Taxes on Monies Earned Online from Overseas

Hello All,

Thank you for taking the time to read through my query.

I work online doing various tasks for an Australian travel agency.  I receive monthly payments of around COP$5,000,000.00 per month which is transferred (via WorldRemit) into my wife's Bancolombia account. 

I'm currently residing in Colombia on a TP-10 visa and have been living here on this visa for nearly 2 years.  The visa has a lifespan of 3 years and I will need to renew it in just over 1 year from now.

My question for those who know is to ask what concerns I should have regarding taxation on my earnings.  My wife is uncertain but has been worrying about what implications we may face as we have not declared anything regarding my earnings. 

Thanking you in advance for your helpful insights.

Respectfully,

Tj

turbojet :

I work online doing various tasks for an Australian travel agency.  I receive monthly payments of around COP$5,000,000.00 per month which is transferred (via WorldRemit) into my wife's Bancolombia account. 

....what concerns I should have regarding taxation on my earnings?  My wife is uncertain but has been worrying about what implications we may face as we have not declared anything regarding my earnings.

Tj

Dear TJ,

Welcome to the Colombia forums of expat.com ...

Apparently, you are a tax resident of Colombia and have been living here while earning Internet-related income for almost all of 2016 and 2017, collecting overseas income without reporting it to any taxing agencies.  A tax resident is someone who has lived in Colombia for 183 days out of 365.  Colombia claims the right to levy a tax on the worldwide income of its tax residents.

Tax filings by all tax residents are due in August or September subsequent to any taxable calendar year, so your filing is in arrears for tax year 2016.

1.  If your employer did not withhold taxes, you may owe taxes to the Australian Taxation Office .. and, if applicable, local/state or territorial agencies in Australia.

2.  You may owe back-tax penalties to the same agencies for 2016.

3.  Colombia may have a tax claim on your worldwide income for 2017, possibly mitigated if you paid taxes to Australia or they were deducted by your employer.

4.  Colombia may claim back-tax penalties for overdue taxes from 2016.

Consult a tax professional in Australia, if applicable, and one in Colombia .. to determine your specific liabilities and get your tax obligations and delinquencies cleared up.  Posters on this thread can give you only general concepts about your obligations based on the information you provided.

cccmedia in Depto. de Nariño

turbojet :

I work online doing various tasks for an Australian travel agency.  I receive monthly payments of around COP $5,000,000.00 per month which is transferred .. into my wife's Bancolombia account.

One more thing.

In case of some future dispute over your current tax obligations to Colombia, you're making it way too easy for the government of Colombia to confiscate or freeze your income.

By having 100 percent of your Internet-generated income from your employer sent into your wife's account here in Colombia, you're a sitting duck if the government ever decides to go after more of your income (including the imposition of late-payment penalties) than you and your future accountant might consider fair.

Consider having your income sent to your own bank account outside Colombia -- for instance, in Australia -- going forward.  Such a move also protects you if your situation with your wife ever goes sideways.

cccmedia

Extremely excellent advice ccc.


Sitting duck is an understatement...

I know I am leaving myself open for a slating here, but I don't believe in trying to avoid our liabilities, reduce them yes, but not openly avoid them.

Reading your post, I presume you get paid by the Australian Travel Agency, is your income not taxed before it is sent to Colombia? If that is the case I think you will find you are not as far into the mire as people would have you believe.

Yes, as a Colombia Tax Resident, you have to file a Tax Return every year, and there will be a small fine for not doing so, DIAN will be aware of your income, because it has been deposited into a Colombian Bank, albeit, they will believe your wife is the one earning the money. However if you get an Accountant, and you will need one, because individuals are not allowed to file their own Tax Return, it has to be done by a qualified Colombian Accountant, this should soon be resolved.

I would think that even if there is not a double taxation agreement between Colombia and Australia, that like with the UK (which is in the process of implementing such an agreement) that DIAN have an 'understanding with the Australian Tax Authorities, and will be treated as if there is a double Tax Agreement, therefore you will only pay tax here if the Tax liability is greater than that you pay in Australia, for example if you pay more tax back home than you would have paid here, you wont pay anything, if you pay less, then you just pay the difference. An Accountant will be able to find out from DIAN if such an Agreement or Understanding exists.

The other piece of advice I would give you, is to have all receipts put in your name, any work on your property, vehicle, healthcare payments etc. can all be used by the Accountant to reduce your tax liabilities.

Shop around for an Accountant, they vary in price for their Services, some charge millions for a submission, mine charges less than 300.000 COP and there is no way I am letting her retire during my lifetime, unfortunately there is no point asking me for her details, because she is in semi-retirement and not taking on more Clients. I have filed a Tax Return each year since moving here, and so far have not had to pay anything, although that might change this year with the new Tax rules.

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