nixstuff

So, we just bought ourselves a prime piece of WA dirt. Can you believe - because the ER has been tumbling, it's cost us £5,000 MORE from the time we registered an interest in the plot to the time it's taken to purchase it.

And to add insult to injury, I got a spot rate in the bank for the transfer, baulked at it, they phoned international business to negotiate a better rate...and the rate went DOWN in front of my eyes. Unbelievable!

Like I said, this had better bloody well be worth it..

JaneandJim

Just transferred over some money and I got a better rate from my bank (First Direct) than I would have done at Ozforex.

Still crap compared to 6 months ago though!

Jane

cruisey

If you don't mind me asking, what rate did you get? I've just done the same with HIFX and got $2.3182 to £1. I've been watching the rate for a few weeks and just thought enoughs enough. At least we know how many dollars we've got to play with now.....

JaneandJim

Hi Cruisey,

I got 2.33, and because I transferred it to another HSBC account, the fee was just £10. We've transferred about 2/3 of our money, just in case the rate goes back up before we need the rest, but I doubt it will. It will be at least the middle of next year before we buy a house over there.

I've just got to watch out for it arriving in my account in Australia now. They do fixed term deposit account with higher rates than I was getting in the UK, so I need to open one as soon as the funds get there!

Jane

cruisey

Did better than us then! 2.33 would have got us an extra £500, drat...

I went for a forward contract as we're waiting for the house the sell, so only had to pay 10% of the total amount, I'll pay the rest when we sell.

I think it might be an idea if I DIDN'T monitor the exchange rate from now on, I'll kick myself if it goes up.

WheelsOfSteel

Think of the buzz though when it goes in your favour. Try commodity trading :scared:

RichS

your interest rates in the UK are nett of tax. In aus you will be paying marginal rate tax on any interest. Therefor you might get a 5% rate, but if you earn over $60000 you'll be paying 47% on that 5%. Its worth making the comparison first.

Another think to watch is retaining your house when you get here. You're liable to a 10% withholding tax on your mortgage repayments - meaning you have to pay the mortgage in the UK and give the Aus govt some too.

If you rent your house then you pay tax in the UK, but the diff between that tax and your marginal rate (47%?) will have to be paid to the Aus govt.

So its happy days all round there then

JaneandJim

Hi Rich,

The withholding tax is being abolished (for properties in the UK, anyways) in July. I won't be working in Australia, so I'll be paying the lowest tax rate on any interest.

Cruisey, I think you got a pretty good rate if its a future rate. The rates not going to go up short term. All depends how long it takes you to sell your house:scared:

Jane

sydneybound

Hi Rich,

Can you please clarify this one ? I was planning on going to Oz with a house in the UK with 0% mortgage, my understanding was that I was going to be taxed on the rental income from the UK, but in the UK (so with pers tax breaks etc.. I wont actually be paying a lot of tax on it). I didn't think I had any additional tax to pay in Oz because of the double taxation treaty between the 2 countries ?

Any clarification appreciated,

Rob

JaneandJim

My money has arrived in my account in OZ already! Took less than 24 hours. I can definitely recommend First Direct.

Jane

RichS

I thought the same as you on the rental front...until I visited my accountant. And yup he said it was liable. Australia takes the view that everything you have is taxable at its rates.

Bugger

now you may be able to get an accountant who can 'structure' things so you don't become liable.

What I haven't looked into is declaring the UK property under Aus taxation and attempting to negative gear it to get a knock down on your tax. You might try that.

topcat

RichS,

Could you point me towards the relevant bit of the tax form, or the ATO website that gives info on this 10% penalisation
for having a UK mortgage. It's annoying when you don't have any choice in the matter (I'm here temporarily and have to lease the house to cover the mortgage...)

Allan Collet's tax sheet says something along the lines of the UK mortgage company should be able to claim the 10% from the UK IR. Did you try this? Neither my mortgage company nor the person I spoke to at the IR in Liverpool even knew what I talking about.

There's an additional paragraph in the new UK-Oz double taxation treaty which to my naive eyes implies the country in which the property is situated has the right to tax on the income:


ARTICLE 6
Income from real property
1 Income derived by a resident of a Contracting State from real property may be
taxed in the Contracting State in which the real property is situated.
2 The term “real property� shall have the meaning which it has under the law of
the Contracting State in which the property is situated. The term shall in any case
include:
(a) a lease of land or any other interest in or over land;
(b) property accessory to real property;
(c) livestock and equipment used in agriculture and forestry;
(d) usufruct of real property;
(e) a right to explore for mineral, oil or gas deposits or other natural
resources, and a right to mine those deposits or resources; and
(f) a right to receive variable or fixed payments either as consideration for or
in respect of the exploitation of, or the right to explore or exploit, mineral,
oil or gas deposits, quarries or other places of extraction or exploitation of
natural resources.
Ships and aircraft shall not be regarded as real property.
3 Any interest or right referred to in paragraph 2 shall be regarded as situated
where the land, mineral, oil or gas deposits, quarries or natural resources, as the case
may be, are situated or where the exploration may take place.
4 The provisions of paragraph 1 of this Article shall apply to income derived from
the direct use, letting, or use in any other form of real property.
5 The provisions of paragraphs 1, 3 and 4 of this Article shall also apply to the
income from real property of an enterprise.


Does this mean if the house is in the UK, Australia will no longer have the right to tax the income as well if you are resident in Oz?
I'd appreciate if anyone could shed some light on this.


Thanks,
TC

sydneybound

It's v hard pinning down all the details on these things, Accountants can be v helpfull, but (with respect) at the end of the day it is their job to give 'paid' consultancy on these things, certainly my Accountant is an expert in explaining relatively straightforward things in an extremely complex way, therefore lining his pocket but making it impossible for me to figure things out myself.

Is there anyone out there who can give me a simple answer to these questions ??

Scenario
*******
I'm resident in Oz, have completed my P85 and NRL1 forms in the UK prior to departure, I rent a property in the UK which has no mortgage, declare the rent to the UK IR, & pay my uk tax on it at the end of each year.

Questions
********
o does the tax I have paid in the UK count as a Tax Credit towards my Oz taxation, (therefore I'm still really getting taxed at full Oz amounts MINUS the tax I paid in the uk) OR does it get taxed ONLY in the uk.

o if I dont tell the Oz authorities abount my flat in the UK, is there anyway on EARTH that they could possibly find out, obviously this is illegal, but someone please just answer the question !!!

o I stay in Oz for 6 years, then sell the flat, do I pay any CGT / income tax on the profit made on the flat

o If I have a mortgage on the property in the uk, do I have to pay 10% of the monthly mortgage amount over to the Oz IR ?

I very much doubt I will get any straight answers to these questions, but fingers crossed !!!!

R

Enzo&Chloe

does the tax I have paid in the UK count as a Tax Credit towards my Oz taxation, (therefore I'm still really getting taxed at full Oz amounts MINUS the tax I paid in the uk)

I believe so.

o if I dont tell the Oz authorities abount my flat in the UK, is there anyway on EARTH that they could possibly find out, obviously this is illegal, but someone please just answer the question !!!

Yes - trying to bring money to OZ from non existant overseas investments, might ring a few alarm bells

o I stay in Oz for 6 years, then sell the flat, do I pay any CGT / income tax on the profit made on the flat

Yes, and any exchange rate profits also

o If I have a mortgage on the property in the uk, do I have to pay 10% of the monthly mortgage amount over to the Oz IR ?

Yes at present, but the law is changing.

This is my interpretation of the tax laws. Please however see financial advice from an advisor, who understand Australian tax. (please check previos posting on one particular advisor!)

sydneybound

Your answer to the first point about Oz Tax seems at first look to be in conflict with Alan's answer in the bottom of http://britishexpats.com/forum/showt...hreadid=188346

But reading back, I can see that perhaps my "So If you've got no mortgage on your property in the UK, then you have no additional Australian Tax to pay ?" was answer EXCLUDING the normal Oz taxation.....

Can you all see the problems I'm having !!! I'ts a nightmare pinning down all this stuff, I'd love to here from someone who's actually done this.

Regards

R