Has anybody advise on tax. If we leave the equity of the house sale in a UK bank account and decide to transfer it when the AUD improves, will we be taxed by either the UK or Oz?

Thanks

You will probably be taxed in Australia. GBP's are a chargeable asset when you move to Australia, and if it increases in value between the date you arrive and the date you convert to A$'s you have a gain that is to be included in your assessable income.

Best regards.

Alan,

Is the senario the same for 457 holders?

Regards,

Ian

Yes, I think so.

If the tax legislation before the Senate had been approved a few days ago it might have been a different story, but it wasn't.

Best regards.

Alan,
In this scenario, what would happen if you only stayed in Australia for five months? Do you then avoid becoming resident in Australia for tax purposes? We intend returning to the Uk after five months, stay here in the UK for a few months before returning to oz permanently next Feb.
Thanks,
Lorrimer

Possibly ... much depends on the quality of your attachments with Australia in those 5 months. If you buy or rent a house, buy a car, etc it is likely to be difficult contending that you aren't tax resident in Australia, and as such you could be tax resident in the UK and in Australia - at which point the "tie breaker" clauses in the Tax Treaty come into play.

Best regards.

What if we are able to sell our house only after 5-6 months of arrival in Aus. Will we then be taxed when we remit this money into Aus?. Is there a time frame within which I must transfer my assets to Aus, to avoid tax?

Nina

First, note that there is no tax on the actual remittance of funds to Australia. You must look at the asset you are selling to determine whether or not you have a capital gain that is assessable in Australia.

So, in the case of your property, if it is worth £200,000 when you move to Australia when the exchange rate is £1 = A$2.60 your asset has a "base cost" of A$520,000.

If you sell it 6 months later for £190,000 when the exchange rate is £1 = A$2.80 your sale proceeds are A$532,000 => you have a gain of A$12,000 that is to be included in your assessable income - irrepective of whether or not you remit the funds to Australia.

Does this clarify the situation?

Hi Alan

Tell me is it generally known that australia has the most awkward incomprehensible and complicated tax system in the world (or am I just thick??)

best regards

I have to say that I think the UK's system is far more complicated than Australia's Yvonne (have you tried to decipher yesterday's Budget announcements?) ... it's just that those who are migrating to Australia see only one side of the equation - and there are similar capital gains tax rules that treat A$'s as chargeable assets if you are tax resident in the UK.

Best regards.

Alan,

Are you serious that I can be taxed in Australia on money sitting in a UK bank depending on currency fluctuations?

Does that mean I can offset Australian tax liabilities against the theoretical effect a strengthening Aussie dollar has on my UK savings.

Cheers,
Bob

Hello Bob.

Yep, a tax liability can indeed arise, but only if you "dispose" of the UK£'s - ie if you convert them to A$'s when they are worth more in A$ terms as compared with the value when you arrive in Australia, or even if you were to transfer the UK£'s to a spouse/partner. If you leave the UK£ funds untouched you (probably) haven't disposed of them and as such there is no exposure to tax in Australia

Sadly it doesn't work the other way in terms of losses that might arise though ...

Best regards.

Hi Alan,

Thanks for the reply. My husband has investments in India - however due to the country's exchane control regulations he is not permitted to remit this money out. Will he be liable for taxes in Aus, for income in India?


Regards
Nina.

Quite probably ... once you are tax resident in Australia income arising anywhere in the world is assessable - the question of whether or not it is remitted to Australia isn't relevant.

This said, I'm not certain as to the situation if your can't remit the income to Australia because of exchange controls - I'd have to review the underlying legislation before I can advise you ... which would mean charging you for my time.

Best regards.