Re: Bank Warning on Australian Property Price Bubble
 

the most sensible 7 lines on this subject (well, not exactly the topic of the thread but well said!)

Re: Bank Warning on Australian Property Price Bubble
 

Hi El Dente,
Yes I have researched the non domiciled rules in detail
Quoted from : Non-Resident & Offshore Tax Planning From Taxcafe.co.uk, a very useful book, worth buying !!!:thumbsup:

Some points mentioned!!

"It should also be noted that a double taxation agreement between
the UK and your country of choice could result in your UK income
falling outside the scope of UK tax but inside the scope of another
country’s tax regime. Double taxation agreements are considered
in further detail later in the guide.

Before looking at living abroad in further detail, it is useful to
remind ourselves of the general rules for income tax, capital gains
tax and inheritance tax. The main points can be summarised as
follows:

• Income tax is based primarily on residence. If you are resident
in the UK, you are normally liable to UK tax on your
worldwide income. If you are not resident you could still be
liable to UK tax on income arising in the UK, but your non-UK
income is outside the scope of UK income tax.

• Capital gains tax depends on both residence and ordinary
residence. If you cease to be resident in the UK without also
ceasing to be ordinarily resident here, you will remain liable to
UK capital gains tax in respect of gains on your worldwide
assets. If you cease to be both resident and ordinarily resident,
you are outside the scope of UK capital gains tax, even on UK
assets, subject to some anti-avoidance rules which we’ll look at
shortly.

Inheritance tax is based on domicile. If a person is domiciled in
the UK he is liable to UK inheritance tax on his worldwide
assets even though he may be both resident and ordinarily
resident in another country. If a person is not domiciled here,
he is generally liable to inheritance tax on his UK assets only."

So Make sure when you do leave tell HMRC that you are going by completing by completing P85 form, sell all UK property, inform docter and dentist that you are leaving the country for good and do not come back for a holiday in the first 12 months of leaving,
Regards

Re: Bank Warning on Australian Property Price Bubble
 

That's interesting as I have just re-let my property in Trinity Beach for more rent than the previous lease. I had 3 new tenants to choose from and the property was not vacant for a day.

Re: Bank Warning on Australian Property Price Bubble
 

Think you were lucky! Lots of properties staying vacant for long periods. House buying market not great either, with lots of dropped prices & places on the market 6 months plus.
Our rent is less than when we first moved in & we live in one of the most popular suburbs.

Re: Bank Warning on Australian Property Price Bubble
 

Wrong. Its not you paying the tax. You can't pay tax anymore because you're dead.

Re: Bank Warning on Australian Property Price Bubble
 

The fact is, you do pay the tax when you are dead. The fact that your estate trustee pays it out of your net worth confirms it. That's the good thing about Australia, they let you die in peace.

Re: Bank Warning on Australian Property Price Bubble
 

I think that's the crux of it - I would rather pay a part of my share of my lifetimes tax-take when I am dead.

Throughout ones life there will be a certain amount of tax one will have to pay for the running of the country and services available.

Obviously one can argue about the amount of services and amount of tax, but whether it is lifetime $100K under a left-wing gov with a functioning NHS or $90K under a right-wing gov, there is still an absolute number each of us will have to contribute over our lifetimes (and some peoples will be more than others).

Would I rather pay more of my lifetime tax when I am in my 20's and paying-off student costs, or in my 30's buying a house or starting kids, or in my 40's with kids costs, or in my 50's and so on - OR, would I rather pay some of it when I have died - if anything seems a "no-brainer" to me, it is this.

I would far rather have a lower income tax and incentivise people to work harder and retain more of their earnings to spend how they desire, than I would have people just sit around waiting for an inheritance.

I don't see who is harmed with an increased IHT - the person whose money it is is now dead. The people inheriting are doing precisely that - inheriting - they have done nothing for it, not worked cleverly or hard or been thrifty with their lives etc, it is just a pure windfall of cash. I don't see that incentivising free cash from dead people is a positive, I would far rather have lower income taxes when people are alive.

I think it should be graduated - perhaps 20% after the first GBP100K and then the 40% after GBP300K. I think loop-holes and IHT avoidance strategies should be closed whenever possible.

Lets face it, if I was going to inherit 500K, under the current rates I would get 325K tax-free and pay 40% on the remaining 175K, giving me a net of 430K - is anyone really going to be crying into their beer over getting a free 430K having done nothing for it?

Re: Bank Warning on Australian Property Price Bubble
 

As I am pointing out above though, if you were to have a higher tax-take from IHT sources there would be a lower take required from income tax, savings, dividends etc - all things we should encourage by lower taxation.

On the "paying tax on taxed income" argument, I would point out that this occurs all the time, every time you buy something that has VAT on it with your take-home pay you are paying tax on taxed income, same with tax on savings - the money that went into the savings was taxed as income and then the interest from the savings is taxed. I would also note that very often the principle asset that gets estates into IHT is property such as the house - whilst this was purchased with taxed income, typically the value has gone up massively over the 20-40 years of ownership and this capital gain has not been taxed at all.

Re: Bank Warning on Australian Property Price Bubble
 

Ponzi People on nil or zero income from property :eek:

Re: Bank Warning on Australian Property Price Bubble
 

er, donut? interest on your mortgage is just another rent? You'll be paying more in interest than you would in rent for an equivalent property. You could rent and stick the rest of your cash in a high interest account at 6% and earn more than the 3% average (after the cost of mortgages have been taken out) that Austrlaian property has recorded in growth over the past 20 years! DONUT!! OPEN YOUR EYES:eek:

Re: Bank Warning on Australian Property Price Bubble
 

Flippin eck, welcome to the forum. Think you'll fit in!

Re: Bank Warning on Australian Property Price Bubble
 

I'm pretty tired with this thread already. But I'll indulge you. When my mortgage is paid off by the time I'm 40, and I never have to make another payment for mortgage/rent again ever - why am I a donut exactly?

Re: Bank Warning on Australian Property Price Bubble
 

Changing your domicile of origin is a little bit more complicated, or so i'm led to believe. Read the link on Richard Burton:

http://www.willswithoutpain.com/rich...ton_actor.html

Re: Bank Warning on Australian Property Price Bubble
 

Well ..... don't say I didn't warn you peeps.

I told ya, renting is the place to be right now in Aus. Buying makes no sense whatsoever, it's half the price and you can bank the difference. We're in a giant ponzi scheme and all it will take is one small trigger to bring the house of cards down.

We're running out of greater fools.

Re: Bank Warning on Australian Property Price Bubble
 

Hi El Dente,
I guess the Welsh flag showed where his true nationality lay.:o

Good story.!!


But on a more sensible planning route and again an excerpt from the "Taxcafe.co.uk" book on Non -Resident & Offshore Tax Planning:

The general rule is that an individual domiciled in the UK will be
subject to inheritance tax on his or her worldwide assets. Non-UK
domiciled individuals are only subject to UK inheritance tax on
their UK assets.

In order to lose your UK domicile you will need to build up
evidence to show that you have abandoned your UK domicile of
origin and have acquired a new domicile of choice. In layman’s
terms, this involves ‘cutting your ties’ with the UK and
establishing a new permanent home overseas. In any case, for
expats who are UK ‘born and bred’, it makes sense to reduce any
ongoing connection with the UK as part of the process of
establishing residence overseas.

This is something that many who leave the country do not do...
with disastrous tax consequences. Frequently they return to the
UK on many occasions, keeping within the perceived 90 days a
year income tax limit. This pattern of behaviour is likely to indicate
that you have not abandoned your domicile of origin, with the
result that you will be subject to UK inheritance tax on your
worldwide assets.

In order to safeguard your overseas estate from inheritance tax,
you are likely to have to make some significant changes to your
lifestyle in order to produce evidence that you have a new
domicile of choice.

HOW TO LOSE YOUR UK DOMICILE
You should take as many of the following steps as possible to show
evidence of an intention to acquire a new domicile of choice:

Take up nationality in the new country.
Join clubs and other social organisations in the new country.
Dispose of UK investments.
Resign from clubs in the UK.
Close UK bank accounts.
Buy an overseas burial plot.
Avoid subscriptions to British newspapers.
Dispose of all UK private residences.
Buy a new residence in the new country.
Make a will under the laws of the new country.
Build up a new circle of friends in the new country.
Avoid retaining directorships in the UK.
Exercise any vote in the new country.

It should be noted that none of the above factors are in themselves
conclusive. However, Revenue and Customs will look at all the
factors that can be put in evidence to determine whether there is a
real intention to reside permanently in the new country.
Obtaining a non-UK domicile of choice does not protect you
completely from UK inheritance tax. You will still be liable to tax
on your UK assets. If the value of these assets is less than the nil
rate band (currently £325,000) it is probably not worth taking any
further action, unless you expect your assets to rise significantly in
value.

It is all interesting stuff that may save your children large amounts of money!!:fingerscrossed: