Australian Tax Residency Law

Australian Tax Residency Law

Australian Tax Residency Law


If you earn income outside Australia, then you need advice on the best way to handle your Australian tax affairs.

We have extensive expertise in acting for Clients on tax residency matters contesting re-assessments exceeding 50 million. We also have some 14 years’ expertise in migration law through our migration law division which has helped countless new Australians sort out the tax residency issues associated with migrating in Australia.

Individuals who have business interest outside of Australia need to record substantial evidence of their foreign business interests and transactions.

tax award brisbaneIf you do not keep evidence of your foreign dealings, you may expose your interests to significant risk. The Australian Taxation Office (“ATO”) is targeting those with foreign bank accounts income, assets or other international interests. In the recent case of Gui Ping Wu v Commissioner of Taxation [2015] AATA 78, a Chinese citizen (who was an Australian resident) lost a considerable amount of personal funds originally from his Chinese bank account because he did not provide the ATO with sufficient evidence to prove the accuracy of his Australian tax return.

If the ATO performs a “re-assessment” of your Australian personal income tax return and discrepancies are found, you can be taxed the applicable income tax rate in addition to a severe shortfall penalty. This cumulative taxation and penalty rate can be up to 90% on your foreign business interest. Additionally, the ATO’s calculation for an imposed shortfall penalty may substantially exceed the correct shortfall amount, which you can be liable to pay.

    1. So how do you protect yourself?For those already living in Australia (whether you are a citizen or a resident), seek professional taxation advice and keep all relevant documentary evidence of your foreign business dealings. Whether you are looking to pre-emptively safeguard your foreign interests or the ATO is conducting a “re-assessment” of your personal income tax return, Irish Bentley Lawyers can minimise the risk of exposing your interests to harsh penalties or overvaluations of potential shortfalls.

      If you intend to become an Australian resident with a bank account, assets, income or other international business interests, it is critical to ensure that your foreign interests are protected. Irish Bentley Lawyers has worked extensively with the Department of Immigration and Border Protection and the ATO. We can streamline the migration process while providing the best protection for your interests.

    2. How to Protect Yourself as a Taxpayer

      How to minimise risk and avoid shortfall penalties due to non-disclosure of foreign income or assets:

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      a. Australian resident taxpayers should declare all income earned in Australia and internationally on their Australian personal income tax return.

      b. Keep complete and precise foreign financial transactional records for the requisite statutory time periods.

      c. Disclose foreign assets over $50,000 on your personal tax return.

      d. Seek Australian professional taxation advice.

      Australian resident taxpayers must declare all income earned (whether it is earned in Australia or internationally) on an Australian personal income tax return. Discrepancies between your personal income tax return and your ATO tax assessment can trigger the ATO to re-assess your tax payable to include both shortfall and interest penalties, which can be up to 90%. The ATO’s calculated shortfall may substantially exceed the correct shortfall so you need good records to ensure the correct shortfall is applied.

    3. What do you need to know if the ATO re-assess your tax?

You need to contact a tax lawyer experienced in residency matters as soon as possible. The law relating to Controlled Foreign Company and Foreign Investment Funds is complex and your tax lawyer should also be experienced in double tax treaties, along with principles and the way the ATO treat same.

Gui Ping Wu v Commissioner of Taxation (2015) AATA 78 is a recent Administrative Appeals Tribunal (“AAT”) decision which considered the non-disclosure of foreign assets and income and what penalties can be imposed for failing to disclose.

Irish Bentley Lawyers have represented the major cases in residency law flowing from Wickenby (Leitchenstein, Vanuatu, Singapore) and more recently the Panama Papers.

Our fixed initial consultation price is $330 and we will outline the issues, the options, and costs for fix, and the best way forward.

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We are also one of 14 insolvency firms on the ARITA website, so we can also advise you on what to do if the tax payable cannot be met.

Arrange an appointment with us on +617 3229 4060 or email us at zeke@irishbentley.com.au.

Irish Bentley Lawyers have significant experience and an outstanding reputation in taxation law with Australian citizens and residents. We have dealt extensively with all types of taxation matters and the ATO.

Our firm is a proud winner of the 2015 Taxation Awards and Zeke Bentley (Principal of Irish Bentley Lawyers) has discussed taxation law extensively in the media.

Disclaimer: The above does not constitute legal advice and Irish Bentley Lawyers make no representations or warranties as to the accuracy of any of the information contained herein. If you have a taxation issue, please do not hesitate to contact the team at Irish Bentley Lawyers.

1 Comment

  1. Beware: ATO Target High Net-Worth “New” Australians
    October 25, 2016

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