR or an awful lot of cash.

  18. #18
    Thailand Expat
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    Thanks everyone! I'm out now and on the phone but all answers are very appreciated... I'm not ignoring it.

    I'll respond tomorrow from home!

  19. #19
    Thailand Expat jabir's Avatar
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    Not sure on Aussie law or your specific situation, but if you intend to give her the property have you looked into the UK equivalent of gifting? It's a common way to avoid/reduce inheritance taxes (and possibly income/cg taxes if she's a minor and/or with low income or unused tax allowances).

    You gift it to her, it's hers with all benefits and obligations, while inheritance tax liabilities graduate down to zero over 7 years. If you're going to give it to her anyway why now instead of later? Paperwork is done under your watch, so you can wrap it up rather than start worrying on your deathbed if everything is ok, will daughter/wife/executor cope or might they be stitched up by a loose comma or some other admin stitchup, and being an Aussie (which you say she is) worst way she still pays a lower tax rate than you as a farang; it removes a potential headache and costs from you, while if you live another 7 years she gets the full relief; you'll need a lawyer or google for the progression to zero, but even if you live just one year she's that much better off.

    And for your unpaid taxes (if due) it's always better to knock on their door and fess up to an honest mistake/oversight, than for them to discover you owe and knock on your door, which starts the process with you on the back foot and tagged guilty.

  20. #20
    or TizYou?
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    Quote Originally Posted by jabir View Post
    It's a common way to avoid/reduce inheritance taxes
    There is no inheritance tax in Aus. However, assets acquired from the estate may become subject to Capital Gains Tax.

  21. #21
    Days Work Done! Norton's Avatar
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    Quote Originally Posted by sabang View Post
    Talk to a tax accountant there, tell him your situation
    Quote Originally Posted by TheRealKW View Post
    talk to a small firm tax agent, get it all sorted
    What they said. This could be a start.

    The 10 Best Accountants in Perth, WA - Oneflare

  22. #22
    Thailand Expat Pragmatic's Avatar
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    Quote Originally Posted by Mendip View Post
    have never worked in Australia.
    You must have blended in quite well with all those lazy ockers.?

  23. #23
    Never Mind The Bollix
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    Don't bother with the historical income. If you want to go legit just declare this years income and all income going forwards.

    You could even kick the tenant out and do bills in your own name for a few months so you can make it look like you turned your private residence into a rental recently when you start renting it out again.

    Property agents do not deduct tax from rent. Property agents do not report your income to the ATO. They only report their own income (i.e. their commission).

    You could have offset tax on historical rent with capital depreciation but you needed to order an approved depreciation schedule from an agency at the time of purchase.

    If you are going legit then get a depreciation schedule drawn up now and offset the future rent with depreciation.

    Note that any capital depreciation deductions you claim now for rent tax offset will result in a depreciated capital value of the property for tax purposes meaning that when you come to sell it then your capital gains taxable profit will be larger since it will be = (Sale price - (purchase price - aggregated annual depreciation))

  24. #24
    or TizYou?
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    The ATO uses real property rental bond data from the state and territory rental bond authorities to identify properties that are income producing. Taxation obligations for tax payers holding income producing properties include correct reporting of rental income and capital gains tax (CGT).

    In the 2013–14 Federal Budget the government announced that it would legislate to make the reporting of property transfer data to the ATO mandatory. Legislation passed property transfer data from 1 July 2016. The Property transaction data matching protocol published in December 2015 has been amended to support the property transfer data. The rental bond data collection will be supported by this protocol.

    So even if the agent hasn't reported the rental income to the ATO. Any deposit to the Rental Bond Board would have been reported.

  25. #25
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    Yer. I know what yer on about. After 14 years of living in Lao i moved my familiy bask to perth. Problem is ive been swirlin the wobbly pops for all that time and really didnt give a fuck. The house was manag3d by century 21 andci paid all mainteance. . Now ive just moved back i there. I havent submitted a tax return ěn 14 years. A friend put me onto curtin unniverity tax clinic. The accountant students get to practice on basker cases like me. Im hoping at least i dont owe the fookers. I was a non resident. Of course i told lots of lies.

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