Just wanting to avail of the collective wisdom on this one! I'm an Australian citizen and Australian tax resident. I have a property in UK that has been looked after by friends for some years but since the start of this year has been formally being rented out by an agent and I'm getting income from it into my UK bank account. It'll amount to under $10k pa after paying rates, insurances and upkeep, so it's not an astronomical sum. I have two conflicting accountant opinions on the need to declare it to ATO; one says since the funds will stay in UK and it's a relatively small amount, I don't need to worry about it. The other says I must declare it and therefore have to work out currency conversion, deductions, etc. and will need an accountant to do that. It sounds like a lot of work and since he has a vested interest I'm not sure whether to take that advice. I declare it to the UK inland revenue, so it's all above board there anyway. If anyone has a suggestion or is in a similar position I'd be keen to hear…
Should I declare a modest income from overseas property to ATO?
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Sell it in UK and Buy Bitcoin and leave it there. Just my opinion
🙈 🙊 🙉
Nice try ATO 😉
Declare it. Data matching is becoming quite sophisticated these days.
Blows my mind that an accountant would tell you not to declare it unless he isn’t a tax agent.
Yep either the accountant is completely incompetent or he is suggesting you tax evade.
I'm in exactly the same position. It doesn't matter that the money stays in the UK: it's income and you're an Australian resident for tax purposes so you must declare it here.
If it was your former primary residence then it probably wasn't purchased specifically as an investment property so you can't claim so many deductions against this income either, i.e. negative gearing isn't possible. You will end up paying tax on the profit, so make sure all legitimate expenses in running this rental are deducted — agents fees, insurances, repairs etc. Some years this results in me not receiving a tax return but instead owing the ATO a small amount. It's ridiculously easy to lodge as part of your online tax return: you just need the total amount of overseas income earned, the total amount of deductions and the ATO's official UK<>AUD exchange rate for the year, which you find on their website. Keep your supporting evidence in case of audit, but those three items are all you need when lodging. Unless your tax situation is complicated you really don't need to use an agent.
Not worth trying to dodge this as someone else mentioned, there's a reciprocal agreement between ATO and Inland Revenue — my UK bank interest, for example, is pre-filled when I lodge an Australian tax return so they already know about your UK income. Better to pay up now rather than have a much bigger tax problem when you eventually sell the house and have to explain the Capital Gain.
Yes, compelling points.
I'd add that it might be a modest amount today, but it might not be tomorrow. Then it'd be a bit hard to explain why you hadn't been declaring it in prior years.
"If it was your former primary residence then it probably wasn't purchased specifically as an investment property so you can't claim so many deductions against this income either, i.e. negative gearing isn't possible."
I know the OP has stated he generates a net income from the property, but if there was a substantial loan or low rental income, there's no reason why you can't negatively gear a former primary residence situated in another country.
The ATO will also happily tax you on the net income on a former primary residence. ATO can't have it both ways.
Doesn't matter if it's a modest amount or even if it is a loss. You have to declare it to ATO.
If you do not they will find out anyway, thanks to reciprocal data sharing arrangements.
What you have to do is extremely simple. Add up all the UK income (from rent) and subtract all the outgoing expenditure (maintenance, fixed costs, agency fees etc).
You'll end up with a simple P/L balance sheet. From that you simply declare net income (or loss) to the ATO.
Alternatively you can employ an accountant to do that for you and pay them a handsome fee.
neah, we live in a stone age - ATO won't find out nothing so keep hiding. /s
no need to declare it, the ato will eventually tell you that you owe them taxes
If you declare it, maybe you could get a trip to UK tax deducted!
Yep, I 'd book retun first or business to use the funds up and declare it as cost of managing the property.
travel to a rental property is no longer an allowable deduction
and it's a relatively small amount, I don't need to worry about it
What the hell… this person cannot possibly be an accountant in public practice.
Thanks heaps all! Looks like I'm declaring it then.
not sure what the tax rules are in the UK or the double tax treaty between Aus/UK but if you're declaring the rent in the UK and paying tax there, you should get a tax credit in Aus for the tax paid in the UK. I.e. you don't pay tax twice on the same income.
I'm sure a few google searches will let you know what the situation is
Treat it just like a normal AU rental property. And more importantly, pick the competent accountant. Not sure if you can use a depreciation report for an overseas property, the accountant should be able to advise you. Never know, once everything is listed out, you might find the property is actually negatively geared.
Ask the accountant that says ignore it, if he will stand behind you if you get audited and supply the same info to them as to you.
I declare it to the UK inland revenue,
If you've declared it in the UK then there is a good chance that the local tax agency knows about it.
If you haven't then they won't know. Tax agencies don't have unlimited resources and they won't look unless they suspect.
Both the Panama and Pandora papers show how much these agencies miss when they aren't looking.
About 400 Australian names are contained in the papers, a cache of 11.9m files from companies hired by wealthy clients to create offshore structures and trusts in tax havens such as Panama, Dubai, Monaco, Switzerland, the Cayman Islands and Samoa.
https://www.theguardian.com/australia-news/2021/oct/04/no-st…They missed 400 millionaires. There would be >1000s of ordinary people that own assets all around the world that they have missed.
Declare it … but mostly because you can claim two flights per year, overseas, to investigate your investment property …
this should more than make up for any tax you have to pay on the earnings …
pretty shitty they stopped this. was nice getting interstate travel back in the day.
ATO stopped this from July 2017. Can no longer claim any travel related expenses associated with property investments anywhere.
Travel to inspect a rental property has not been tax deductible for about 5 years.
thought about buying an investment property overseas but most countries have tax treaties with the ATO and then how would one work out double tax credits it seems complicated
you need to declare it.
just so you know ATO and HMRC do data matching.