UPP Undeducted purchase price.

[Paul Moore]

Hi Can anyone help me.

this is the box at the top of the ATO form for claiming UPP.

Can you let me know how to claim the 8% deduction. I assume it's on the tax return but I don't see where.

Thanks

Paul Moore

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[Mo Reardon]

I believe you automatically get the 8% if you don't complete the form.

Cheers Mo

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[elle...@gmail.com]

Hi Paul
D11 on the paper form, I suspect you need a reference for the online form though ?

Does this help ?

https://www.ato.gov.au/individuals-and-families/your-tax-return/instructions-to-complete-your-tax-return/paper-tax-return-instructions/2022/supplementary-tax-return/deduction-questions-d11-d15/d11-deductible-amount-of-undeducted-purchase-price-of-a-foreign-pension-or-annuity-2022

 

 

Ellen

 

From: bapa...@googlegroups.com <bapa...@googlegroups.com> On Behalf Of Paul Moore
Sent: Sunday, 28 April 2024 10:31 AM
To: bapa...@googlegroups.com
Subject: [bapanews] UPP Undeducted purchase price.

 

 

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[Paul Swain]

Hi Everyone!

Here is the link for myTax:  https://www.ato.gov.au/individuals-and-families/your-tax-return/instructions-to-complete-your-tax-return/mytax-instructions/2023/income/foreign-income/foreign-pension-and-annuity  You need to scroll down to the Completing this section section for the actual instructions.

Ellen:  Thanks very much for the link for the paper form link.  I didn't know that the ATO provided instructions like this.

Paul

[pandjmoore]

Hi everyone. Thanks for your replies and the information.

I have finally sorted it out I hope. As I understand it:-

On page 3 of the paper tax return is where UK state pension (amongst other income) is entered. 

This sum is brought over from page 11 item E which includes item L which is in my case UK state pension WITHOUT  UPP deducted.

The 8% allowance for UPP is entered at the top of page 11 item Y

this figure is transferred back to page 3 and back entered in D Total Supplement Deductions.

Simples.

This is probably old hat to most of you but is very much of interest to us newcomers.

I missed this on my HR Block filled tax returns so I have now to write to the ATO to claim it back if I can.

cheers Paul

[Derek Russell]

UPP (Undeducted Purchase Price) of UK pensions for ATO purposes.

Paul and others have laid out how to make the UPP  deduction request to ATO for the UK State Pension (easiest using just the 8%.   I have been looking into whether UPP deductions can apply to other UK based employer pensions.  In my case this was the Teachers Pension Scheme pension.  For work or personal pensions ATO will give you a ruling on whether or not a deduction is available, but the information they request is essentially impracticable to assemble.  However.... the UPP calculation by ATO rests on 'contributions' made by the tax payer to these pensions and it seems that these 'contributions' must be post-tax contributions.   Most UK work pension contributions (perhaps all?) take their contributions from pre-tax salary (the Teachers Pension Scheme has formally confirmed that for me now).   So it would seem that unless you have made 'personal' post UK income tax contributions to a pension scheme you will not be able to claim a UPP deduction for Australian income tax purposes.  (I am aware that people have been seeking and obtaining these deductions to taxable income but this is probably relying on the ATO not auditing their returns).

Maybe someone can tell me why the UK Old Age Pension is eligible for this deduction.  Was the 'stamp' not deducted from salaries pre-tax?

Cheers

Derek

Derek Russell

Tel: +61 425824081

E-mail: derekru...@gmail.com

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[Steve Symmons]

Technically, NI contributions were deducted separately and therefore, after income tax had been taken from gross pay.

That is (for simplicity’s sake assuming no tax free threshold and a flat 20% IT rate):

Gross Pay.     100

Tax deducted 20

After tax          80

NI.                      5

Net pay.           75

There was no reduction in income tax liability due to any tax deduction for the NI contribution.

Were that the case the tax taken would have been 20% of GBP95 (100 gross -5 NI) or GBP19.

I hope the above clarifies the situation.

PS:

The ATO flat 8% is almost certainly a better deal than actually calculating the correct amount. Only in very rare situations is it not the case. And the time/cost/hassle of establishing your exact contributions and then apportioning them across your expected lifetime (using actuarial life expectancy tables) simply isn’t worth it.

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[elle...@gmail.com]

Great explanation, thanks Steve

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[Derek Russell]

Thank you for that explanation of the reason why the Australia 8% tax deduction is appropriate for UK State Pension payments.  Maybe not so surprising that NI contributions were taken out of post-tax income.  It maximises Govt revenue.

Cheers

Derel

Derek Russell

Tel: +61 425824081

E-mail: derekru...@gmail.com

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