Double taxation treaties and Travelex

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Double taxation treaties and Travelex

Postby peterj » Fri 12 May 2006 04:20

Hi

I know theres already a similar thread, but I thought a new one wouldn't hurt.

My income comes from shares, unit trusts and property mostly based in Australia. The total is a combination of capital gains and income, but all of it has to be paid directly into an Australian bank account. I will then be transfering some of the money to Malta.

Most of the Australian tax is paid at the end of the July - June tax year.

When I remit money to Malta I understand that I will be taxed on the amounts remitted, but that I am allowed to claim tax credits for tax already paid in Australia. What I don't get is how you can demonstrate which capital gain or income has been remitted, as it will by then have been in and out of an Australian bank account. Without being able to identify the source, how can you claim the correct tax deduction?

Has anyone got any experience of this sort of situation? I've heard that some people use two bank accounts - one called "Peters Capital Gains" and another called "Peter's income", but this seems so open to abuse that I doubt most Tax authorities would accept it.

On the flipside, it is conceivable that I will have to pay some Maltese tax before the Australian tax is due because of the 6 month difference in financial years, and that in this case I should be able to claim the total of tax paid in Malta as a "foreign tax credit".

Also, I am considering just using Travelex to transfer money rather than opening a bank account, as their comission and exchange rates seem quite good, and I can sort out the Australian end over the net. It seems I have a choice of having a Visa card from them, or just picking up money over the counter in Malta or Gozo offices. In this case would I need to declare the Travelex transaction records instead of the bank account records.

Any comments anybody?
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Postby oddis » Sat 13 May 2006 07:39

I strongly advice you to use a tax lawyer. It is expensive, but on the other hand that would be an insurance (hopefully) against any surprises.

I thought you were going to be a permanent resident? If so, that should be just 15% flat tax regardless of the income, whether capital gains or other income.

I was in contact with a tax lawyer this winter and he told me it was only INCOME remitted to Malta that was subject to 15% tax. It may cost USD 3000 for this advice but perhaps worth it.

I thought of getting a permanent residence myself and will decide this fall as I am much in the same situation as you.
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Postby oddis » Sat 13 May 2006 07:42

You should also watch out for any loopholes in the double taxation agreements. There is no gurantee that you are qualified for a tax credit even if there is an agreement. It depends on the income and agreement.
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Postby gozomark » Thu 24 Aug 2006 14:42

Hi Peter

as you mention, you need separate income and capital accounts, and they must remain separate at all times, or the tax authorities will assume its income you bring in first ! (this is the case in the UK, and presumably in Malta as well)

its tax on income only, and income becomes capital once past Dec 31st

if you use a visa-type card in an ATM, no-one I know declares this ! My accountant even suggested doing this to avoid paying tax
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Postby Marg1412 » Sun 10 Sep 2006 12:51

Hi there
When we eventually arrive in Malta on a permanent basis (not permanent resident though) does anyone know if we will be taxed on the money imported to pay for renting a house as this will be from interest on capital in Uk and what will be the best way to do this. It will have been taxed in Uk first. General living expenses will be from our pensions and is obviously an income which we can have paid either in Malta or in Uk.
Thanks in advance
Margaret
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Postby gozomark » Sun 10 Sep 2006 12:56

Hi

money to buy a house is excluded from taxation, even if its income, but not for renting a house, I believe.

When you say "what will be the best way to do this", do what ? Bring money into Malta ?

As for income already taxed in the UK, you still have to pay tax in Malta, but you can offset the tax already paid, so whether you will pay tax in Malta will depend on the allowances, and the tax rates. AFAIK money used to pay rent is treated no different to that used for general living expenses

hope that helps
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Postby Marg1412 » Sun 10 Sep 2006 13:33

Hi Gozomark
Thanks for your advice. Sorry about being misleading. From what you say about the money for renting, then I suppose that this money can just be transferred over by my bank into the same account in Malta that our pensions will be going into as its all liable to tax. On the other hand, if we transferred the rent money direct to the agent each month from Uk then maybe this would alleviate the problem? Food for thought!
Margaret
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Postby gozomark » Sun 10 Sep 2006 13:39

Hi again

transferring the money direct to the agent - you are still bringing the money into the country, so legally there would be no difference. Remember, income becomes capital once you go past 31/12 each year, so if you don't bring in the income until Jan, its then capital, so no tax !

when you say your rent will be paid from "from interest on capital in Uk " - why not bring in the capital into Malta instead of the income (or is it an annuity type product where you can't access the capital ?)
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double tax

Postby dlazzari » Mon 05 Mar 2007 22:56

Hello everyone,
I'm thinking of moving to the paradise island too. I was wondering if I would have to pay tax on child support monies????
Here in the U.S.A we don't pay tax on it.
Thanks for your help, Darla
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Postby gozomark » Mon 05 Mar 2007 23:05

Hi

I'm no expert, but I'd guess it would be treated the same as other income brought into Malta - ie taxed if brought into Malta, and converted into MTL the same CY as you were paid it in the US, otherwise not
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