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tax question from an Australian

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Shanghai Expat Forum Index » Hot Topics Forums » Visas, Taxes, and Legalities

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ers_6

Newbie

Joined: Nov 04, 2009
Posts: 2

Status: Offline

Posted: Nov 04, 2009 - 06:23 PM
Post subject: tax question from an Australian

Hi All,
Need your help.

I'm looking into joining an american based company based in shanghai.
When I asked about tax situation there response was along these lines:
"You would use your home base as the country in which you pay tax".

Has anyone heard of this?
Any australians out there that can point me in the right direction?

Thanks

AUSCNRUS

Talker

Joined: Feb 25, 2009
Posts: 107

Status: Offline

Posted: Nov 04, 2009 - 07:48 PM

Well your home base would be in China, correct? Therefore you would pay Chinese taxes. You would only pay Australian tax if you were considered to be an Australian resident for tax purposes, which means residing in Australia for 180 days or more per financial year (also can be if you still have a property in Australia or some other assets linking you to Australia). If not a tax resident then you will not need to pay Australian taxes.

bigroh73

Reacher

Joined: July 13, 2003
Posts: 316
Location: Shanghai
Status: Offline

Posted: Nov 04, 2009 - 10:53 PM

Yeah, the tax situation for Australians in China (and most countries) is much better than for many other foreigners, especially Americans who have much more complex tax implications to deal with.
For Aussies - you aren't in Australia for the required no. of days, aren't employed there, so you don't pay tax there - tax is paid in China. And you can still keep your Australia drivers license, credit cards, bank accounts, use medicare during trips back home, own property, stocks, don't repay HECS.
But of course, not entitled to the stimulus payments - oh well, can't have everything!

American-based Co. based in Shanghai - you need to look at who is employing you, the China entity of that American co...or you are living in China and they are in US - so just paying money into your account? This is where the tax situation for you may vary.

AUSCNRUS

Talker

Joined: Feb 25, 2009
Posts: 107

Status: Offline

Posted: Nov 05, 2009 - 08:11 AM

bigroh73 wrote:

For Aussies - you aren't in Australia for the required no. of days, aren't employed there, so you don't pay tax there - tax is paid in China. And you can still keep your Australia drivers license, credit cards, bank accounts, use medicare during trips back home, own property, stocks, don't repay HECS.

^ The 180 day rule is the main test, however it can be argued that you are still a tax resident if you own property in Australia.

ers_6

Newbie

Joined: Nov 04, 2009
Posts: 2

Status: Offline

Posted: Nov 05, 2009 - 11:16 AM

thanks everyone. some further reading backs up what you say...
The company Id be working for only has US employees so they simply dont know any differently.

While we are on the topic.
Can anyone explain to me how the tax rate works?
I'm reading 30% in some places is this correct.

cheers

ProcrastiNation

Talker

Joined: Oct 21, 2008
Posts: 104

Status: Offline

Posted: Nov 05, 2009 - 12:00 PM

Don't be lazy, just google "chinese tax rate for foreigners". Google is the new God.

Also I received my 900 from old Kruddy even though I haven't lived in OZ for more than 5 years... Yay!

HAMLover

Barker

Joined: Dec 08, 2008
Posts: 167

Status: Offline

Posted: Nov 05, 2009 - 12:40 PM

I went back home last year at the end of Feb and worked around 3 months of that financial year. My income in China was not taxable BUT it did count towards establishing which tax bracket I would fall into. For example you earn $20KAUD here and you have an investment property at home/you earn some income from a job there...at $15k you will no longer be in the 15% tax bracket but in the 30% tax bracket. It changes as to whether the tax office considers you a resident that year or not....I can't remember exactly what though, my accountant started going off on a tangent and I tuned out Smile

You could always "pay" tax here only, and not declare your income back in Oz. However things are complicated if you do have an investment property, and you have a tax accountant.....

HAMLover

Barker

Joined: Dec 08, 2008
Posts: 167

Status: Offline

Posted: Nov 05, 2009 - 12:42 PM

Oh I meant to add...in my example - income of $35K, you would only pay tax on the income earnt in Australia. The income earnt overseas is just used to establish which tax braket you fall into. Hope this makes sense Smile

mat

Shanghai Royalty

Joined: Apr 26, 2004
Posts: 9030
Location: Loooooooooooose!
Status: Online!

Posted: Nov 05, 2009 - 01:13 PM

AUSCNRUS wrote:

Not entirely correct, but close.

I'm actually a CPA, and have done a lot of tax work. Basically, it is correct that your home base would be China, forget that you are an Australian resident for the purposes of the employer.

For your Australian tax, you need to make sure you are a non resident for tax purposes, which can be done a couple of ways.

The best way, is to make sure that you don't have any type of contract from your employer that states they will bring you to China and repatriate you back to Aus at any time within 1 year and 364 days. If it is over this period, or preferably, open ended or no stated repatriation period, then you are basically a non-resident for tax purposes. Also, when you fill in your last tax return in oz, tick the box stating that you are not going to need to fill in a tax return the following year, or at the very least, tick the box that says you are not sure.

I know there are some new laws coming out that make it harder, and i need to read up on them more, however, if you do everything stated above, you should be fine as to your tax liability in Oz.

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