With the wave of Irish heading home and the Australian property market not doing so well, there is an increasing trend of ex-pats returning home and keeping their Australian property.
These properties are subsequently being rented out to help pay towards the cost of keeping them until the market picks up.
If this sounds like you, here are some tax facts you need to know:
Australian Tax obligations:
As the house is located in Australia, you will have to submit an Australian tax return every year the property generates rent.
This is regardless of where you now live and whether the property is profitable or not.
If you are no longer tax resident in Australia, non-resident rates of tax will apply to any rental profits.
The current rates are:
|Taxable income||Tax on this income|
|0 – $87,000||32.5c for each $1|
|$87,001 – $180,000||$28,275 plus 37c for each $1 over $87,000|
|$180,001 and over||$62,685 plus 45c for each $1 over $180,000|
Luckily the tax system in Australia is currently quite favourable for landlords so most of our clients do not have to pay any Australian tax.
They do however have to submit the returns to advise the ATO that they have no tax liability.
Irish Tax Obligations:
If you are living in Ireland and have a property rented out in Australia, chances are you have to declare this income in an Irish tax return, as well as an Australian tax return.
If you are an Irish citizen and resident in Ireland for tax purposes, you have to declare and pay tax on your worldwide income.
This includes any rental income earned on an Australian investment property. If you are not an Irish citizen, you may not have to declare your worldwide income, but you should get professional advice to make sure.
Under the rules of the tax treaty between Ireland & Australia, tax paid in Australia on rental income can be used to reduce any tax that you subsequently have to pay in Ireland on the same income.
This means you are not taxed twice.
Unfortunately, the Irish system is not as generous as the Australian system when it comes to calculating rental profits for tax purposes.
Many owners of Australian property do not have to pay any Australian tax but find that they do have to pay Irish tax on rental income.
The ATO and the Irish Revenue Commissioners have been actively data matching & sharing information since 1 May 2017.
Don’t wait to get caught out – we can help with your Irish and Australian tax returns.
Want to get in touch? We can be contacted through Facebook, our website or call our Australian office for more information:
Phone: +61 423 423 652