Pommie Granite

Hi all,

Would appreciate any advice please...with so many questions!!!!

I am a PR in Oz and I now wish to return some funds back to England.

Do you think the ATO and Inland Revenue would want to know about this?

I guess I would have to declare any interest income if I leave in a UK bank.

What if I bought some stocks in England (with no dividends...therefore no income)...would I still have to declare them?

Do you think a UK broker allow this as I would no longer be a UK resident?

The truth is that I want to send it to take advantage of the exchange rate...and bring it back at a later date when the fx rate is closer to $2.60

Thanks in advance

PG

Grayling

The ATO will be very interested.

You are liable for tax on your worldwidwe income.

Annual growth of investments is also considered as income.

G

Swerv-o

I'd be interested to know the answers to this. I have been thinking along much the same lines. The exchange rate is now better than when I exchanged, so a theoretical pond profit could be realised already. It also looks like the US$ is likely to weaken further, and thus bring the rate even more in our favour for buying sterling by streangthening the AU$.

Was thinking about stashing my savings back in the UK, wait for a better return rate, and cash in on the profit. What taxation considerations should we be aware of, beyond tax on interest earned? Could the return profit be considered a capital gain, or does this take us back to the subject no-one should mention - tax on Forex gains?

S

Grayling

If you try and move money around to take advantage of exchange rates you are also liable for tax on forex gains.

Take advice.

G

Swerv-o

It stands to reason that you would, but at what rate? Your marginal tax rate for earned and unearned income, or at the capital gains rate?

I will do some digging around before making any decisions...

S

Grayling

Not sure.

As far as I know it is also counted as income and taxed accordingly but someone may know better.

It can make a big difference.

G

Pommie Granite

Thanks Grayling but..

Isn't annual growth of investments is considered income if it is the nature of one's business i.e day trader.

My investments here in Oz aren't considered as income, only should I sell my investments and realise a capital gain

Can't surely be both income AND capital gains.

So doesn't the same apply to offshore investments?

Swerv-o

There was a long debate that raged here for many weeks about the ins and outs of forex gains. Some believe they attract capital gains, others income rates and others no tax at all due to the description in the Tax Pack.

I think this needs to be cleared up before any decisions can be made...

S

Grayling

Any growth on FIFs are taxed as income as far as I know. There is a tax free limit of $50000 but once you hit this limit you are taxed on the lot

This really is an area where professional advice is worthwhile....I also have a pretty large sum to invest but intend to take expert advice forst.

G

Grayling

This may help if you can understand it all

http://www.ato.gov.au/individuals/co...tent/66277.htm

G

adriang

one thing you might want to look at, is to get an off shore investment. I've got one that is with Royal Skandia, held on the Ilse of Man. Tax free, and the Isle of Man constitution means that they will not divulge any personal details to any other government. I make the monthly payments with my credit card, so there is not paper trail, and then when I want the money, a transfer into a bank account of my choice. (I think it is also possible to access the money with a debit card).

I set one up about 10 years ago when I was living in Holland, and it was in Sterling, and the only downside is that is it not possible to change the currency, which I wanted to do when the Euro came in. So I cashed it in (not hassles), and then started up a new one in Euros. Now I am in OZ, I'm thinking about cashing that one in, and dumping the contents into my Super fund.

I set mine who with a company specializing in working with ex-pats called Temple Bar. They are pretty shocking to work with, and would never recommend them. Next time I start on, I'll deal with them direct.

When I did a bit of googling, I found that most of the main, well known banks have similar off-shore, tax free schemes, so they are all very kosher..

JAJ

Complex rules. Generally, transactions in foreign currency are capital in nature. In theory foreign currencies are not exempted from capital gains tax but no-one seems to know the calculation rules for a pooled asset like this.

However if you are trading so much that the ATO might feel you had a currency trading business, this could be subject to income tax.

And there are special (and complex) rules for large corporations that in theory could apply to everyone but finding someone in your average ATO tax office who knows much about these rules may be easier said than done.

Not many accountants will know these rules inside out either.