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Taxes on Income from Overseas?

ROC taxes, overseas payment of taxes, withholding rates, general tax liability issues, and other tax-related matters
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Taxes on Income from Overseas?

Postby tsukinodeynatsu » 25 Apr 2012, 16:43

I'm trying to figure out what the best move for me financially would be, so please bare with me - I'm not very good at financial stuff!

I translate as a freelancer, and get paid mostly in Australian dollars by an Australian client. The interest rate for an Australian account is 0.01% :aiyo: , and the Australian tax-free threshold is $6,000, and they charge me $4/month for the pleasure of having an account with their bank.

Usually what happens is that my money gets transferred directly into my SO's Taiwanese account, which reports it as 'salary' and therefore he would need to pay income tax on it when the time rolls around, and on paper in Taiwan I am just a dependent.

I've heard people saying before that if you pay taxes on your income in country you don't need to pay it again to access it here; is this true? I'm wondering if it might be better to change to an account type with a better interest rate, declare the income in Australia and transfer it periodically to my account here. This I think would also make me a legal resident for tax purposes in Australia. However, at the moment whenever we transfer it here it's classed as 'taxable income' and declared to the government by the bank; if there's no way to avoid this, it doesn't make sense to pay tax twice!

Does anybody have any experience with anything like this?
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Re: Taxes on Income from Overseas?

Postby spaint » 02 May 2012, 19:34

The way I'd handle this would be to accept the $4 a month hit, and get myself a bank card with the Cirrus or Plus logo on it. Then I'd withdraw the money from an ATM in Taiwan periodically and avoid the issue of transferring it all into a bank account for local taxes. This obviously leaves you with Australian taxes, which depending on your residence status and tax credits/exemptions you might be able to avoid altogether.

Other alternatives would be to ask the customer to transfer to your local (i.e. Taiwanese) bank account and have him deduct the transfer fees. Of course, it'll be reported as salary here, but taxes here are probably lower than Australian taxes. Or get paid through Paypal (set up a Taiwanese account - I don't even think Paypal reports such income to Taiwan's government).
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Re: Taxes on Income from Overseas?

Postby tsukinodeynatsu » 03 May 2012, 16:23

Paypal takes a MASSIVE cut, unfortunately. It works out cheaper to pay bank fees.

I've done a little research, so I suppose I should report there for everyone's benefit.

It costs $22AUD to transfer money from Australia using a bank transfer, and $500NTD from here to Australia using the same. Then you lose a little on the exchange rate each time.

Australian non-resident taxes are 29% (29%!! 29%!!) with no tax-free threshold, so considering I get paid roughly $1,000 at a time I lose far less transferring it here and then paying 5% tax (remember we pay the 5% on what arrives in the bank here AFTER everyone's had their cut, too).

We've opened up an Australian savings account (no monthly fees) and closed the everyday account. The savings account has a set interest rate of 2.5% calculated monthly, and this increases to 5.6% providing you a) have $200AUD more at the end of the month than at the beginning, and b) make no more than one withdrawal a month.

Non-residents pay a 10% tax on interest earned in Australian investments.

We haven't quite figured out all of the fees and charges yet, but it looks like it may make more sense financially in the relatively short term to transfer the money here, pay the tax, and then transfer it back to save it. It's not an ideal solution and it's not a great investment plan, but for the short term it may work out better. We're going to do some sums over the next few weeks and figure it out. If we end up going up a tax bracket we may need to reconsider as well, but if that's the case we'll hopefully have the capital to consider something much better anyway!
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Re: Taxes on Income from Overseas?

Postby tommy525 » 04 May 2012, 01:21

Id be interested to know as well how it all works nowadays on this topic. Maybe someone in the know can fill us in. Heres what I think so far, using a US citizen as an example:

1. far as I know, no tax treaty currently between taiwan and usa. This may have changed?

which means that if a US citizen got income (not in salary form) from owning an icecream store, that income is fully liable for taxes per Uncle Sam. Irregardless if taxes in taiwan are paid.

in other words. say an US citizen reported 10,000 US income from ownership of an ice cream store he would have to report 10,000 , even if he paid 3000 to TW govt in taxes. Unless there was a treaty which would take out the 3000. Or would the treaty take out all 10,000 as that was already taxed in Taiwan? Somehow I think the most the Uncle will allow is 3000 in this case. He wants his money !

Now if he reported this 10,000 as salary earned , it falls below the Uncles 80k (i forget what it is now) salary exemption. And the US citizen would have to report that on form 2555 and qualify for it .

2. Far as TW is concerned, in the past they dont care what you made overseas outside of Taiwan, but now there is a threshold (3 million ntd or what? I forget) over which you have to pay, under you dont.

So far as Tsuki is concerned, are you under that threshold? Technically if you work on behalf of a company and do so from taiwan you may still not be taxable if what you do has nothing to do with Taiwan.

If you , say, manage a liaison office in Taiwan for a foreign company. YEs you are liable for all moneys earn thus. But if you write articles , say, for a foreign mag that are NOT about Taiwan in any way , shape or form you could say that has nothing to do with Taiwan. Especially if its not a huge amount of money we are talking about. The TW govt likely has MUCH bigger fish to fry then.

+++++++++++

above all my one penny (maybe not worth two cents). Feel free to correct.
im all ears (or eyes I should say)
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Re: Taxes on Income from Overseas?

Postby tsukinodeynatsu » 05 May 2012, 19:45

tommy525 wrote:2. Far as TW is concerned, in the past they dont care what you made overseas outside of Taiwan, but now there is a threshold (3 million ntd or what? I forget) over which you have to pay, under you dont.

So far as Tsuki is concerned, are you under that threshold? Technically if you work on behalf of a company and do so from taiwan you may still not be taxable if what you do has nothing to do with Taiwan.

If you , say, manage a liaison office in Taiwan for a foreign company. YEs you are liable for all moneys earn thus. But if you write articles , say, for a foreign mag that are NOT about Taiwan in any way , shape or form you could say that has nothing to do with Taiwan. Especially if its not a huge amount of money we are talking about. The TW govt likely has MUCH bigger fish to fry then.



Thats interesting stuff about the US system.

As far as TW is concerned, if it goes in the bank it's taxable. I usually get paid in 20,000~50,000NTD transfers at a time, and the bank ALWAYS rings up and asks 'Can we authorize this, and is it salary earned?' If you say no, they ask you where it came from.

This is probably why a lot of people with a good chunk of cash keep it in a safe at home; to avoid going up a tax bracket. The first tax bracket is only 5 or 6%, I think, but the next one is something like 12%. I think the next bracket kicks in at 5 million NTD yearly income or something..

I'm a freelancer, so I have to pay taxes somewhere. I'm not paying them in Australia or the UK, and my cash comes from three countries so I'd have to pay it here, realistically. I think the foreigner tax is something like 20% so it all goes under my SO's name instead. I don't know how you'd report it as income earned overseas, there might be a way.. then at least the amount under the threshold would be tax-free!
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Re: Taxes on Income from Overseas?

Postby tommy525 » 05 May 2012, 22:39

Makes sense to report it in Taiwan then in your case as over-all tax rate is lower and there will be no issues since you physically reside in Taiwan.

Actually you pay your taxes at the end of the year yes? SO none of the money is withdrawn by the bank on your behalf (they cant do this as they are not your employer). So you will be taxed the same rate as a local who has been in taiwan over 183 days of the calendar year. The only problems comes when your total for the year falls under 183.
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Re: Taxes on Income from Overseas?

Postby tsukinodeynatsu » 06 May 2012, 01:46

tommy525 wrote:Makes sense to report it in Taiwan then in your case as over-all tax rate is lower and there will be no issues since you physically reside in Taiwan.

Actually you pay your taxes at the end of the year yes? SO none of the money is withdrawn by the bank on your behalf (they cant do this as they are not your employer). So you will be taxed the same rate as a local who has been in taiwan over 183 days of the calendar year. The only problems comes when your total for the year falls under 183.


Yes we do! I never thought of that. But if we stick it all under my SO's name I think I can be deducted as a dependent, which should work out better?
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Re: Taxes on Income from Overseas?

Postby tommy525 » 06 May 2012, 02:06

Maybe but remember there are deductions and exemptions that may work out better if you report separately? Look into it at least?
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