Active bank accounts in Australia and tax implications in Switzerland

Finance, Taxes, Banking, Insurance and Retirement
1
I am hoping someone can help me with this dilemma. I have moved recently to Switzerland from Australia. I am on L permit and earn CHF 120,000 and I am taxed at the source. I have not closed my bank accounts in Australia. Since I don't have to lodge a tax return in Switzerland do I need to to somehow declare a very small interest that I earned in Australia? If so, how? I worked in Australia for a part of the last year prior to my move here. I am aware of Double Taxation Agreement between Switzerland and Australia. I will be including my interest earned in Australia in my Australian Tax Return after 01/07/2023 (that is the beginning of next financial year there). I may pay tax in Australia on the interest earned there. Do I need to do anything here? Another question is can I keep my Australian bank accounts open without getting into any troubles here? If so, what I need to do in relation to my taxes in Switzerland considering that I am taxed at the source and do not need to submit tax forms here? I will need to continue to submit my tax return in Australia if I keep my accounts and pay some tax. Does the tax agreement cover me here if I pay taxes in Australia? It would cost me an arm and a leg to transfer my money to Switzerland.

2
It's very easy - if your total worldwide income goes close to 120,000 then you probably do need to do a tax return in Switzerland, even if you are taxed 'at source' - the tax return will adjust whatever you pay - it could be slighly more or less than the 'at source' amount that you pay... you can also claim some things in your tax return... depending on your personal situation.

If you are not resident in Australia for tax purposes, then the only reason why you may need to continue to fill tax returns as far as I know is if you have a tertiary debt to the government, or if you run a business/have an ABN. But maybe I am wrong....

You definitely should have notified the ATO in Australia when/before you left Australia - then you do a tax return in Australia for the end of the year but only up until the date when you moved your residency.

Hope that makes sense - it's really very easy - the problem we have is that the tax years are different between Aus and Switzerland - but what you can do is ask to delay lodgement of the tax return (postpone Swiss tax lodgement from end March to around September) so that you can finish your Aussie tax stuff first, then have that info available to do your Swiss one.... you have to remember to do this each year with the Swiss tax authorities - we use a tax agent and they do this for us on request each year....

3
I moved here on 01/10/2022. I have not made anywhere near CHF 120,000 in 2022. Does it mean, I don't have to worry until next year?

I found this online:

influx from abroad

Tax liability in Zurich begins on the date you move to Zurich. If you are still resident in the city of Zurich on December 31, you will receive a tax return from the city of Zurich in the spring of the following year. You are subject to tax in Zurich from the moment you move to Zurich from abroad and declare all income that you have earned after moving to Zurich in your tax return.

4
If you spent less than a year in Switzerland, income during that period will be proportionally scaled to the whole year in order to determine if you exceeded 120k or not. And the actual limit for you will be 30k during October to December period.

Also, 120k limit isn't the only limit when you have to fill a tax declaration. IIRC, if your untaxed through "tax at source" income exceeds 3k francs, you will have to submit a declaration as well.

5
I think one has to declare your total assets (fixed and movable ) worldwide. Its used to to calculate your tax rate here but you will not be taxed on these assets.

6
Note that once you switch to filling out a normal tax declaration (other than surpassing a threshold you could demand so at will) you can't revert to taxation at source even if your income drops below the threshold later on.

7

Yes, that’s correct for ZH. You also need to file an ordinary tax declaration if your total taxable net worth exceeds CHF 80k (or 160k if you’re married). See https://www.zh.ch/de/steuern-finanze…erkorrekt.html

For Swiss tax purposes, it shouldn’t matter whether your bank (or investment) account is in Switzerland or Australia. As a tax resident of Switzerland, your worldwide income and ‘movable assets’ are taxed in Switzerland (but no tax liability while you’re taxed at source and below the above thresholds). Real estate is taxed differently. A few countries tax non-residents after they’ve left (e.g. the US) but that would be a separate question and wouldn’t affect taxation in Switzerland.

You’re likely obliged to inform your bank about your new (tax) residency and they may or may not allow you to keep the account open as a Swiss resident. Having an Australian bank account is not a concern from the Swiss perspective, though.

8
I'm certainly taxed here on my assets. I have to pay soisl security on them too.

9
Thank you all for your input and links.

In summary:

1. I have to file a tax return regardless of the fact that I am taxed at source here and I have not made 120K in 2022. Am I going to receive the documents/forms or this is up to me to initiate?

2. Once I get it, I then request to delay the lodgement and complete my Australian tax return in July 2023

3. When I receive my Australian tax return in July, I complete the lodgement in Zurich. I include my tax return from Australia with this.

4. I also need to pay Wealth tax on my personal savings kept in Australia. Self initiated process?

I will have paid tax on my Australian income and interest by then in Australia. Is Switzerland going to tax me again? When does the Tax agreement come into play? The agreement is meant to prevent double taxation.

So many questions for the future. For example, if I make $10,000 in interest from my savings in Australia, I will not be taxed in Australia because I will be under the taxable threshold there. Then I declare this in Switzerland, they may tax me because this threshold does not apply here. One would think that the tax agreement means pay the taxes in the country where you made the money, i.e. in Australia. What you make in Switzerland, you are taxed for that in Switzerland. I will certainly not be declaring my Swiss income on my Australian tax return because I am not obliged as I understand.

10
Yes. You probably need to seek tax relief in Australia.

11
  1. You have to request ordinary tax assessment as they won’t know about your other income/assets (except at some point via AEOI). The deadline for this request is March 31 and for ZH the steps for requesting this online are described at https://www.zh.ch/de/steuern-finanze…erkorrekt.html (German)
  2. The same tax declaration is used for both income and wealth tax purposes.

Assuming you’re considered a tax resident in Switzerland, your worldwide (non-rental) income is primarily taxed in Switzerland.

I’m not familiar with Australian taxes. Do you have a link that briefly explains tax liability in Australia for non-residents or why do you expect having to keep paying Australian taxes while no longer residing there?

If Australia taxes non-residents, I’d expect the double taxation relief to come from Australia for Swiss tax residents.

12

My situation is a bit complicated. I left Australia at the end of 2021 when the lockdown ended there. I took 18 months paid leave from work. So, I have been getting paid all the time, including for the three months I have lived in Switzerland. There was always a possibility that I could not find work in Europe and go back to my job in Australia. I am not getting paid any longer but I will receive a payout from my Australian employer next month as I am owed some leave entitlements (worked for them for 30 years). I am still a tax resident in Australia even though I am no longer living there. That will end when I submit 2022/2023 tax return in July. I will keep some funds in my Australian bank accounts as the interest rates are quite good in Australia, 3-4% per annum.
Can I assume that I need to declare to Swiss authorities only the income received since I moved to Switzerland? Do I even need to do that since there is a Tax agreement between our countries https://treasury.gov.au/sites/defaul…3/SwissDTA.pdf
I just want to do the right thing but it may cost me a lot if double taxation is not avoided. I simply don’t know how to approach this. The complicating factor is that Australian financial year begins on 1st of July.

13
Ah, if you're still considered tax resident of Australia and not Switzerland, then you should indeed only have to pay taxes in Australia until that changes (assuming no Swiss real estate). I wouldn't expect any actual double taxation given there is a fairly recent double taxation agreement.

However, I don't know the details how this is handled. Unless someone else here knows more, I'd suggest asking the tax authorities of your municipality for details, they are usually friendly.

14
Are you implying that I cannot be a tax resident of both countries?

15

As I understand article 4 of the DTA, you should indeed effectively be considered tax resident of only one of the two countries at a given time. Availability of a permanent home, centre of vital interests, habitual abode, and nationality are the described factors, in order of priority.

16
Only the fixed assets (e.g. real estate) are used for tax rate but not taxed directly. If we are taking about a bank account, it does not really matter whether it is in Switzerland or Australia, from the date you become a Swiss tax resident all interests (and total wealth) of the Australian bank account will be fully taxed in Switzerland

17
If a person is taxed "at source", how can they know that the taxation rules have been broken? Who is going to tell them? My intention is not to hide my past overseas income but I have been told not to worry about the tax if I am taxed at source. Only when you have to submit tax return you need to declare everything. Obviously this was very wrong advice. In Australia, most people are taxed at source (PAYG). Everybody has to lodge a tax return and you get asked all those difficult questions about additional income. Your tax is adjusted accordingly, up or down. In my case, I will need to declare my Swiss income there, they will tax me at my marginal tax rate (45%), increase my Medicare Levy and it is not clear to me how they apply the Double Taxation Treaty. There is a thing called Foreign Income Tax Offset but it does not come nearly close to eliminating double taxation. At this end it is the same, I declare my Australian income (taxes paid in Australia), they don't tax me directly on that but they increase my tax rate on the Swiss portion of my income. It is a lose - lose situation.

18
This is actually correct - if you don't have to submit the tax return you don't need to worry about the tax, but the nuance is that being subject to taxes at source does not necessarily mean that you don't have to submit the tax return.

Taxes at source are a mere rough anticipation of the taxes because Swiss tax office does not trust the fact that you won't run away without paying them. In some cases, the tax office gives you the possibility of accepting a deal of "we just assume what you paid as withholding tax is the correct amount and end it here" when the error w.r.t. real owed taxes can't be very high.

Apparently you are likely not in these exception (i.e. you must file a tax return), but I'd double check as the info you provided (120k salary) is exactly the threshold, so maybe you're safe here.

If you have to submit a tax return (because you are > 120k salary or because you have too much non taxed foreign income or too much wealth) - you should start preparing for how to file it this year which is the tricky one, next year it will be easier Maybe it's worth to talk to some specialist about it