Australian Pension of a Non-Resident: Where to Pay Taxes?

Lalpha31 on 31/07/2022 - 04:23

I had been living and working in Australia for decades, then I retired and now I'm back to Italy and I get my Australian age pension. I know there's a convention between Australia and Italy to avoid double taxation so my question is: where have I to pay my pension's taxes? In other words: is my Australia pension paid to my italian bank account already taxed ("net") by "centrelink intl services" so I've not to pay anything more or is "centrelink intl services" sending me my pension's "gross" so I've to pay Italian taxes?

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  • garetz on 31/07/2022 - 05:31
    -3

    It depends on how much you are getting, if the total amount pa requires taxation by the aust government, then they will withhold a certain %.

    You will have to pay the difference if you owe money the next financial year to the ATO.

    If you earn anything in Italy, you would need to declare that to the Australian tax office which will then affect your pension amount paid. Anything you earn in Italy will be taxable there.

  • cashless on 31/07/2022 - 09:08
    +2

    The place where you are “tax resident” usually determines where (and to whom) you pay tax.
    Sounds like you are domiciled in Italy from your description, so you are likely to pay tax there.
    OzBargain forums are not the most reliable source for information about tax domiciles, so don’t believe anything you read here.

  • JimmyF on 31/07/2022 - 10:37
    -4

    centrelink payments in most cases are classed as 'tax free' by the ATO, but as cashless said, will depend on the laws in the place you are a tax resident.

    • happydude on 31/07/2022 - 14:05

      No. It very limited cases they are tax free. Age pension is not one of those cases.

      Often considering the Tax Free Thresholds and Tax offsets there may not be any tax payable due to the amount paid, but that is not the same as tax free.

  • trex on 31/07/2022 - 20:06

    1. Are you an Australian Tax Resident? (Australian Tax residency does not depend on physical presence in Australia)

    2. If not:

    Article 18 - Pensions and annuities
    1. Pensions (including government pensions) and annuities paid to a resident of one of the Contracting States (ie Italy) shall be taxable only in that State (ie Italy).

    (https://www.finanze.gov.it/export/sites/finanze/.galleries/D…)

  • alpha31 on 31/07/2022 - 23:09

    Thank you for your tips. I had previously asked to 2 different accountants here in Italy and received 2 opposite answers then I've written here because I mostly hoped someone of you shared the same situation of mine, anyway I'll show the legal bases given by trex to the "ignorant" accountant ("your pension is already taxed in Australia, you don't have to pay anything here") and listen what he answers.

    @garetz
    I don't know if it can be useful but my Australian age pension is about 1,600-1,700 AUSD every 4 weeks so the total amount will be 20,800-22,100 AUSD per year.
    Let's say it's true I must pay this pension's taxes here in Italy because I'm now only an Italian citizen, I'd like to know if it could be possible to pay this tax once and only to Australian government (and not to Italian one as the law establishes) and, if yes, how much I'd pay so I'll make a comparison to understand in which country I'd pay less taxes, if and only if I could choose. Is here someone of you that lives in Australia and earns an Australian age pension in the same range of money of mine and wants to say how much % taxes he/she pays?

    Do you Ultimately know who should I ask these financial questions to to get 100% sure answers? I've found the centerlink Services Australia's free of charge number 800 781 977 for Italian residents, I'll try to ask them. Do you know if they've got an email address too?

    PS - Can I be notified by email of your answers? I use gmail and I subscribed this thread ("Send me notifications for: new replies") but I've got nothing in my gmail (including spam folder).

    • trex on 01/08/2022 - 13:46

      Go to My Account>Settings then choose Subscriptions. You should see Notifications and check the box for Email.

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