tscriven

Hi, can anyone help us on tax issues?? We are emigrating to Oz in June. We have decided to let our house out now as due to the economical climate we have lost too much money to sell it. We know that the money we earn in rent we will be taxed by the English government the normal 22% which is fine, but we have just now been told because this will be classed as offshore earnings from Australia's point of view we will be taxed again by them on the rent and also when we come to sell it we will get taxed on any of the profit - is this true? We have also been told if we put our house up for sale now before we leave England and can't sell it but still rent it out then that's how we get around paying tax in Oz on the house from rent perspective and when we come to sell it, but again not sure how correct this information is? We also want to leave some English money in our savings accounts here until the exchange rate picks up and same for some shares until they pick up in value, but again have heard that we can be taxed on doing this by Australia. Surely we can't be the only ones in this situation?! Our happiness about emigrating is now being marred by worrying tax issues , can anyone give us some info. as we are feeling very confused and not sure what to do.

edman

You can rent your home in the uk for 2 yrs without paying anytax on the additional profit and as long as the rent covers only costs no tax on it either. UK and Aus have a reciprocal tax system so u will never be taxed twice as a result. If you sold your UK home and transferred the money I doubt they would ever know about it in any event. The Aussie tax system is a little different and if you ae still shakey on this why not look on line for some tax advise. I think you are worrying to much when you ought to relax and enjoy.

Alan Collett

Au contraire. The ATO works with Austrac, and has been known to enquire of taxpayers as to the source of funds remitted into Australia and whether any tax is properly payable on the transaction/s giving rise to the remittance.

Indeed, with Governments looking for revenues and following the recent G20 meeting we can all anticipate increased cross border communications at Government tax authority level.

Tread carefully.

Best regards.

JAJ

You may not have to pay any tax on the rental income in Britain, as you will still have your personal allowance. In Australia, you will be taxed on the rental profit but you can offset any UK tax that's due.

Capital gains tax. Look on the bright side. Australia won't tax you on any capital gains arising before you become resident in Australia.

Other than that, as a general guide => if you make income and capital gains, expect to pay tax on it. If you have no money and no income, you'll probably pay no tax. Life would be simpler, but would you want that?

You may also wish to browse:
http://britishexpats.com/wiki/Austra...Special_Issues

tigger101

Hi I am sorry I'm a little naive in tax issues.

If I'm renting a property in Australia and my english property that I owe (no morgage)is being rented out and taxed in England when I come to sell it if I sell it before 2 years I will not have to pay any capital gains tax on it?

thank you

MartinLuther

I'm not sure where people get this 2 year thing from but it's like a virus. It appeared in a thread a few days ago and now it's spreading.

Anyway this is the UK rule (copied from another thread)

With regards to Aus then if you rent your previous house remains your primary residence and you have 6 years before you get hit for CGT. If you buy a house then your old house effectively becomes an investment property and becomes liable to CGT from that date. (You do get an extra 3 months if you're trying to sell the property.)

As for rental and other income from the UK. You get taxed by Aus but get a credit for any tax you have already paid in the UK. So you just pay the Aus rate of tax rather than being taxed twice. One plus point is that if you make a rental loss (i.e. rent less interest only mortgage payment less expenses is negative) then you can claim this loss against your Aus income. This is not something that you can do in the UK.

spalen

and to throw one more data point int o the mix

When you move to Australia - all of your assets receive a revaluation to their value at the time of the move.

You may find that the drop in AU$ has incurred a 'loss' for you - so dont forget to offset currency changes as well when you calculate/assess.

But - go see a tax adviser - there may be 1 million and 1 ways to avoid/minimse, aus is full of weird little tax loopholes and hidey-holes.

NedKelly

I believe they changed that for non-residents in the last budget. It doesn't matter as you get the offset here.

hantsfamily1

UK government ministers dont pay capital gains so why should you

JAJ

Hasn't changed for 2008/09, at least.
http://www.hmrc.gov.uk/cnr/r43notes-09.pdf

La Vida loca

And I get tax deductions on my income, from my rental losses in UK. and they are absolutely whopping.....

By rights i wont be taxed on another $30k this year...

Alan Collett

Free tax factsheets here:
http://www.collettandco.com/factsheet.cfm

Best regards.

Alfresco

That's good to know. How do you pay the rental loss back in the uk i.e. mortgage repayment to the bank? Is it easy to do?

tscriven

Thanks for all the info guys, it's helped to set my mind at rest. Now I can start looking forward to the move now rather than worrying about tax issues!