Is tax free overseas really tax free?

[paddyxy]

Hey,

What's the deal with earning a "tax free" income in Taiwan and China for example. Does that mean that you don't pay tax on the TEFL income you earn while in Taiwan, but then you have to pay tax on that income when you come back into Australia?

Also if that is the case would it make much of a diference if you were for example earning tax free money in a TEFL in a government school in Taiwan?

I just want to know, as the ATO isn't 100% clear on this issue from what I can see. And perhaps it depends on what arrangements the Australian government has with particular countries.

Thanks.

[gfell]

I'm sure you know of Paul Clitheroe from Australia's Money Magazine. One phrase he often says is, "If it's too good to be true, then it probably is."

You will have to pay tax in Taiwan, and if you don't, then the ATO will deduct the tax for themselves. It's either you pay the tax to the Taiwanese government, or pay it to the Australian government.

There are 2 tax categories in Taiwan.

* Category A : 0 ~ 183 days - You must pay 20% tax on your income. No deductions can be claimed.
* Category B : 184 days or more - You will be taxed according to the following progressive scale.

See http://www.aacircle.com.au/teach-in-taiwan.htm for full information on the tax system.

[paddyxy]

Hey, thanks for the quick reply.

I should try and read that money magazine more often.

Looks as though paying tax in Taiwan would be the way to go, rather than to the ATO.