I have a bit of a problem with tax living overseas and was wondering if anyone could help me out. I have a fund in Aus where I am paying some tax but nowhere near enough to be in the largest tax bracket I think(I am only 20 so my father has set it up and I dont have much to do with it at the moment). I am now living in Japan and earning about $45k-$50k but paying no tax. This is because I have some sort of tax exemption while studying here at the Japanese gov’ts expense. My stipend from the gov’t is not taxed and any other income that I earn here is not meant to be taxed either. However Dad has just told me after talking to the accountant that even though I am tax exempt here my tax rates at home should be different for my fund and I should be paying more tax. Was just wondering if somebody could explain this to me? If this is so what is my best course of action? I have had this arrangement for nearly 3 years now so would back pay come into it? Should I just keep quiet about it? If so would there be problems if I try to state this income when going for an IP loan at home which I haven’t done yet but intend to do in the future?
G’day…
Wish I could give you a direct answer. I think your best bet is to ring the Acct your Dad is speaking with… or perhaps email him and ask the questions you are asking here… Make sense?
Keep in touch
Bill
Bill O’Mara
Real Estate,Mortgages, Option Writing & Forex. [email protected]Thanks for the reply Bill.
I am a bit reluctant to fully disclose my situation to the accountant until I find out a bit more about where I stand. I have had no experience with him as he is Dad’s. We are planning to go and talk to his financial planner when I go home in a few weeks who has drawn up Dad’s retirement plans before we approach the one who does his books. I dont know if this hesistence is warranted or correct but we have both been knocked over by this a bit as we only found out about this problem this week and our plans will have to be changed quite a bit if there are any problems like this not to mention the couple of grand I will have to find.
Also Bill do you have any idea how I would go trying to get a loan while working overseas? Most of my income is proveable although not all but I was just interested how the overseas bit would affect things. Not too worried about that though as I dont think the market is right at the moment.Also I dont have the money and am reluctant to make my first move from overseas anyway. However the 1.6% interest rates available here are quite attractive I must admit
]Hi dglees,
Can you explain a little more about why you think your additional income is not taxed in Japan whilst you’re studying. This doesn’t sound entirely correct. You should be paying at least 5% or possibly 10% in Japan even if you have a scholarship or receive funding by the Japanese govt or an authorised educational intitution. I would suggest a call (you don’t have to give your name or any private information you don’t want too) to the ATO and explain the type of fund you are using and your situation o/s. There are no problems borrowing from a Foreign bank or an Australian bank in Japan for property in Australia, but if you intend to leave Japan they may ask you too pay out the oustanding balance and then refinance with the same bank in OZ. Also, if the exchange rate changes too much and the ratio of your LVR changes they will ask you to put in enough cash to bring the LVR back to the acceptable limit. Also you may find that the interest rate for o/s borrowing should be about 2.25-3%. 1.6% should be for domestic borrowing in Japan but normally requires a 60% deposit although some banks are now a little more flexible. If you contact Bill he can give you some additional information that may help you.
C2
“Is it true the more you owe the more you grow until the bank steps in?”I am sure my scholarship is tax free. Have you had or do you know about the Monbusho schoplarship? Thats the one I am on. As far as other work goes, about half is cash in hand and the rest I am not taxed unless maybe it goes before I see it. This job is only once a week and the pay is a round number so I assume not. It is pretty casual as I dont even get any paper work with it. I have been told by many of my friends on the same program that we are not meant to pay tax and even if tax is withheld we can claim it back. I havent been in this situation as yet so and not sure about it. Might be wrong but hope to avoid the situation all together.
Regarding the finance here, a friend has got finance for a NZ property from a bank here with 1.6% variable and a min deposit of 25%. Also the loan had to be for at least the equivalent US$200k. You need to be earning Yen to get the loan and have an address in Japan. He got this loan through a mortgage broker here and they said that it is standard practice to allow clients to use their address for the loan if the client moves overseas.
However yes the exchange rate is a big variable that would have to be taken into account. It is probably the one major thing that would make me baulk at borrowing here, particularly with the aussie dollar as it is at the moment.Hi dglees
Okay your scholarship is tax free. Your other income is meant to be taxed. Can you tell me the name of the mortgage broker and which bank? I would still be a little careful in regards to what the MB is offering to do. But if they’re able to bend the rules and get away with it then I’m interested.
C2
“Is it true the more you owe the more you grow until the bank steps in?”Sure I can look into it. The mate of mine is overseas at the moment so it may take a while but will see what I can do. Got a feeling that the mortgage broker and possibly the bank were both foreign but not sure of that. Yeah you are right about the mortgage broker and checking up on them. Even if you have to refinance when going home I guess the low rates at the beginning of a loan could turn the first years of a normally neg geared ip into a pos geared one. Also if you are looking at principle and interest loans then you could really cut into the principle by using the interest you save to bring it down before going home.
Hi dglees,
When you find out please let me know.
C2
“Is it true the more you owe the more you grow until the bank steps in?”G’day D…
Please do as C2 suggested… I know C2… he’s worth his weight in Gold to you.
We have swapped numerous emails and even a tel call from C2 in Japan… he can help you more than any of us….. Please email give me authority to give C2 your email…. you are both on my e-mail program.
Cheers
Bill
Bill O’Mara
Real Estate,Mortgages, Option Writing & Forex. [email protected]Bill
Yes please pass it on! I have been asking around over here for a ages trying to find someone with a common interest in property and pretty much come up blank so I would really appreciate it if you could pass it on. I have a thousand and one questions and ideas to run by someone over here so getting in contact with someone with experience would be great.
thanks again
DavidHi
Before the ATO can tax you, they have to know about the income. I’ve lived and worked in Japan before [
]Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw
I am thinking along those lines. Will there be any problems if I then use that income to get a loan in Aus?
Thanks
David
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