ARE THE LOSSES FROM MY RENTAL IN NZ TAX-DEDUCTIBLE IN AUSTRALIA IF I’M WORKING THERE? PART 2

May 12, 2013

The Australian Tax Office (ATO) wrote back!  Call me pessimistic, but I didn’t think we’d get a reply.  Nonetheless, a few days ago it arrived.  Here’s the two questions we asked, and the response of the ATO regarding personal attribution of losses from a Look Through Company (LTC):

Question #1
Seeing as a New Zealander working in Australia is taxed on his worldwide income, does the ATO allow losses from rental property in New Zealand owned by a New Zealand LTC to be offset against personal waged income earned in Australia?

Answer
“For Australian income tax purposes, companies are unable to distribute lossees from rental properties (or other losses) to their shareholders.”

In other words, No.

map of australia

Question #2
Seeing as a New Zealander working in Australia is taxed on his worldwide income, does the ATO allow losses from rental property in New Zealand personally owned by said individual to be offset against personal waged income earned in Australia?

Answer
“If an Australian resident’s overseas property tax deductions are greater than their overseas rental income, they will have a foreign tax loss. They can use their foreign income loss to reduce their Australian income.”

In other words, Yes. However, this may cause your property to be caught up in the Australian capital gains tax, so we strongly recommend you seek the advice of a local (i.e. in Australia) accountant with expertise in Trans-Tasman tax.

What about…

  • If you live or work in the UK?  See this article.
  • If you live or work in Malaysia or Singapore?  If Singapore, click here. For Malaysia, see here.

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