Guest dragon

Tax implications of closing ltd company on emigration to Oz

    Recommended Posts

    Guest dragon

    Hi folks out there Oz (and here in UK),

     

    I'm looking to migrate down to Adelaide from Cardiff, most likely next June. I've been working through a limited company in the UK for a while and have some savings in the company account.

    My company is a one man band working in consultancy. If I pay the cash in the company account out in dividends I'll receive all those dividends and one some of that I'll have a personal tax liability. So if I pay it now I'll be due a tax bill.

    I was advised by an accountant that if I closed the company in transit to Australia I could avoid that tax liability. If I closed the company in the UK I'd be liable for tax here, if I closed it in Oz I'd be due for tax there. But if I closed it in transit there would be no liability.

     

    Has anyone done this, or knows if this is legal either in the UK or Oz. I don't want to break ant laws, but if it's legal, maybe...:chatterbox:

     

    Thanks all,

    Dave.

    Share this post


    Link to post
    Share on other sites
    Guest Aussie pat

    Aussie pat's other half here.

     

    I haven't done this and I don't know the direct answer to your question - is it legal?. However, if it was me, I'd be asking the accountant if he has any clients who have successfully done this or if he has run his idea past HMRC. He's obviously thinking about a technical play on the concept of tax residency, thinking that if you're in transit, you are in a tax residency no man's land so who can tax you. It all seems a bit too easy. I'd be careful.

    Share this post


    Link to post
    Share on other sites

    I agree, tax residency and domicile are extremely complex areas.

     

    I would suggest that you speak with a Tax Adviser that has the experience and qualifications to deal with this type of thing ie migration to Australia matters.

     

    Alan Collett who pops on here from time to time is a qualified Chartered Accountant in both the UK and Australia, seeking advice from someone like him would be your best route.

     

     

    Regards

     

     

    Andy

    Share this post


    Link to post
    Share on other sites
    Guest Matey

    What sort of visa are you on? If it's a temporary residency visa you can close the company down once you're here and not be liable either end, as long as you get the timing right and don't go back to live in the UK for a certain amount of time (think it's 5 years). If you've got PR I think it might be harder.

     

    We took advice from Alan Collett at Go Matilda and thought he was fantastic. We saved far more than his fee, and had the peace of mind of knowing we were doing everything by the book.

    Share this post


    Link to post
    Share on other sites
    Guest dragon

    Hi Matey,

    I'll be on a 136 Skilled - Independent visa. When you say I need to get the timing right, what did you have in mind. Do you think the company needs to be closed within a certain time of arriving in Oz?

    Good advice on the 5 year rule though, I'd forgotten about that, but it's certainly something to bear in mind.

    Share this post


    Link to post
    Share on other sites

    Hi Mate,

     

    I think you really need to take professional advice on this. Have you thought about just paying the tax in the UK. As you are closing the company down you get Entrepreneurs Relief and so only pay 9%. Why risk it when it is so low any way?

     

    Nick

    Share this post


    Link to post
    Share on other sites
    Guest Matey

    Hi Dragon

    If you're on a temporary visa the timing is to wait until a tax year when you're no longer resident for tax in the UK. Then you would be assessed in Aus as you said in your original post, and there are concessions for temporary residents here relating to overseas capital gains, foreign currency gains etc.

     

    But if you've got PR that won't apply anyway so I've probably wasted your time. Like everyone else has said the only sensible advice is to ask a qualified professional who is up to date with the ever-changing rules and can consider all your circumstances and plans.

     

    Good luck

    Share this post


    Link to post
    Share on other sites

    Create an account or sign in to comment

    You need to be a member in order to leave a comment

    Create an account

    Sign up for a new account in our community. It's easy!

    Register a new account

    Sign in

    Already have an account? Sign in here.

    Sign In Now


    • Similar Content

      • By eugenezh
        Dear forum members,

        I will be moving to OZ next month and have a query on keeping money overseas.
        I am a permanent resident, currently, in my home country, I hold local currency (Euro) and AUD.

        I will open a bank account at NAB next week and will transfer all my AUD to that account prior our move in OZ.
        However, I would like to keep on my bank account in Germany my EURO and when exchange rates will become better, I will exchange to AUD and transfer them to my OZ bank account.

        The problem is that I don't know how long it might take for the AUD to get to its low rates, therefore I might keep my EURO in Germany for a while.

        My question is, what is the policy of the ATO if I keep a bank account overseas and NOT gaining any interest rates on it and then transfer that money to OZ? let's say after a year residing in OZ.

        I am looking forward to getting your inputs on this issue,
        Eugene