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How long do you have to move your money?

How long do you have to move your money?

Old Aug 8th 2006, 11:24 pm
  #1  
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Default How long do you have to move your money?

After selling your house before you get tucked up tax wise?

I seem to remember that there is some law or such like that if you keep the proceeds from your UK house in the UK if you dont move it over within a certain amount of time you get shafted for tax. But i cant remember for the life of me what is called, i have tried looking at the ATO site but cant see for looking....

Help !!
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Old Aug 9th 2006, 12:32 am
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Default Re: How long do you have to move your money?

Originally Posted by wargod
After selling your house before you get tucked up tax wise?

I seem to remember that there is some law or such like that if you keep the proceeds from your UK house in the UK if you dont move it over within a certain amount of time you get shafted for tax. But i cant remember for the life of me what is called, i have tried looking at the ATO site but cant see for looking....

Help !!
Funny you should say that, I thought it was 6 months (excluding house sell) and when I spoke to the tax office here they had never heard of this rule.

Jo
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Old Aug 9th 2006, 12:36 am
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Default Re: How long do you have to move your money?

Originally Posted by joho
Funny you should say that, I thought it was 6 months (excluding house sell) and when I spoke to the tax office here they had never heard of this rule.

Jo
I did a search on here a few minutes ago and basically the 6 month rule is an urban myth.... However there is a form of capital gains tax that i think applies. Essentially if you sell your house today and then some time in the future you transfer your money to Aus you may be liable to any interest rate fluctuations (i think!!)
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Old Aug 9th 2006, 1:24 am
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Default Re: How long do you have to move your money?

Originally Posted by wargod
After selling your house before you get tucked up tax wise?

I seem to remember that there is some law or such like that if you keep the proceeds from your UK house in the UK if you dont move it over within a certain amount of time you get shafted for tax. But i cant remember for the life of me what is called, i have tried looking at the ATO site but cant see for looking....

Help !!

Hi there

You only get taxed on the difference in the exchange rate from when you arrive in Australia.

For example

$50,000 at 2.45 = $122,500

Say in 12 months the rate goes up to 2.50

$50,000 at 2.5 = $125,000

You only pay tax on the difference, i.e. $2,500
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Old Aug 9th 2006, 1:40 am
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Default Re: How long do you have to move your money?

Originally Posted by sassie
Hi there

You only get taxed on the difference in the exchange rate from when you arrive in Australia.

For example

$50,000 at 2.45 = $122,500

Say in 12 months the rate goes up to 2.50

$50,000 at 2.5 = $125,000

You only pay tax on the difference, i.e. $2,500
And if the rate goes down you can offset the loss against tax.
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Old Aug 9th 2006, 1:47 am
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Default Re: How long do you have to move your money?

Originally Posted by wargod
I did a search on here a few minutes ago and basically the 6 month rule is an urban myth.... However there is a form of capital gains tax that i think applies. Essentially if you sell your house today and then some time in the future you transfer your money to Aus you may be liable to any interest rate fluctuations (i think!!)
You are right that the 6 months is an urban myth. There is a 6 months rule for the transfer of pensions but not for anything else.

There are a number of schools of thought on whether you get taxed on your Forex Gains. One is that you either get CGT taxed or FGT (Foreign Gains Tax) taxed on the gain from when you could have moved the money until when you actually moved the money. The other is that you don't get taxed (for CGT - FGT uncertain) because the transfer is "of a private nature".

I would not seek professional advice on this matter as it is very complicated and there is a distinct probability that the professional you choose will get it wrong.

I think the best advice in this situation is to apply for a Private Ruling. This is VERY easy to do and is binding on the ATO.

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Old Aug 9th 2006, 2:35 am
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Default Re: How long do you have to move your money?

Originally Posted by Amazulu
And if the rate goes down you can offset the loss against tax.
Isn't it "quarantined" meaning that you can only offset any forex loss against a forex gain and not against any other type of income?
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Old Aug 9th 2006, 2:57 am
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Default Re: How long do you have to move your money?

Originally Posted by OzSheila
Isn't it "quarantined" meaning that you can only offset any forex loss against a forex gain and not against any other type of income?

Income or capital gains? Need to answer that question before anything else. And a capital transfer is not taxed at all.
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Old Aug 9th 2006, 3:25 am
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Default Re: How long do you have to move your money?

Originally Posted by JAJ
Income or capital gains? Need to answer that question before anything else. And a capital transfer is not taxed at all.
Sorry, I was talking income. Realise that capital transfers are not taxed but what about the forex gain or loss associated with the capital transfer?
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Old Aug 9th 2006, 4:34 am
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Default Re: How long do you have to move your money?

Originally Posted by OzSheila
Sorry, I was talking income. Realise that capital transfers are not taxed but what about the forex gain or loss associated with the capital transfer?
Sounds more like a capital gain to me - why would you think it's income?
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Old Aug 9th 2006, 5:07 am
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Default Re: How long do you have to move your money?

Originally Posted by MartinLuther
There is a 6 months rule for the transfer of pensions
Be grateful if you could elaborate on this
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Old Aug 9th 2006, 10:52 am
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Default Re: How long do you have to move your money?

Originally Posted by sunbather
Be grateful if you could elaborate on this
Hello,

The 1936 tax act (as amended) allows you to move your pension to Aus within 6 months without any tax implications. After 6 months any profit (which can be reduced by the cost of moving the pension) is subject to a 15% tax.

Fairly much it's not usually a big deal because it only taxes the change in value of the pension since you arrived (NOT the whole pension) less the cost of moving it. For example, if you have £100k pension and it goes up by 8% over the year and the cost of moving it was 5% then the tax bill would be £390 which they would take out of the pension.

Hope this helps.
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Old Aug 9th 2006, 11:01 am
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Default Re: How long do you have to move your money?

The way I understand it is that you may have to pay capital gains tax in the UK only (providing the house is in UK). There is a point at which you pay capital gains tax not sure what this is?

As long as you have paid it in one country then you dont pay it again in the other country. You may well be asked about it in the tax return - but as long as you have paid it and have reciept then you are ok.

Also there is a thing called 'taper relief' which means if you have lived in a house then rented it out you get some relief on Capital Gains Tax. This depends on how long you have been at your house.

I suggest you check out the HMRC web site. Not sure on url
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Old Aug 9th 2006, 12:36 pm
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Default Re: How long do you have to move your money?

Originally Posted by MartinLuther
Hello,

The 1936 tax act (as amended) allows you to move your pension to Aus within 6 months without any tax implications. After 6 months any profit (which can be reduced by the cost of moving the pension) is subject to a 15% tax.

Fairly much it's not usually a big deal because it only taxes the change in value of the pension since you arrived (NOT the whole pension) less the cost of moving it. For example, if you have £100k pension and it goes up by 8% over the year and the cost of moving it was 5% then the tax bill would be £390 which they would take out of the pension.

Hope this helps.
Thanks for that, you are a star
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