UK Australia double tax treaty

Simon Misiewicz

Simon Misiewicz

Expat & Property Tax Specialist

30th June 2022

UK Australia double taxation treaty

Brits emigrating to Australia or Australians moving to the UK need to be aware of the UK-Australia double tax treaty.

Australian tax and UK tax can both be complex.

It is vital to gain the best advice when navigating the UK-Australia double taxation agreement.


What are the basics of the UK Australia double taxation treaty?

Australia has double taxation treaties with more than 40 jurisdictions, including the UK.

A tax treaty is also called a tax convention or a double taxation agreement (DTA).

Double taxation treaties prevent double taxation and fiscal evasion and foster cooperation between Australia and UK on international tax laws.

Double taxation treaties can be complex but are created to ensure that an individual can claim tax relief rather than pay tax twice on the same income.

Each double taxation treaty is different, although many follow similar guidelines.

The 2003 UK-Australia double taxation treaty was modified by the Multilateral Instrument (MLI).

The UK-Australia double taxation convention aimed to prevent fiscal evasion of income tax and capital gains.

Find out more about the UK and Australia tax treaties here.

Is Income Tax higher in the UK than Australia?

Income taxes are lower in the UK due to the progressive rates of tax applying at higher levels of taxable income.

The UK has much higher medical contribution taxes than Australia, so the UK taxpayer may end up paying a higher overall tax burden.

When considering whether to live in the UK or Australia, such tax considerations are highly pertinent.

We recommend that British ex-pats read more about Income Tax treaties from the Australian government.

 

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How do I emigrate to Australia from the UK?

Australia’s permanent Migration Program incorporates economic and family migration and is the main pathway to permanent residence in Australia from the UK.

As a UK citizen, it is possible to emigrate to Australia, but the country’s immigration system is complex.

Australia uses a point-based immigration system.

You must score 65 points or more and be under the age of 45 when you apply.

Your main occupation must also be on the list of eligible occupations.

After three years of living in Australia on the Skilled Work Regional visa, you can apply for a permanent residence visa.


Do I stil have to pay tax in the UK if I live in Australia?

If you are considered a tax resident in a specific tax year, you will still be subject to the tax rules of the UK in that year.

If you are a UK resident and domiciled, you will be liable to income and capital gains tax on your worldwide income.

You can live in Australia and still be a UK resident for tax if you visit the UK from Australia for more than 183 days in a tax year.

You would pay UK tax on your income and profits from selling assets such as shares in the usual way.

You usually have to pay tax on your income from outside the UK.

 

Can foreigners buy real estate in Australia?

You need to ideally be a permanent resident or citizen to buy houses in Australia.

Many of the home loans available also require you to be an Australian.

Foreign residents, temporary residents and short-term visa holders can buy investment properties and residential real estate in Australia.

You must first be granted permission to do so by the Foreign Investment Review Board.


What tax issues face expats in Australia?

There are tax issues if you plan to move to Australia from the UK.

Getting the best advice and structuring your tax affairs accordingly is vital to minimise your tax liability.

Some of the key tax issues to consider are:

* Whether you are an Australian tax resident.

* Whether you qualify as a temporary resident for Australian tax purposes and therefore are only required to pay tax on your Australian-sourced income.

* Australian capital gains tax on becoming Australian tax resident or departing Australia.

* Australian main resident relief on the sale of your home.

* Australian withholding taxes.

*Availability of foreign income tax offset (FITO).

* The application of the UK-Australian double taxation treaty.

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