What Will be my Tax Rate on Interest Earned on Savings if I Live and Work Overseas?

Scrooge McDeal on 27/10/2024 - 18:55
Last edited 27/10/2024 - 19:00

Hello everyone! I need your help on this one. I am an Australian citizen but I left Australia permanently in September (atleast for now it's permanently). I am currently living in a EU country, which I am also citizen and now tax resident since I work here.

How will I calculate the tax that I need to pay on the interest earned on my savings?
And since I was a tax resident up until end of August, how will I calculate my tax return?

All I could find it's this:

• https://www.ato.gov.au/individuals-and-families/coming-to-au…

• https://www.ato.gov.au/individuals-and-families/coming-to-au…

Please help! Thanks in advance.

Financial

Comments

  • theHMASfriendship on 27/10/2024 - 18:58

    Where did you move to?

    • Scrooge McDeal on 27/10/2024 - 19:00

      EU country 🇪🇺

      • AustriaBargain on 27/10/2024 - 21:05
        +5

        Scrooge McDuck is Scottish, but Scotland famously left the EU a few years ago 🤔

      • Nugs on 28/10/2024 - 19:14
        +1

        Are you in hiding from bikies?
        .

  • bemybubble on 27/10/2024 - 19:07
    +1

    Scrooge. You would notify your bank that you’re no longer a resident of Aus. They will withhold 10% and that takes care of your obligations.

    Unless the DTA states otherwise of course (not sure which country) then in most cases the above works

    • Scrooge McDeal on 27/10/2024 - 19:14

      Oh I haven't done that. It's been 2 months now. Shall I just change address on my bank accounts?

      • bemybubble on 27/10/2024 - 19:15

        I would contact the bank. Contact the AEC and anyone else you have to in order to ensure you’ve severed connections with Aus.

        • Scrooge McDeal on 27/10/2024 - 19:19

          I have ticket that I left Aus. Also I have payslips from job overseas. Hopefully no issues. I can only contact them via chat. I can't make any calls from my Aus number.

          • bemybubble on 27/10/2024 - 19:20
            +3

            @Scrooge McDeal: Still need to let AEC and other people know. Otherwise the tax office will argue you had a foot in the pond with an intent to return.

            In other words, if you decide to permanently leave you would take full steps to demonstrate as such. That will keep the tax office off your back

            • Scrooge McDeal on 27/10/2024 - 19:22

              @bemybubble: Oh, thanks for that. I will start letting several agencies know. AEC, Medicare what other agencies you reckon?

              • bemybubble on 27/10/2024 - 19:23
                +1

                @Scrooge McDeal: Those are the main ones to be honest.

                • Scrooge McDeal on 27/10/2024 - 20:14

                  @bemybubble: How do I change my address on Medicare or other MyGov services? When I try to enter overseas address, it doesn't let me. It only lets me to change it to an Australian address.

                  • bemybubble on 27/10/2024 - 21:02

                    @Scrooge McDeal: I don’t think you can out an os address. But don’t quote me on that

                  • jackspratt on 28/10/2024 - 20:51

                    @Scrooge McDeal: If you have an Australian address you can use, I would hold on to your Medicare card for as long as you can.

                    • Scrooge McDeal on 28/10/2024 - 21:42

                      @jackspratt: Yeah I have an address I can use. Anyway it's impossible to change the address online from Australian address to an overseas address.

                      It's so complicated. What if I want in the future to live 6 months in Australia and 6 months overseas?
                      How complicated that would be?

              • MS Paint on 27/10/2024 - 19:41

                @Scrooge McDeal: Don't cancel your jobseeker allowance.

      • reactor-au on 28/10/2024 - 08:38

        You need to provide the Australian bank with your new address and foreign tax number.

    • HeWhoKnows on 28/10/2024 - 13:38

      "You would notify your bank that you’re no longer a resident of Aus. They will withhold 10% and that takes care of your obligations."
      Correct!

  • CyberMurning on 27/10/2024 - 21:22

    I thought we met once or twice at ozb birthdays years ago but probably not as you just joined in 2021.. hmm maybe similar username.
    Good luck!

    • Scrooge McDeal on 27/10/2024 - 21:38

      Never been to an Ozb meetup. Probably a different Scrooge. Thanks for the wishes! 👍

  • altomic on 27/10/2024 - 23:21

    How much savings?

    • Scrooge McDeal on 28/10/2024 - 00:31

      Nothing crazy. Let's say I make around $5k in interest per year before tax.

      • altomic on 28/10/2024 - 08:10
        -1

        it's below the tax free threshold

        • BigBirdy on 28/10/2024 - 10:20
          +4

          Foreign residents don’t get a tax free threshold

          • ddilrat on 28/10/2024 - 22:27

            @BigBirdy: It’s a flat 30% for non residents

          • altomic on 28/10/2024 - 23:09

            @BigBirdy:

            I am an Australian citizen

            according to OP.

            • jackspratt on 29/10/2024 - 00:12
              +1

              @altomic: Who can at the same time be a non-resident for tax purposes.

      • JimmyF on 28/10/2024 - 08:23
        +1

        Why not just move it all over to your EU accounts and deal with it there?

        • Redoctober00 on 28/10/2024 - 10:17

          Aus banks guarantee savings if bank collapses. I'm not sure about other countries. For piece of mind I would probably keep bulk of my savings in Aus as well.

        • Scrooge McDeal on 28/10/2024 - 15:43

          Have you seen interest rates on Savings in Europe? Peanuts 🥜

  • BigBirdy on 28/10/2024 - 10:27
    +3

    It sounds like you are now a Foreign Resident For Tax Purposes, so you’re required to pay 30% tax rate on your first $135K of income, with no tax-free threshold.
    https://www.ato.gov.au/tax-rates-and-codes/tax-rates-foreign…

    • jackspratt on 28/10/2024 - 20:54

      That doesn't apply to bank interest.

      • bemybubble on 29/10/2024 - 09:22

        Not sure why you go negged but you’re 100% right

        • jackspratt on 29/10/2024 - 13:02
          +1

          Yes, astonishing ignorance isn't it.

          • bemybubble on 29/10/2024 - 13:12
            +1

            @jackspratt: For completeness - https://www.ato.gov.au/individuals-and-families/investments-…

            Tax rates for foreign residents

            You advise the Australian financial institution – your payer – that you are a foreign resident and they withhold tax in Australia at the time of payment. You won't need to declare this income in an Australian tax return. Your payer should withhold tax at the following rates:

            Tax rate for Treaty countries Non-treaty countries %
            Interest Some agreements provide an exemption from withholding tax in certain circumstances. 10%
            Unfranked dividends Most agreements reduce the rate to 15%. 30%
            Royalties Most agreements reduce the rate to 15%. 30%
  • freefall101 on 28/10/2024 - 11:25

    Definitely go find an accountant. For Australia you just need to tell the institutions you hold with that you're no longer an Australian for tax purposes and they'll withhold extra tax, but from the other side you need to figure out if there's a double taxation treaty and how it handles overseas income (i.e. is the tax withheld in Australia tax deductible there). You also potentially have to deal with a different end of financial year which means the income could be split in weird ways. You have to adhere to both their tax law and Australian tax law now, which isn't always a clear path. You'll likely need to file returns in both countries for the first year.

    Also are you really sure that having a job and citizenship is the sole requirement for being a tax resident? If you decide to come home early (i.e spend less than 6 months there) you might not be a tax resident for whatever their tax year is).

    Also just saying you're living in the EU doesn't help much, all the countries still have their own tax systems and tax laws. You'll need to do what's specific for that.

    • leiiv on 28/10/2024 - 12:21

      Yes this, I think double taxation treaty is bilateral, so there is a specific one for each country.

  • buckster on 29/10/2024 - 08:59

    How can it be permanently "for now" lol

  • yamahamoto on 29/10/2024 - 12:31

    How did you find the job in Europe? We are looking to
    move to Germany for family reason but I’m not getting any luck with my application.

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