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Posted Thu, 14 Sep 2023 13:32:11 GMT by
Hello I am a tax payer in both Australia and the UK. I have income from rental properties in Australia. This income comes under my Tax Free Threshold in Australia so I don't pay any tax on it. However when I combine the rental income with my other income in the UK I have to pay additional tax. Under the DTA would I be able to claim back the tax I have paid on the rental income in the UK?
Posted Sat, 16 Sep 2023 15:34:39 GMT by
Property income from overseas, in the context of Double Taxation Agreements (DTAs), refers to income earned from real property (such as rental income or capital gains from the sale of real estate) located in a foreign country. DTAs, also known as tax treaties, are agreements between two countries to prevent double taxation of the same income or gains by providing rules for how income should be taxed when it crosses international borders. Here's how property income from overseas is typically treated under DTAs: 1. **Residency and Source Rules:** - DTAs typically define which country has the right to tax property income. Generally, income from immovable property (real estate) is usually taxed in the country where the property is located (source country). 2. **Taxation of Rental Income:** - Rental income derived from overseas property is often subject to tax in the country where the property is situated. However, the DTA may specify the rate of tax that the source country can apply, and it may also provide mechanisms to avoid double taxation. 3. **Taxation of Capital Gains:** - Gains from the sale of real property (capital gains) are typically taxed in the country where the property is located. Some DTAs may allow the source country to tax such gains. 4. **Reduced Withholding Tax Rates:** - DTAs often specify reduced withholding tax rates for property income. For example, a DTA may state that the source country can withhold tax on rental income or capital gains at a reduced rate (e.g., 10%) instead of the standard domestic rate. 5. **Tax Credits and Exemptions:** - To prevent double taxation, many DTAs provide mechanisms for residents of one country to claim a tax credit in their home country for the taxes paid to the foreign country. This ensures that the same income is not taxed twice. 6. **Anti-Abuse Provisions:** - Some DTAs include anti-abuse provisions to prevent taxpayers from exploiting the treaty to avoid or reduce taxes. 7. **Permanent Establishment (PE):** - In some cases, if a person has a permanent establishment (e.g., a rental property or real estate development) in a foreign country, the DTA may provide rules for how the income derived from that PE is to be taxed. It's important to note that the specific rules and provisions regarding property income from overseas can vary significantly from one DTA to another. Therefore, it's crucial to review the specific DTA between the two countries in question to understand how property income will be treated for tax purposes. Additionally, it's advisable to consult with tax professionals or experts in international taxation, as they can provide guidance tailored to your specific situation and help ensure compliance with both domestic and international tax laws.
Posted Thu, 21 Sep 2023 15:55:07 GMT by HMRC Admin 20
Hi Neoaus,

As a UK resident, the UK has taxing rights on your worldwide income.  
If tax was deducted on this income in Australia, then you would be able to claim foreign tax credit relief on this, to stop you being taxed on it twice.  
As you state no tax is paid in Australia, then it is correctly taxed in the UK and no refund can be claimed.

Thank you.

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