Saving in Oz
 

What's the best return on savings anyone has seen over here?
I've seen 5.3% from citibank is this beatable by anyone,need to do some serious money putting away instead of spending!

we got a high interest savings account through BankWest a few years ago.... but that`s only 5% and you couldn`t withdraw any money before a year was up, and then only $5000 at a time minumum, so yours sounds good.

Ingdirect pay 5.00% with an internet account with no bank fees and no min balance. The rate varies with interest rates generally so you are not tied in.


dragondirect have the same account at the same 5.0% rate.

Re: Saving in Oz
 

As an aside, is the interest subject to tax? The accounts I've looked at dont seem to specify gross and net interest like in the UK.

Or am I just living in a dreamworld;)

Re: Saving in Oz
 

Yes it is subject to tax, but it is paid to you gross, so you have to declare it at the end of the year in your tax return and then depends wether you have overpaid or underpaid tax wether you pay more or get a refund.

Beware
If you bring over loads of dosh and put it in a high interest account for say 12 months before you buy a house or buisness. In the following tax year they will assume you are earning the same interest (plus 10%) and bill you 3 monthly throughout the year. You can advise them that your circumstances have changed and they will reduce the rate to what you advise.

BUT if you get it wrong and underpay (based on your year end tax return) their are penalty rates that apply so ere on the side of caution.

We have an ING account in the UK, so I emailed the Oz lot asking how we could set up an account down under before lleaving, and if they charge to receive money.

I got a reply saying that "We do not offer an account such as the one you are talking about"! (I had not mentioned any particular kind of account at all)

Would this be typical of an Oz bank's grasp of things?

You cannot pay money into these accounts except through a conventional Oz bank. And all transfers are done through this bank using the internet. I use my saving account at ANZ to transfer money to and fro.
So until you have a regular Oz bank account that meets the transfer requirements (most do) of the internet bank your stuffed.
The people who reply to your e mail are low paid students on min wages who have a list of how to answers and if your question dosn't fit it dosn't exist.
I doubt you would be able to open an account up from abroad their are ID requirements and so forth.

Your best bet is to keep your money in your account in the UK, but get some friend or family you trust to be allowed to manage it. The bank will want their signature and address.

Then go to Oz, look around and open up a bank account.

When you feel like it, get your friend to transfer your money from the UK into your Oz account, via a transfer bank who will get you the best rates for the day.

check out places like:

http://www.money-exchangeonline.co.uk/

http://www.currenciesdirect.com/

I think we used currencies direct a few years ago... very good.

and here`s an exchange rate site:

http://www.moneyworld.co.uk/rates/currency/tourist.htm

Having a HSBC account in both UK and OZ, i set up a "Fax Authority" with HSBC, that allowed me to fax instructions to the bank in the UK.

When i needed to transfer a large sum from UK to OZ, i faxed over an instruction telling them the rate that I wanted the funds transferred at, and when the exchange rate reached that figure, they did the transaction.

I have internet banking in both countries, to make everything easy.

I visited the local manager before I left UK, to discuss everything, and spoke directly to him, on the phone, a couple of times before the transfer.

You can wire from the UK directly into the INGdirect accounts. Tried and successfully tested. The Ingdirect account must be linked to an Australian Bank account.

Re: Saving in Oz
 

Be careful about holding cash in UK Australia has introduced a tax on cash whereby you make elections as to how you would be taxed on foreign exchange - this affects all migrants

Its rocket science - we have had to get legal opinion about it.

It does create opportunity to get tax relief on exchange losses.

Here is the URL.

Forex - the $250,000 balance election

This election allows gains and losses arising in respect of transactions on certain low balance bank and credit card foreign currency accounts to be disregarded. http://ato.gov.au/distributor.asp?do...tent/34043.htm
Published: 15 Oct 2003

It can result in a lot of tax saved or cause tax to be paid.

The URL starts off as follows:

Forex - the $250,000 balance election

The ordinary operation of the measures is that deposits to and withdrawals from foreign currency denominated bank accounts, where a gain or loss arises from a currency exchange rate fluctuation, give rise to a gain or loss that is realised under the measures. Withdrawals from an account with a credit balance will also generally have a consequence under the Capital Gains Tax provisions.

However, this election broadly enables taxpayers to disregard certain foreign currency gains and losses on certain foreign currency denominated bank accounts and credit card accounts with balances below a specified limit.

An election can be made in relation to a qualifying forex account. A qualifying forex account is an account held (in Australia) with a bank or (overseas) with a bank or similar institution, denominated in a foreign currency. The account must be a credit card account, or an account held for the primary purpose of facilitating transactions.

A taxpayer can elect, in writing, in relation to any number of accounts. An election can be varied, in writing, by adding or removing one or more qualifying forex accounts. Removing an account or withdrawing an election does not prevent a fresh election being made in relation the same account at a later time.

An election applies in relation to a particular account from when it is made (but see More information about elections) and continues in force in relation to that account until:

the taxpayer ceases to hold the account or
the account ceases to be a qualifying forex account or
the election is varied by removing the account or
the election is withdrawn.

This one is a gem of legislation.

Cheers

Looks pretty straightforward. All you have to do is hire Smith Barney for a couple of years to work out what the **** that little lot means to the man on the Clapham omnibus and Bob's your uncle.

Makes you realise that politicians are politicians 'cos they can't do anything else!

Re: Saving in Oz
 

Here are the salient words:

"A qualifying forex account is an account held (in Australia) with a bank or (overseas) with a bank or similar institution, denominated in a foreign currency."

Most migrants to Australia I have encountered are considering retaining funds in a UK£ bank account located in the UK, which means that for most the election is not available. There may therefore be merit in arranging a UK£ account with an Australian bank if one wishes to retain UK£'s in anticipation of an improvement in the exchange rate (from the £ perspective).

Best regards.

Re: Saving in Oz
 

>>Here are the salient words:

"A qualifying forex account is an account held (in Australia) with a bank or (overseas) with a bank or similar institution, denominated in a foreign currency."

Most migrants to Australia I have encountered are considering retaining funds in a UK£ bank account located in the UK, which means that for most the election is not available. There may therefore be merit in arranging a UK£ account with an Australian bank if one wishes to retain UK£'s in anticipation of an improvement in the exchange rate (from the £ perspective).<<

The wording does indicate, because of the (overseas), that UK institutions ARE included if you read the sentence as properly constructed English. A comma after the first "bank" would have helped though!

Of more interest is the heading at the top of the ATO page "Large Corporates and Multinationals", implying that this applies to them and not to individuals.

This legislation does affect individuals - its not just limited to corporates - the man in the street is affected.

Opinion has been sought on this legislation by the Montfort International team and the legal opinion from Australia confirms the teams research. The opinion was not cheap - even though it was a fixed price contract. There are significant tax issues. We strongly advise anyone reading this thread to look carefully at this legislation and take advice as to how they are affected.

We appointed a leading Australian Tax Barrister based in Wentworth Chambers in Sydney - the brief given certainly caught him by surprise, he thought it was an easy answer, it wasn't. Thank-goodness we got a fixed price opinion.

It is not straightforward - in any shape way or form.

Already the opinion given has caused us to recommend definitive election policies as set down by this legislation - having naturally calculated through our tax programme the tax saving \ liability.

The brief was drafted by Australia's leading UK based Australian trained Chartered Accountant - former Director of International Tax of one of the world's largest tax firms - now based in our offices in UK.

The opportunities and pitfalls this legislation opened up are considerable.

A UK bank account held in Australia - is not what it is cracked up to be as a means of dealing with this legislation.

This is another example of one of the very reasons why advice should be taken pre-departure - not post departure.

The brief and the opinion are available on a case by case basis and on pre-agreed terms.

Words which should now be considered are as follows as per ATO Web Site

This election allows a taxpayer to bring to account gains and losses in relation to a qualifying forex account on a retranslation basis. A qualifying forex account is an account or accounts held (in Australia) with a bank or (overseas) with a bank or similar institution, denominated in a foreign currency. The account must be a credit card account, or an account held for the primary purpose of facilitating transactions.

Geraint,

Do you think Counsel's opinion would bind the ATO, or would you recommend that each taxpayer also seeks a Ruling as to his/her personal circumstances?

I would see the opinion from Counsel as useful, but if it is relatively contentious it would probably not be definitive => it would be prudent to seek a Private Ruling.

Best regards.

Cash is Tax Assessed - Opportunity
 

Alan

Before answering this email - a comment is necessary about the Brief.

The Quality of the Brief

Those from an accounting and financial background who were involved in the production of this precision worded briefing document are like myself - all Australian trained and qualified. It took approximately 150 man hours to get it ready. I am surprised that you haven't acknowledged our experience as of consequence - being yourself relatively new to the Australian system and knowing that we pioneered the pension transfer concept - we do have an acknowledged technical background and are currently providing input to Treasury in Australia on legislative amendments.

We chose blue blood quality Australian Counsel (all of whom are similarly Australian qualified) and are publicly acknowledged as expert.

Such experience should answer the question for you. No counsel opinion is binding - but sure has to be acknowledged as opposed to the consequences of going blind. As Dickens said in Great Expectations.

"Take nothing on its looks; take everything on evidence. There's no better rule."

In other words the precision of the brief - would seem to indicate that any Private Ruling would similarly require you to have your wits and references about you when wording any request for a ruling.

My colleagues would not agree with what you appear to be proposing - immediately going for a Private Ruling?

It would be ridiculous in the extreme to submit a request for a ruling if you had not sought advice prior to sticking your head in the lions mouth. I am astonished you would even think that the preliminary option.

* see note from moderator below

In other words "Dear Mr Taxman - I have done this will I be taxed?"

As opposed to "Dear Mr Taxman - having taken advice I have arranged my affairs this way - I seek your clarification that I am now entitled to this tax deduction?"

Rule Number 1. Never go to the tax office and say I have done this - how are you going to tax me? You take advice beforehand.

Clearly what good a ruling if what one is requesting is an interpretation on a subject that one is not familiar with? In other words individual circumstances need to be checked over (in light of an opinion) and advice can then be given as to what one should do.

You could compare it to the situation I created back in 1993 when I set about the advice processes that were to launch the concept that would allow the Australian Financial Planning Fraternity to provide advice on the transfer of UK Pensions to Australia in conjunction with Australian trained and knowledgeable UK based advisors - I sought opinion as to what one could and could not do - I think others should have as well.

Suffice it to say that what was found in the Tax on Cash legislation required several leading Australian accountants to get their heads together. I somewhat doubt that what opportunities these specialists unearthed would be found by the man in the street. It certainly took Counsel by surprise.

I think the contention is in your eyes - not in the eyes of those who have investigated and unearthed this opportunity - sometimes legislation is drafted creating opportunity - sometimes in error - but the law is the law is the law - and the words used indicate in certain circumstances tax planning opportunities were opened up.

Note from moderator: It would be best that the professionals frequenting this forum be civilized towards a fellow professional when posting here. The tone of the paragraphs in red is unbecoming of a professional, in my opinion.

Re: Cash is Tax Assessed - Opportunity
 

Now I'm a reasonable chap Geraint, but who rattled your cage? For heaven's sake mine was an innocuous question that wasn't intended to catch you out or imply you are deficient in your strategies, etc, etc.

It made no reference as to seeking a Private Ruling before taking Counsel's opnion (do you only read what you want to see?). Indeed, I think what you have done in seeking an opinion makes eminently good sense, but by the same token if the ATO takes an opposing view I wouldn't want to be the taxpayer funding a tax audit.

As to your inferences about my competencies and the fact that you are the only chap who can develop tax saving strategies I would tread very carefully if I were you. I could talk about how long I have been working in the tax profession, about how people I speak with (in the same profession as you and me, and those who approach me as prospective clients) are mightily fed up with the manner in which certain advisors claim to be the only ones with knowledge or competence, but once again I'll hold back for the sake of decorum and endeavouring to retain some professionalism on this forum.

Best regards.

Re: Cash is Tax Assessed - Opportunity
 

This is getting interesting folks.;) What chance Rog for the man on the Clapham bus when the 'experts' are falling out? No offence intended Alan and Geraint - it just makes it more bewildering for us 'punters'.

OzTennis:)

Re: Cash is Tax Assessed - Opportunity
 

Alan

The posting you made had to be responded to as we felt that there was a possibility it could direct readers away from the technical fact, we hoped that is would encourage you to read the legislation again. It is essential that clients have clarity.

If you read carefully what we posted - you will note I mentioned we have done extensive research. It was a WE not an I. Blue bloods have looked at this, i.e. other independent experts. So. we are not one voice. So we are far from being one making a solitary claim to be the fount of all knowledge. We thought you would go back and look at it.

We are categorically not claiming that we have a mortgage on these ideas - I have no idea where this has come from or why you state this. Could it be that it is known that I have as you know indeed trained many who now tread the boards on this subject. However we are not making any such claim of being knowledge kings - we listen intently to what others say – how else do you learn?

For these very reasons we sought counsels opinion for the benefit of our clients - please note I clearly stated that we got this opinion, following advice we had taken. And there have been second opinions, in fact we went for third and fourth opinions. I do not claim that we are a lone voice on the tax on cash issue or on any other issue for that matter.

Back to FOREX, counsel confirmed what each scenario (fact pattern) we presented should do as regards an election – it was consistent with our thinking.

I am sorry but your following sentence did seem to state the obvious.

"Do you think Counsel's opinion would bind the ATO, or would you recommend that each taxpayer also seeks a Ruling as to his/her personal circumstances?"

The ATO would not be bound by this opinion, you know that and I know that - so why ask the question? I was genuinely surprised at your comment. And why would you seek a Ruling before getting your situation clarified? Always get pre-Ruling advice.

Your comments did in all honesty seem to cast doubt on what we and other experts have unearthed. - I repeat we are not alone - others have considered the situation also and agreed with us. I was trying to get the message across that would encourage you to look again at the legislation and also ask prepare a briefing and ask for an opinion.

Incidentally the sort of person we went to are the type you would go to for advice or comfort if you needed a second opinion. That is not casting doubt on your integrity or your capability.

Try reading the legislation with a set of circumstance in position - then the tax break is there - the art is to have the right fact pattern. Have that and it should not be contentious. How big is the tax break, well it is significant. We used some lateral thinking and what we saw became obvious, others seem not to have seen it - so when we pointed it out to our confidantes - they could not believe what the legislation actually says with a certain fact pattern – a tax deduction based on a track plan with historical events.

An audit would not be required - when you ask for a Private Ruling - if the ATO has already confirmed that you get a deduction.

In other words get the wrong history and you wander into the lions mouth - those clients who have been made aware of our findings will know exactly where the fangs are.

Nobody is making any comment about your capabilities - but please recognise there are others out there that do have knowledge, they are also recognised for their experience.

It does seem to indicate that you are the one who has all the knowledge and that is worrying because freedom of speech is important.

I know that re-basing and hidden costs should be vigorously debated and how UK based advice can handle more effectively the 27CAA issue.

With the likes of LAFHA, Re-Location, CGT,etc. Why not start a thread on why advice should start in the UK and finish in Australia as opposed to starting in Australia?- we both have different views on this. So lets have a healthy debate. If we disagree with you technically then its for the reader to check the situation out, if we are wrong that is good news because the reader is informed, if you are wrong then the reader is informed.

Re: Cash is Tax Assessed - Opportunity
 

Oz Tennis

There is a need for a second opinion - on this. I take it as no offence. We know its opened up discussions in the big tax firms.

This needs a second opinion so lets quote from Hansard. Senate p 18192 - this is when they passed the legislation.

Monday 1 December 2003

New Business Tax System (Taxation of Financial Arrangements) Bill (No 1)

Second Reading

Senator Murray (9.49 pm) said....

I rise to speak to the New Business Tax System (Taxation of Financial Arrangements) Bill (No 1). Those who have heard my speeches previously will know that I like to place on Hansard a record of the additional amount of taxation law we create each time we pass a taxation bill. This bill represents another 127 pages of legislation and an accompanying 133 pages of explanatory memorandum. It will pass into law and we will support it. Once again the nature of the legislation means that we are placing a great deal of trust in the Treasury and the Taxation officials to get the legislation right, although the Senate did its part with the Economics Legislation Committee taking submissions and evidence on the bill. Nevertheless these matters are technical and complex. They are such that the members of the committee were not as fully across them as they might have been if they were each and every one of them tax experts.

Is this simple absolutely not. So what is the above? its the passing of the FOREX legislation into law.

Everybody needs to take advice - hence the counsels opinion.

Kind Regards

Welcome to Australia. Tax in Oz makes Gordon Brown look like a pussy cat.

For all those going to Oz, if you are not a pauper, be prepared to pay lots and lots of tax and also make these guys richer than they probably already are.

Back on the savings theme ingdirect and citibank have both been recommended on here at different times. The last time I looked which was only a fortnight ago citibank had a slightly better interest rate than ing. They both operate the same way as has been pointed out - in conjunction with a 'bricks and mortar' bank account. Both banks operate internet accounts in the UK as well but you still need the account in Oz - you can't work from ing or citibank internet accounts in the 2 countries.

I appreciate how complicated the tax laws might be Geraint and that expert opinion and second expert opinion is often needed on such issues.

Another thing to point out to the wife to cheer you up dugongs?:D

OzTennis:)

Spot on! Common sense prevails

I remember coffee with an ATO Director - I asked how do you deal with those who say "I didn't know that there were tax issues"

He said - "You would say that wouldn't you" - he sipped his coffee and I almost choked.

Brits ain't used to the Australian way of handling tax.

Rule Number 1 - Virtually all Australians use accountants

Rule Number 2 - Invite a mate over for a BBQ - talk about super and tax

Rule Number 3 - Plan ahead

Rule Number 4 - Have a beer - talk about tax and super

Rule Number 5 - Participate in Australias Most Popular Pastime - work out how to beat the ATO fairly and squarely - i.e. getting your tax down - Aussies are masters at it.

Rule NUnber 6 - Put some snaggers on the BBQ

Rule Number 7 - Learn the system

Rule Number 8 - Have another beer

Rule Number 9 - Be always one step ahead.

Rule Number 10 - Take it easy and chill

Aussies are so savvy on tax, that is why they chill out.

Geraint's decalogue (Ten Commandments) :D

OzTennis:)

Re: Cash is Tax Assessed - Opportunity
 

Comments below in blue text.

Best regards.

Re: Cash is Tax Assessed - Opportunity
 

And in the blue corner we have Go Matilda and in the red corner we have Montfort International. Who can get the upper hand? Sorry guys, just enjoying the exchange of views!

OzTennis:)

Re: Cash is Tax Assessed - Opportunity
 

So now we have TWO experts at it, but at least one is not shouting :)

Re: Cash is Tax Assessed - Opportunity
 

Healthy Debate - aids migrant needs.

Hardest part is where we appear to technically disagree.

The operative word is appear and translating that into words.

Re: Cash is Tax Assessed - Opportunity
 

Alan

It was something - you said on a way past post which related to tax issues - I will dig it out when I get back from my trip.

It seemed to imply that we were not qualified - that was how one of our clients interpreted it. So he asked for confirmation - of our qualifications - because he doubted our experience and hence it was important from our point of view that our position was clarified.


Penned in haste

Must dash

Re: Cash is Tax Assessed - Opportunity
 

I think you'll probably find that we don't tend to disagree on the technical issues ... I'm hard pressed to recall a difference of views on technical points.

Rather, our exchanges tend to relate to the strategy each of us takes in providing advice, the implementation of such strategies as are appropriate, and the manner these are conveyed on this forum.

Best regards.

Re: Cash is Tax Assessed - Opportunity
 

I thought Alans question perfectly reasonable bearing in mind the ATO advice from their warnings section:


At least Alan makes clear points unlike yours.