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WE'RE BLOGGING TODAY

Are The Losses From My Rental in NZ Tax Deductible in Australia if I'm Working There? Part 2

6/6/2022

 
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.
Puzzle solved
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.

So, what's in it for me then?
Well, dear reader, the point is this: If you have negatively-geared rental property in New Zealand, which is personally owned i.e., not by a company, then you can claim the losses against your tax in Australia. 

How it works is this:
  1. File the relevant tax returns in New Zealand first, then
  2. Do likewise in Australia.


BUT, there is a gotcha.  This means that 
  1. You'll have to pay CGT to the Australian government when you sell the property, and
  2. Any claims would be clawed back.


So, you need to consider the long-term scenario before doing so.  We recommend you talk to an accountant who is skilled in this area first.

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.

    Garreth Collard

    Accounting for your rental residential investment property; specialised property tax advice.  Buy me a coffee! 

    View my profile on LinkedIn

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  • HOME
  • ABOUT
    • IN THE NEWS >
      • OWNERSHIP STRUCTURES
      • TURNING SKILLS INTO MONEY AND A BETTER LIFESTYLE
    • PARTNERS
    • SERVICES
    • TESTIMONIALS
    • WHY USE A PROPERTY ACCOUNTANT
  • FAQ
    • AML/CFT
    • ANTI-CORRUPTION
    • AUDIT SHIELD
    • DATA PRIVACY
    • FORMS
    • GETTING STARTED IN INVESTMENT PROPERTY
    • HOW TO CALCULATE RENTAL YIELD
    • INFO FOR NEW INVESTORS
    • INVOICES
    • NEW VS OLD VS LAND&BUILD
    • TAX RETURN FAQ
    • TAX POOLING
  • CONTACT
  • BLOG