MartinLuther

I know this ruling well.

I've got to say that the ATO were a little sneaky because they changed the question to one they could answer rather than answering the question I asked. :curse:

Such is Life

JAJ

I would think most ATO staff (other than specialists) wouldn't know either.

The tax rules have become too complex for most staff to keep up with them.

MartinLuther

I'm with you on that one.

Even the specialists were having a bit of a hard time with my question. So much so they just avoided answering it and stonewalled.

Alan Collett

And the people who write the legislation don't see the consequences of what they are drafting, after which the politicians simply rubber stamp the new laws ... a hopeless state of affairs, but that's the way tax seems to be these days.

Best regards.

maxim

I have followed this debate and read the numerous previous posts going back some time. I would have thought that any professional advisers offering opinions on here would have sought more clarity on this by now.

The whole key is whether transfers are of a personal nature and you will not find the ATO expanding on this because individual circumstances vary.

Most emigrants to Australia have transferred their personal cash. But has anyone ever heard of the ATO demanding tax on a notional gain on such transfers? I don’t think so - unless thought, or suspected by Austrac, to be trading.

Alan Collett

Remember that taxation in Australia operates under a self assessment regime. It is therefore incorrect to say that the ATO will "demand" tax - it is up to each individual taxpayer to include those amounts of assessable income (and allowable deductions) that s/he consider should properly be included.

I would also not use the term "notional gain". The amounts we are talking about are actual gains (and losses) arising on the disposal of non-A$ currency balances, measured in A$ terms.

Best regards.

maxim

I have used the term notional gain (or loss) because many find that the exchange rate on tax residency deviates widely from the moving average.

Also the ATO does tax audits. So have you (or anyone) heard of anyone having to pay tax on notional gains as a result? I don’t think so if not trading.

Regards

Alan Collett

Please drop the term "notional gains". This implies a gain (or loss) hasn't actually arisen - when under the taxing laws it has.

In answer to your direct question as to tax audits - no I haven't.

My view though is that this is no basis on which to manage one's tax affairs - the tax legislation appears fairly clear to me, and the ATO Rulings that are starting to appear seem to be supporting my earlier thoughts, particularly in those cases where individuals are holding monies in UK£ bank accounts in anticipation of an improvement in the exchange rate.

I'd go further by saying that the gains and losses of a "private nature" argument seems to be a vague and unclear assertion that is difficult to sustain if you are retaining a fairly sizeable amount of UK£ in a bank account and are awaiting a target exchange rate before buying A$'s.

Each to their own though. If you are happy to exclude such gains (and losses) from your personal Aussie Tax Returns it is your call. I'm not your accountant, and you may be engaging one who has a contrary view to mine.

If you have any official commentary supporting an alternative view to mine I'm happy to be corrected (as I have said on many occasions in the past when this issue has been discussed).

Best regards.

Geelong Gent

The onus is on the tax payer to prove otherwise.

maxim

The only commentary supporting an alternative view to yours comes from the ATO specialist department.

Holding on to cash in the UK they say is no problem because Australian tax is being paid on the interest.

What I don’t understand is why you are still taking a contrary view to the ATO on this!

Regards

Alan Collett

Get it in writing then. What's the saying about verbal advice? It's not worth the paper its written on ...

Until I see written confirmation that gains and losses on foreign currency is not assessable in the hands of an Australian tax resident I remain of the view expressed previously.

How and whether/where the interest is taxed is irrelevant to this issue.

Best regards.

Alan Collett

PS. As to my "motives" - I try to give the correct advice on this and other forums, and to my clients. I do so based on my interpretation of the legislation and informed exchanges with other professionals. I don't simply accept what the ATO says, particularly when many of the ATO staff don't understand the full implications of certain aspects of the tax legislation.

That's why I invite you to seek written confirmation of what was said to you verbally if you want to have comfort the ATO will not change its mind should they choose to review your tax affairs in an audit at a later date.

maxim

I have no problems myself about the issue because I always transfer from a bank account opened a long time ago before capital gains tax was introduced. But I am disappointed to see you persist with promoting your own view which I think could lead people to pay tax unnecessarily. Have you yourself got anything in writing from the ATO to say that tax should be paid?

Regards

Alan Collett

With respect, with the years of experience I have in tax practice I do not need correspondence from the ATO to be in a position to give a professional opinion.

If you choose to counter my view it is incumbent on you to either make clear the basis of your opinions (do you hold any professional qualifications?), or to provide something more substantive than reporting your telephone conversation with the tax office.

This thread is starting to head the way of previous threads on the same subject (the comments you make are somehow familiar to me ...), so I suggest we draw a line under our exchanges.

Best regards.

Pollyana

As Alan has said this thread is heading the same way as all others on the subject. I suggest that the poster who has an issue with Alan's professional opinion takes himself elsewhere rather than repeating an oft-repeated argument.
Please keep the thread to a civilised discussion and away from this old disagreement or I shall close it.