Confused and worried after tax return - advice please

Hi guys

Just to keep it briefly , got a close friend who has moved to US on e3 visa and have been working there , he is an Australian citizen by status

while he moved , he has rented out his ppor till that point of time and left to US , he has lodged the Au tax returns since then , there were no issues initially but very recently his tax agent called him and told me that he has to pay back around 6K to ATO

He has lodged two tax returns so far , declaring his rent as income and expenses of interest , management fee and repairs and so forth ....

His returns were some where around 300 and 500 dollars for the two years

we are guessing that the tax agent might have lodged the tax returns with his a resident for taxation purposes there by incurred no tax for the first 18K , looks like he has redone the returns with resident for taxation purposes hence the difference and also says that my mate has to include US earned income in Australian tax returns which we dont understand

The income he earns in US is spent there and he has not purchased any income generating properties in Au

I have been looking for answers every where but couldnt find any good explanation , hopefully experts in the forum can help

Much appreciated !!!

thanks
sri

 

Best tips can offer

The taxpayer lodges. The agent merely facilitates. What was the advice ? Is the person a australian tax resident.

Where you earn or spend income is no t the issue.

 

If you are suggesting that your friend is an AU resident for the purposes of his AU tax return then he MUST declare all income regardless of where the income is earned. So your friend must declare his US income on his AU tax return.

 

could be resident for tax purposes in Australia which means he is assessed on his Australian sourced income and overseas sourced income. Australia has a double tax treaty with the US so would receive foreign income tax offsets for US taxes paid. not necessarily the full amount of taxes paid but the accountant can work out what foreign taxes paid are eligble for a credit and what amount.

could be a non resident for tax purposes in Australia and then they will only be assessed on Australian sourced income.

determine residency status first before going further