# Tax payable on overseas bank accounts?



## ajeffrie (29 October 2008)

Doing an assingment and i cant find the proper tax rulings for the question! 

You deposit 75000 euros into a french 3 year term deposit, and interest is paid monthly in arrears of 8% per annum, and the bank deducts tax at a flat rate of 20% before depositing the interest into the french bank account.

Do you get some sort of foreign tax credit on the 20%? or do you not have to pay tax on it becuase it is not an Australian income source?

Help would be greatly appreciated!


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## Chorlton (29 October 2008)

ajeffrie said:


> Doing an assingment and i cant find the proper tax rulings for the question!
> 
> You deposit 75000 euros into a french 3 year term deposit, and interest is paid monthly in arrears of 8% per annum, and the bank deducts tax at a flat rate of 20% before depositing the interest into the french bank account.
> 
> ...




Are you a Permanent Resident / Citizen or a Temporary Resident of Australia?


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## ajeffrie (29 October 2008)

came to australia on the 2nd july 2007, as a temporary resident.
the money went into the bank before that on the 15 june 2007.
became a repmanent resident 2 july 2008.


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## son of baglimit (29 October 2008)

http://law.ato.gov.au/atolaw/view.h...O TAXES ON INCOME:#00010#ARTICLE 10 Interest;

heres the answer - will explain when i have time.


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## ajeffrie (29 October 2008)

Thank-you so much!
I really appreciate it.


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## Chorlton (30 October 2008)

ajeffrie said:


> came to australia on the 2nd july 2007, as a temporary resident.
> the money went into the bank before that on the 15 june 2007.
> became a repmanent resident 2 july 2008.




In that case you don't have to declare your "foreign" income (in this case the interest earnt on your money) up to the time that you became a PR. This ruling only applies to foreign income and not income earnt within Australia.

Any income earnt after the day you were granted PR status, you would be liable to pay Autstralian Tax on.

If the interest was paid prior to 2July2008, then it does not have to be declared. After this date, it does.....

Hope this helps...


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## son of baglimit (30 October 2008)

chorlton i beg to differ.

residency is an ugly and confusing question.

intention is just as ugly.

if the 'intention' was to become a resident, then it is declared here.

go to the ato calculators and look at the residency ones.


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## Chorlton (31 October 2008)

son of baglimit said:


> chorlton i beg to differ.
> 
> residency is an ugly and confusing question.
> 
> ...




You may differ if you want. 

There is a specific ATO ruling (released 2006) about Declaration of Foreign Income which applies to those who are (i) Residents for tax purposes , but (ii) ALSO those on Temperory Visas. 

The ruling is clearly visible on the ATO website, although fairly well hidden!!!!. However, it personally took me 3-4 attempts at contacting the ATO until one of their people accepted that this ruling actually existed. I had to give them the web page http link over the phone for them to find it.

I have had lengthy discussions with the ATO regarding this particular ruling and I am fairly confident that my understanding of its content (which I have posted earlier) is correct.


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