Go Back  British Expats > Living & Moving Abroad > Australia
Reload this Page >

Return to UK but CGT

Return to UK but CGT

Old Jun 29th 2018, 9:59 am
  #1  
Forum Regular
Thread Starter
 
Joined: Dec 2010
Posts: 33
shouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really nice
Default Return to UK but CGT

hi

Im returning to uk after seven years. I held on to property in uk during that time and rented it out. I declared the earnings to the ato and uk tax.

now I’m returning to uk my accountant says I’m liable for cgt on the amount the property has increased during that time.the property has doubled in price by an extra £275k.
please please tell me do I have to pay CGT on the £275k! I’ll have to sell it. Is this true?

I recently became Aus citizen. Did it for the kids!
shouldistayorgo is offline  
Old Jun 29th 2018, 11:12 am
  #2  
Lost in BE Cyberspace
 
Joined: Dec 2010
Posts: 13,173
Beoz has a reputation beyond reputeBeoz has a reputation beyond reputeBeoz has a reputation beyond reputeBeoz has a reputation beyond reputeBeoz has a reputation beyond reputeBeoz has a reputation beyond reputeBeoz has a reputation beyond reputeBeoz has a reputation beyond reputeBeoz has a reputation beyond reputeBeoz has a reputation beyond reputeBeoz has a reputation beyond repute
Default Re: Return to UK but CGT

Originally Posted by shouldistayorgo View Post
hi

Im returning to uk after seven years. I held on to property in uk during that time and rented it out. I declared the earnings to the ato and uk tax.

now I’m returning to uk my accountant says I’m liable for cgt on the amount the property has increased during that time.the property has doubled in price by an extra £275k.
please please tell me do I have to pay CGT on the £275k! I’ll have to sell it. Is this true?

I recently became Aus citizen. Did it for the kids!
You haven't sold nor made any money on that growth. How can you be liable on that?

GST is a goods a consumption tax. Not a tax on speculation.

just my take.
Beoz is offline  
Old Jun 29th 2018, 11:34 am
  #3  
Forum Regular
Thread Starter
 
Joined: Dec 2010
Posts: 33
shouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really nice
Default Re: Return to UK but CGT

Accountant says it’s due to this residency rule!!
I’m sick with worry. This take bill could force me to sell the house .


https://www.ato.gov.au/General/Capit...ralianresident
shouldistayorgo is offline  
Old Jun 29th 2018, 12:37 pm
  #4  
Addicted to browsing BE
 
goldchoccycoin's Avatar
 
Joined: Oct 2005
Location: Brisbane, QLD
Posts: 2,045
goldchoccycoin has a reputation beyond reputegoldchoccycoin has a reputation beyond reputegoldchoccycoin has a reputation beyond reputegoldchoccycoin has a reputation beyond reputegoldchoccycoin has a reputation beyond reputegoldchoccycoin has a reputation beyond reputegoldchoccycoin has a reputation beyond reputegoldchoccycoin has a reputation beyond reputegoldchoccycoin has a reputation beyond reputegoldchoccycoin has a reputation beyond reputegoldchoccycoin has a reputation beyond repute
Default Re: Return to UK but CGT

Isn't that ruling about Australian properties - not UK properties?

This seems a very strange situation if it is indeed the case that this ruling applies to UK properties, I would be getting a second opinion from another accountant or from someone like Alan Collett.
goldchoccycoin is offline  
Old Jun 29th 2018, 1:27 pm
  #5  
Lost in BE Cyberspace
 
quoll's Avatar
 
Joined: Sep 2007
Location: Canberra
Posts: 8,238
quoll has a reputation beyond reputequoll has a reputation beyond reputequoll has a reputation beyond reputequoll has a reputation beyond reputequoll has a reputation beyond reputequoll has a reputation beyond reputequoll has a reputation beyond reputequoll has a reputation beyond reputequoll has a reputation beyond reputequoll has a reputation beyond reputequoll has a reputation beyond repute
Default Re: Return to UK but CGT

Which property are you talking about here? One in Australia that you’ve been living in, in which case you just sell it, no CGT, or the U.K. property that you’ve rented out? If you’re going to move back into the U.K. property then you won’t have to pay CGT unless you decide to sell it without it being your place of residence again.
quoll is offline  
Old Jun 29th 2018, 4:52 pm
  #6  
BE Forum Addict
 
Joined: Oct 2006
Location: Nowhere - I'm a travelling (wo)man!
Posts: 2,349
louie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond repute
Default Re: Return to UK but CGT

The link says (as I read it), either you can treat all your non-Australian property as having been sold when you cease to be Australian resident, paying capital gains tax at that point but having no further liability on those assets when they are sold, or you can "choose to disregard all capital gains" but you will have to pay capital gains tax on that asset in Australia at the time it is sold, even though you are no longer an Australian resident. So if an asset has appreciated £50k between you becoming and ceasing to be Australian-resident, you can pay Australian CGT at that point if you wish. If you don't, and it is eventually sold for £100k more than its value at some later point, you will then have to pay Australian CGT on the whole £100k (presumably subject to whatever exemptions are available, if any). I suspect that this is widely ignored, either wilfully or in ignorance; I have no idea how it is policed.

NB: Beoz - we are talking about capital gains tax, not goods and services tax.
louie is offline  
Old Jun 30th 2018, 1:55 am
  #7  
Forum Regular
Thread Starter
 
Joined: Dec 2010
Posts: 33
shouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really niceshouldistayorgo is just really nice
Default Re: Return to UK but CGT

I’m getting a second opinion. If true This is just so unfair!! I’ll let you know .
shouldistayorgo is offline  
Old Jul 1st 2018, 7:43 am
  #8  
Migration Agent
 
Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,441
Alan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond repute
Default Re: Return to UK but CGT

Yes, a cessation of residency in Australia can trigger a deemed disposal for CGT purposes - see CGT Event I1:
https://www.ato.gov.au/General/Capit...ralianresident

However, be also mindful of the provisions of the Tax Treaty between the UK and Australia, and in particular para 5 of Article 13:
Convention between the Government of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gai

What you should perhaps be doing is getting an opinion and some pro forma CGT computations under the provisions of the UK and Australia from an accountant who is across the provisions of the UK and Australia, as well as the Treaty provisions.

Feel able to ping a PM or an email to me.

Best regards.
Alan Collett is offline  
Old Jul 1st 2018, 9:09 am
  #9  
Concierge
 
mikelincs's Avatar
 
Joined: May 2006
Location: ex ex-pat, in Taunton
Posts: 24,275
mikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond repute
Default Re: Return to UK but CGT

Originally Posted by louie View Post
The link says (as I read it), either you can treat all your non-Australian property as having been sold when you cease to be Australian resident, paying capital gains tax at that point but having no further liability on those assets when they are sold, or you can "choose to disregard all capital gains" but you will have to pay capital gains tax on that asset in Australia at the time it is sold, even though you are no longer an Australian resident. So if an asset has appreciated £50k between you becoming and ceasing to be Australian-resident, you can pay Australian CGT at that point if you wish. If you don't, and it is eventually sold for £100k more than its value at some later point, you will then have to pay Australian CGT on the whole £100k (presumably subject to whatever exemptions are available, if any). I suspect that this is widely ignored, either wilfully or in ignorance; I have no idea how it is policed.

NB: Beoz - we are talking about capital gains tax, not goods and services tax.
That has never come up on this forum AFAIK, and I suspect doesn't really apply, once you are no longer an OZ resident how are the authorities going to know whether you have sold your UK property, or how much the value has increased unless you tell them,
mikelincs is offline  
Old Jul 1st 2018, 9:21 am
  #10  
Migration Agent
 
Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,441
Alan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond repute
Default Re: Return to UK but CGT

Originally Posted by mikelincs View Post
That has never come up on this forum AFAIK, and I suspect doesn't really apply, once you are no longer an OZ resident how are the authorities going to know whether you have sold your UK property, or how much the value has increased unless you tell them,
I take it you are not advocating doing anything unlawful, Mike ...?

Best regards.
Alan Collett is offline  
Old Jul 1st 2018, 9:27 am
  #11  
Concierge
 
mikelincs's Avatar
 
Joined: May 2006
Location: ex ex-pat, in Taunton
Posts: 24,275
mikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond reputemikelincs has a reputation beyond repute
Default Re: Return to UK but CGT

Originally Posted by Alan Collett View Post
I take it you are not advocating doing anything unlawful, Mike ...?

Best regards.
What me??? Never.
mikelincs is offline  
Old Jul 1st 2018, 9:55 am
  #12  
BE Forum Addict
 
Joined: Oct 2006
Location: Nowhere - I'm a travelling (wo)man!
Posts: 2,349
louie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond reputelouie has a reputation beyond repute
Default Re: Return to UK but CGT

Originally Posted by Alan Collett View Post
However, be also mindful of the provisions of the Tax Treaty between the UK and Australia, and in particular para 5 of Article 13:
That says "An individual who elects, under the taxation law of (Australia), to defer taxation on income or gains relating to property which would otherwise be taxed in (Australia) upon the individual ceasing to be a resident of (Australia) for the purposes of its tax (*), shall, if the individual is a resident of the (UK), be taxable on income or gains from the subsequent alienation of that property (sale or transfer) only in (the UK)."

* - i.e. the pay it later on the whole gain on eventual sale, not just the gain in value until ceasing to be resident (but paying it at that earlier point), option

So the treaty comes in to save the OP it seems. Alan, why would he need CGT calculations?
louie is offline  
Old Jul 1st 2018, 11:11 am
  #13  
I still dont believe it..
 
Joined: Oct 2013
Location: 12 degrees north
Posts: 2,566
uk_grenada has a reputation beyond reputeuk_grenada has a reputation beyond reputeuk_grenada has a reputation beyond reputeuk_grenada has a reputation beyond reputeuk_grenada has a reputation beyond reputeuk_grenada has a reputation beyond reputeuk_grenada has a reputation beyond reputeuk_grenada has a reputation beyond reputeuk_grenada has a reputation beyond reputeuk_grenada has a reputation beyond reputeuk_grenada has a reputation beyond repute
Default Re: Return to UK but CGT

A capital gain cannot occur till it is crystallised by selling or bed and breakfasting for those into shares.

Check with an expert but i think you are liable for uk cgt on the uk property while you were away but you dont pay till you sell, who knows what is noticed / recorded? The only exemption is your main residence while you live there.
uk_grenada is offline  
Old Jul 1st 2018, 11:47 am
  #14  
Migration Agent
 
Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,441
Alan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond reputeAlan Collett has a reputation beyond repute
Default Re: Return to UK but CGT

Originally Posted by uk_grenada View Post
A capital gain cannot occur till it is crystallised by selling or bed and breakfasting for those into shares.

Check with an expert but i think you are liable for uk cgt on the uk property while you were away but you dont pay till you sell, who knows what is noticed / recorded? The only exemption is your main residence while you live there.
Not correct - sorry.

A deemed disposal of an investment asset can take place on certain occasions, including (in Australia) the cessation of tax residency.

Best regards.
Alan Collett is offline  
Old Jul 3rd 2018, 12:55 pm
  #15  
BE Forum Addict
 
Joined: Jan 2003
Location: Brisbane
Posts: 1,562
Kiwipaul is a splendid one to beholdKiwipaul is a splendid one to beholdKiwipaul is a splendid one to beholdKiwipaul is a splendid one to beholdKiwipaul is a splendid one to beholdKiwipaul is a splendid one to beholdKiwipaul is a splendid one to beholdKiwipaul is a splendid one to beholdKiwipaul is a splendid one to beholdKiwipaul is a splendid one to beholdKiwipaul is a splendid one to behold
Default Re: Return to UK but CGT

Originally Posted by shouldistayorgo View Post
Im returning to uk after seven years. I held on to property in uk during that time and rented it out.
The important question is did you buy or rent a property whilst in Oz.

If you rented then you can claim your UK property as your PPOR for 6 years after you move out.

But if you bought another property in OZ then yes you are liable for the CGT on the increase on your UK property. But you will be selling your Oz property with no CGT liability which will soften the blow.
Kiwipaul is offline  

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information -

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.