Playing the Exchange Rate
 

I'm one of the many watching the Aus-UK exchange rate with interest. It's fluctuating quite a lot at the moment - it was around 2.34 on Monday and is about 2.29 now.

Having just sold my house in the UK, I'm considering risking bankrupting myself and 'playing' the exchange rate. For example I could have bought at 2.34 from the UK and the moved the money back to the UK for a fairly tidy profit. I am thinking of repeating this a couple of times a month dependent upon the exchange rate, and I'll limit the risk by using a broker to buy and sell at predetermined exchange rates.

Does anyone know the tax implication of doing this? Will I get taxed on the profit and is to, how would I declare it? I'm on a 457.

Hope someone can help

Re: Playing the Exchange Rate
 

Not too sure but I think you have to be in the UK to remit funds to Oz and in Oz to remit funds back to the UK. So might prove less profitable than you think!!

Re: Playing the Exchange Rate
 

There is no law saying that.

Re: Playing the Exchange Rate
 

that sounds interesting :unsure: but I suppose you have to think about what could be earn't in a high interest savings account here/Oz

Re: Playing the Exchange Rate
 

Hi
The only problem you will face is that when a person transfers large sums across from any country to a OZ bank account, it is a requirement of the bank to tell the Australian tax office and customs because of the money laundering act, if i remember correctly if you transfer more than AU$25000 three times in a year then they will inform customs
The only way to do this legal is set up a multi currency account with a company that exchanges currency
thxs Trev

Re: Playing the Exchange Rate
 

I believe this to be correct........You can open a bank account in Oz and transfer your money from uk to Oz . . . . BUT your money will remain in the Oz bank account and you can not do anything with it until you have been to your local branch and identified yourselves......This is for obvious security reasons so , unless you have already been to Oz to "identify" yourselves with the bank I don't see this working for you:thumbdown:

Re: Playing the Exchange Rate
 

To be honest this is a question of risk and knowledge - i.e. if you think you can predict the exchange rate movements (and if it was that easy thousands would be doing it) then go ahead but remember, you will never get the headline rate (banks need to make money so they will keep a certain margin) so unless you are transferring large sums the gains will be very small. In addition, because you will need to keep the money "fluid" then you will likely not get the best (if any) interest while you are waiting to make your next swoop.

My advice would be that unless you have a serious amount of money (that you don't mind losing) then don't bother.

Re: Playing the Exchange Rate
 

He can set up an AUD account with a British bank, or vice-versa.

Re: Playing the Exchange Rate
 

Out of interest, what would you call a serious amount of money?

Threads like this intrigue me, the way people think about risk, knowledge with regards to their personal finance.;)

Re: Playing the Exchange Rate
 

Just wondering if anyone thought about contacting a broker on an exchange floor for large currency transactions?

Re: Playing the Exchange Rate
 

Its difficult to define as something like $5,000 would be a large sum to some people but relatively small to another.

There are three things which are key in my mind regarding any investment decision. The first, and the key phrase here is "that you don't mind losing" and the second is what is the size of the potential prize and the third is how much hassle is involved in making the gain? I suspect that for most people the answers to those questions are:

1. Very little;
2. Very little (if only investing the amount in (1); and
3. A lot

Re: Playing the Exchange Rate
 

Hi,

My currency dealer(AFEX) allows me to open up a holding account. The longest you can have this open for is three months. You can exchange as many times as you like, within the holding account. The holding account will hold any currency. At the end of the three months you need to transfer to a bank account (UK or OZ).

You can also place stop trades. I found my broker wasn't keen on this. The first thing he tryed to push was the usual forwards option, then he wanted me to do spot trades. I guess he wants the commission. With a stop trade, you lay down a buy price, or a sell price and when the market reaches this level the trade takes place. This can happen at any time, 24hr.

TAX, you are not liable for OZ tax until you validate your visa. After that you'r subject to capital gains on the profits made.

You would be liable for UK capital gains tax, if you return within the year. I think it's a year.

Good luck with playing the markets, If you have time on your hands you might get lucky.

But I recon, US Dollar to Yen to OZ looks a good run, but then again 'Black Beauty' running in the Epson 12:30 looks good too!

;)

Re: Playing the Exchange Rate
 

This information you provide, links, published documents, so to validate the information, as it is quite critical as to whether this information is correct as it could quite easily mislead people on this forum?

Because what you are saying is, you validate, the exchange rate is 1 to 2, then you arrive in OZ two years later making your permanent entry, and the rate is 1 to 2.5, and you are liable to capital gains on the money you take into OZ? A gain of 0.5 dollars to every pound you exchange, you are liable to capital gains tax?

That is what you have outlined in your post?

Re: Playing the Exchange Rate
 

Hey I'm no accountant, but this link should help...

http://britishexpats.com/forum/showthread.php?t=485444

I'm sure you could argue sale of house delayed etc', then you could be ok. But notice you can also claim back tax relief if the rate goes against you.

After a while it gets a bit complicated...

Re: Playing the Exchange Rate
 

Help me? Thats my thread;)
LOL:rofl: