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investments in oz

investments in oz

Old Oct 3rd 2002, 2:22 pm
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Default investments in oz


Couple of questions about OZ investment.

If I have either ISA's or index trackers in the UK what is the tax effect when I arrive in OZ??

I am quite sure that OZ does not run ISA's, do they run Index trackers or similar investment options?

Can anybody give any hint's advice about investment/saving while in OZ.

The current account I am currently setting up is the HSBC online saving which gives 4.25% return on a balance greater than $2000. Does anybody know of a current account that offers better?


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Old Oct 3rd 2002, 4:44 pm
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Default Re: investments in oz


There’s a bit of a misconception here. An ISA is not an alternative to an index tracker. It is a tax wrapper in which you can put investments in order to avoid certain (UK) taxes. An index tracker is a specific kind of investment – a pooled fund or unit trust which aims to replicate the make-up of a specific stock market index. You can have an index tracker in an ISA, or you can have some other kind of investment in an ISA. Conversely, you can have an index tracker (or any other investment) outside an ISA.

An ISA protects you against UK taxes but not, obviously, against taxes arising under the law of any other country. If you migrate to Australia and become an Australian resident you will be liable to Australian tax on your worldwide income and gains, including income and gains arising from investment held in the UK. The fact that the investments may be in a UK ISA is immaterial from an Australian point of view; you will still be liable to tax.

The position may, in fact, be worse than this. I’m no expert in this area, but Australia has legislation directed against people who lock up their money in offshore investment vehicles, and try to avoid Australian tax. Basically, if as an Australian resident you hold a “foreign investment fund�, you are liable to Australian tax on the growth in value of the fund each year even if you do not actually receive that growth, and even if you cannot receive it (because, for instance, it is locked up in a UK personal pension). I think it is possible that a UK index tracker would be regarded as a “foreign investment fund� and so, for example, if the value of your index tracker rose from $1,000 to $1,200 in the course of the year, that would be $200 of “income� on which you would have to pay Australian tax, even though you wouldn’t actually receive that money unless you sold the index tracker.

Yes, I believe that the Australian market does offer index-tracking mutual funds and index-tracking exchange-traded securities, and these are taxed as you would expect - dividends taxed in the year they are paid paid, capital gains taxes when you sell or redeem the investment. So the best option may be to sell your UK investments, remit the proceeds to Australia and buy similar investments there.

I am not an expert in this area, so before acting on this advice you should confirm it with somebody who is.


You might like to visit http://www.infochoice.com.au/banking/default.asp which is a good resource for comparing loans, credit cards and bank accounts available in Australia. Currently, according to that site, you can get up to 5% on an online account, but not necessarily with all the features that the HSBC account offers.
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