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Court Case Winnings Tax

Discussion in 'The Pub' started by haksu, Dec 20, 2010.

  1. Hi,
    I've been reading alot on the internet and can't seem to find any particular piece of information on this anywhere including the ATO.

    If I was to win a class action in the USA, is that money taxable in Australia? i.e. considered/taxable income

    I'm about to contact an accountant and the ATO but I am hoping someone here might be able to help me understand some of the basics before I start engaging this matter more seriously.
  2. If you do ring the ATO, dont devulge your personal details.

    In relation to being taxed double, doesnt work that way; if you are earning income from an occupation in one country and being taxed at there nominal rate, you cannot be taxed again @ the australian nominal tax bracket.

    The ATO has a reducible schedules of taxable rates according to which country you earn income in. These rates are heavily orientated on countries where you earn tax free dollars.

    If you reside in a country for more than fixed percentage of time, this works as an exclusion tax clause also.

    Legal loophole.

    If you wish to avoid tax in aus in relation to your investment.

    1. Open a USD bank account (no interest) ie saving account and deposit it.
    2. Transfer those funds into a AUD bank account that earns zero interest (ie another day to day savings fund) and leave the money there or cash it.

    You will bear a fee when changing from USD to AUD.

    Personal day to day accounts that earn no interest are not taxable. You only need to declare interest earned (ie from term deposits, saving bonds, shares etc) to the ATO on your yearly tax return.
  3. disagree with you - I had an every day account I was using when building my house - as I had a lot of cash in it for a period of 10 months I earnt some extra $$$ --- was forced to pay tax on it

  4. When you say earnt extra $$$ what is that referring to?

    Because blackster was mentioning ZERO interest accounts, so you shouldn't be earning any interest on the money, and thus not being taxed on the interest.
  5. What is the interest rate on that account?

    I have a PSA set up, which accumulates no interest or fees, pays to shop around.
  6. you have to pay tax, either in Aust or America but NOT BOTH.
  7. Correct. Interest is income, regardless of account type, so it's taxable. No interest, no tax.
  8. Found this on the ATO's website when searching under "compensation". Depending on what you are receiving the settlement for, it may be exempt from Capital Gains Tax entirely. I suspect that it would also not fall under the heading of taxable income.

  9. I was paid in a european country when working there, and i was charged... hell... i forget how much honestly... only about 1 - 2% to bring the money into australia by the ATO.
    No idea what the law is now, but probably the link above or actually asking the ATO would help - maybe ask a tax lawyer? If its a substantial amount of money, wont hurt to have some advice.
  10. Nah. Asking a bunch of random individuals with a range of backgrounds and levels of education and a proven lax attitude to risk is much more likely to give you the correct answer :LOL:.
  11. Thanks guys, really good reading.

    It's an injury related compensation claim so all the above has been very useful reading.
    I'll go firm things up with my accountant and see if he can confirm what I've been hearing here.