Taxation

[Guest Sarah Wright]

My family and i are emigrating in March this year and still have concerns regarding the state of the dollar against the pound. We still haven't sold our house and have concerns regarding any tax implications there may be by leaving our money in the UK. Does anyone know how long we have to to transfer our money to OZ before we get hammered by tax. Thanks

[Andrew from Vista Financial]

Hi Sarah

 

Just to clarify that the only tax payable if payable dependant on your individual circumstances will be on the foreign exchange gain.

 

Therefore it you transferred funds because of fearing tax, and for example exchanged 50,000 GBP and achieved $1.80, this would give you $90,000.

 

If you waited for a better rate and achieved say $2.10 this would equal $105,000.

 

Therefore a $15,000 gain. If taxable then tax would only be on $15,000 and taxed at marginal tax rates.

 

The average tax bracket here is 31.5% inc Medicare, so a liability of $4,725 in tax meaning you will still have made $10,275.

 

Please note that this is purely an example and not specific to you.

 

Sarah you should also think about what if the rate does not improve, at least for the short to medium term anyway.

 

What are the funds for?

 

It could be possible to achieve greater growth on the money in Australia if invested than waiting to achieve a better exchange.

 

Regards

 

Andy

 

 

 

The above are general comments only.

[Guest caoimhe]

My family and i are emigrating in March this year and still have concerns regarding the state of the dollar against the pound. We still haven't sold our house and have concerns regarding any tax implications there may be by leaving our money in the UK. Does anyone know how long we have to to transfer our money to OZ before we get hammered by tax. Thanks

 

There is tax implications if you move here as a Permanent Resident and leave a property overseas, when it is sold you will be liable to capital gains....so be careful

[Guest Sarah Wright]

Thanks for your advice , we are really concerned about losing lots of our hard earned savings by moving to OZ. Yes we have the dream of a better life but we want to be in at least a similar financial position as we are here.

 

Caoimhe - does the captial gains tax on property sale relate to your primary residence ? Any ideas how long we have to sell the house and do you have any ideas how much capital gains tax is ?

 

Thanks to everyone.

[Andrew from Vista Financial]

Sarah in relation to capital gains tax on a UK property, once a property is rented out it is then viewed as an investment property and as such capital gains tax on the sale can apply.

 

However there are exemptions given from the UK in that if it was the persons primary home that was lived in then there is a three year timeframe in which if sold no capital gains tax will apply.

 

Also generally if someone has left the UK on or after 17 March 1998 and have been not resident and not ordinarily resident in the UK for at least 5 full tax years from the year they left the UK then capital gains tax is not payable.

 

If for whatever reason a gain is payable in the UK then individuals have a £10,100 exemption for the tax year 09/10 and after this the rate is 18%.

 

However as Jacqui (Caoimhe) says, if someone moves to Australia as a permanent resident, the Australian Tax Office (ATO) will want a slice of the pie. The ATO also offer exemptions, one being a 6 year main residence exemption, so better than the UK on that front, as long as it can still be classified as your main residence!

 

If it is payable in Australia for whatever reason there is a 50% discount on the capital gain if the asset has been held for more than 12 months. Then after all exemptions are taken into consideration tax is payable at your marginal tax rates look here http://www.ato.gov.au/individuals/content.asp?doc=/content/12333.htm

 

If capital gains was paid in the UK and is also payable in Australia there may be entitlement to a tax credit in Australia on the amount paid to the UK as part of the taxation agreement between UK and OZ.

 

So as you can see, there can be an optimum time to sell.

 

 

Please note that this is not tax advice but general information. It would be advisable to speak to a Tax Adviser that has knowledge of both tax systems prior to selling a property to plan for tax effectively.

 

 

Regards

 

Andy

[Guest Sarah Wright]

Thanks for your reply Andy, i appreciate that this is not tax advice but am i right in thinking that the Australian tax people cannot tax us on the cash raised from the sale of our primary residence in the uk for a number of years. Therefore ifor example if it takes 12 months or more to sell our home the ATO will not tax us when we transfer the proceeds into an Australian bank ?

Thanks

Sarah

[Guest Aussie pat]

Aussie Pat's other half here. Sarah, have you got permanent residency? I'm no tax expert, but as Andrew implies, the tax situation is different for permanent residents as opposed to temp residents.

[jim and adel]

Hey Andy, this info in this instance isn't really applicable to me, but thanks for answering questions like this so thoroughly and regularly - you're a star!

 

Jim

[Andrew from Vista Financial]

Cheers Jim.

 

Sarah I have responded to your email.

 

Andy