What a difference timing makes. A recent case before the Administrative Appeals Tribunal (AAT) is a reminder about the tax impact of the
timing of employment income.
When the job ended, the taxpayer moved to Australia and became a resident. Once in Australia, the former employer
honoured the performance bonus and paid it as a series of instalments.
The dispute between the ATO and the taxpayer started when the Commissioner issued amended assessments taxing the bonus payments received.
The dispute focused on when the bonus was derived. Had the bonus been derived while the taxpayer was still a non-resident then it would not
have been taxed in Australia.
This is because non-residents are normally only taxed in Australia on Australian sourced income. Employment income is typically sourced
in the place where the work is performed (although there can be exceptions to this).
Australian tax case law says that employment income is normally derived on receipt. In the taxpayer’s case, this was when he received the
payments from his former employer, not when he became entitled to the bonus. Because the taxpayer received the bonus when he was a tax
resident of Australia, the bonus was subject to tax.
The difference for the taxpayer was quite dramatic. Had he been paid the bonus when it was due, he would have paid no
tax as Kuwait does not impose income tax.
Please call us if you are concerned about tax residency or managing overseas income. We want our people to be the best they can be.
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Treasury has released exposure draft legislation for Payday Super that will require employers to pay superannuation at around the same time as salary and wages are paid to the employee. The changes are proposed to commence from 1 July 2026.
Shannon Smit dives deep into the compelling world of using self-managed super funds (SMSFs) to invest in property. With her signature energy and expertise, Shannon explains the mechanics of SMSFs, contrasting them with retail and industry super funds, and revealing the unique power they offer individuals to take control of their financial future.
What does it take to turn a modest property portfolio into a self-sufficient powerhouse? In this episode of The Accountant That Builds, Shannon Smit invites you into the fascinating journey of property investment, revealing the key steps, strategies, and mindset shifts that can transform two properties into a thriving, cash flow-neutral portfolio.
The Government’s big moment in the 2025-26 Federal Budget was the personal income tax cuts. Income tax cuts are a dazzling headline but in reality they deliver a tax saving of up to $268 in the 2026-27 year, with a tax saving of up to $536 from the 2027-28 year.
Paying off your mortgage is a significant financial milestone, but once you’ve reached the halfway mark, what’s the best next step? Should you continue aggressively paying it down, start investing, or focus on building your superannuation?
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Treasury has released exposure draft legislation for Payday Super that will require employers to pay superannuation at around the same time as salary and wages are paid to the employee. The changes are proposed to commence from 1 July 2026.
