We are moving to Australia in the summer - we have a range of assets that we are saving to spend on a house either there or here when we know where we want to stay.

Have heard a range of things about Tax please has anyone got any advisors they have used that could give us quality un biased help?

Thanks

Han

Hi,

Allan Collett at Go Matilda does tax advice.

Ben

ps We moved over here from Gloucester.

Thanks,

When did you moveing serious out? Where are you now? Was it worth it? We are having serious cold feet because of the financial implcations!

What financial implications are you concerned about ?

We're moving out from Gloucestershire at the end of the summer too!

SOrry not sure what I was trying to write!

The tax we will have to pay on any money that we make from investments as from the moment we arrive. We have a flat that we have lost most of our capital and we have been told that any increase in value it has from the day we arrive we will have to pay capital gains at 40% every year not when we sell it!

Plus we weren't planning to send any money over until we were ready to buy a house as we want to save it and make the decision on house buying when we are settled and have jobs. But have been told that if we don't take the money over we will have to pay to import it too. That means we loose out on that and obviously probably exchange rate value too.

I think we feel disappointed that money we have worked hard to earn will lost at three points and it may not be worth our while actually going as we will loose so much from so many different places.

Has any one else found this?

With the risk of sounding dim - we're not planning on paying any tax on the house we are leaving behind in England!

It`s highly unlikely for you to make any capital gain the way the housing market is like at present. I`m in the same situation, I have a property in the UK and 2 building lots in the Caribbean which are for sale,I`m not bothered about Australian Tax as their values are more likely to go down rather than up.Good luck.

Erm.....hi guys.

Interesting thread. Not sure I understand it though and would like to know more. How does the tax thing work then? Whatever amount of money I have from the sale of my assets, do I have taxes/commissions to pay to move it over to Australia? It doesnt sound as simple as just putting your money into a bank account, doing the conversion to Aus $ and putting it down on a house! Can anyone offer an example using some numbers?

No you don't, and I have come across this assumption many times, so you are not alone in wondering this.

In a simplistic view...

Whatever value your assets are in $A, at the time of your move to Australia, is their base value. No tax is payable on their base value.

eg: You have a house worth £100,000 in UK when you move. Say $200,000 at current FX rate.

You sell the house a few years later for £120,000 and the FX rate has become 2.2. The ATO will calculate the value at $264,000 = a profit of $64,000, less any expenses incurred. If you have bought another house, then than profit, on what has become an INVESTMENT property, will be taxable, like any other Investment asset.

However, if you have NOT purchased another house, then I "THINK" that your UK house can be treated as your Residence property and therefore avoid any tax.

Yes, this is correct. (And even after you've purchased a house here, there are some things you can do to avoid CGT on your UK one.)

Hanwilt wrote: "we have been told that any increase in value it has from the day we arrive we will have to pay capital gains at 40% every year not when we sell it!"

Answer: Complete and utter bo11ocks!
(1) CGT [may] arise when you sell your UK property (unless it was your main residence etc etc - see above).
(2) If the house was in joined names, any gain is halved and each half added to each spouse's other taxable income.
(3) If you've owned the property for more than 12 months, the gain is halved, i.e. only half is assessable to CGT.
(4) Australia has no capital gains tax rates. Instead the gain (what's left after 2 and 3 above) is added to your other assessable income (if you have any). You then pay tax on that.

In ABCD's example above, the gain was $64,000 (assuming it wasn't your main residence etc etc). You owned it jointly with your spouse, so each of you is assessable on $32,000. You owned the house for more than 12 months, which means you can claim the 50% discount: you each have a gain of $16,000. If that was your only taxable income, then you would have each paid $750 tax (in the 2007-2008 income year). [The example assumes you were in the country for the whole 12 months.]

I was about 99.999% sure, but was reluctant to say so, in case things had changed

There is such a lot of miss-information about that can really scare people.

Thanks for this advice on the house, the advice we were given by a professional on Australian tax an immigration from UK was a little confusing (over the phone) and did not focus on Property, so we assumed that Property was bundled in with all other investments he talked about. If we don't have to pay CGT (as income) tax on it every year, great, even better if we can call it our residential home and not have to pay any tax. However, I have a a series of concerns:

1. Property proces have crashed over the last couple of years and not look to be nearing the bottom if not at the bottom. My problem with this is I bought a house, lost 25% of the value but expect to make that back over the next 5-10 years. But the Aussies want to tax me on the recouping of these losses! Or so i was led to believe.

2. We were told that your assets are benchmarked on day you arrive in Australia. Same story - all our pensions and ISAs have lost 1/3 of there value. No problem - these are long term investments, but the Aussies want to tax us from the point we move over on capital gains not from what we bought the assets for but for what they are worth now.

3. We were also told that Aussies don't pay CGT, but are expected to have their assets valued every year (This includes overseas ISAs and Pensions) and they are taxed income tax on the rise in these asset values annually. I assumed this included property also, but it does include ISAs.

4. Apparently, when we arrive in Australia we can take as much currency as we want, but actually we don't want to take much as the rates are so poor. However, if the rates improve, we will be charged tax on the difference between the exchange rate when we arrive and the exchange rate when we bring the money in.

5. Finally! I am not clear if we rent our house out if that will also count as an income even though it is offset by the mortgage payments.

It seems like these tax aspects are OK, if we hadn't just had a huge crash, but baselining our asset value at a much lower level than we paid for tax purposes just seems like madness and has us thinking that we have the timing of going to australia all wrong.

he move is supposed to be about improving standards of living, not giving up our hard earned savings. Currently we are doing our best to work out how we can avoid some of this and still make the move work. Current thinking is about when we officially become residents....maybe we can bend the rules there for a while? who knows

I understand your need to check this out...
I will answer a couple of points:
Any taxable income will be NET income, ie after all relevant costs, Mortgage Interest (not capital portion), agents fees, insurance etc etc.

There is a CGT, but at normal income tax rates, and with a 50% reduction for assets held over 12 months. I've not heard of an individual having to value assets each year, and I never have done so myself, even when I was an accountant doing tax returns.... ( I hope I wasn't wrong )

In your shoes, I would be writing to the Tax Office, and try to get a special ruling to base your assets on original cost, due to the current situation.

No guarantees that it would work, but you never know, it is always worth trying.

Also, get the ATO to clarify all your points, in writing, as the professionals do not always get it right, and you pay the price if they don't.

Alternatively... no, i'd better not say in a public forum....