Nogo

From earlier posts I believe the following to be the case but would like to test with others with more experience of the Australian system.

I have forward bought $A with HIFX at 2.40. If when I become tax resident in Australia the exchange rate is $2.60 can I claim the loss as on offset against my assessable income for the current tax year?

Presumably this would only apply if the cash was transferred after becoming tax resident? If transferring before then no offset would be available?

Conversely if the Australia exchange rate is $2.20 on residency I would have to include the “profit” as assessable income?

Regards

Don

The strike point is the day you become tax resident, not the day you bought the asset. Ie you own assets at their market value on the day that you become tax resident. It's the capital gains after that which matter.

wmoore

I don't understand According to HIFX today's rate is 2.56. You've asked them to wait 'til the rate drops?

Don

Probably fixed contract back in March

Nogo

Yes the contract was done earlier this year. So the fact that I bought A$ would mean that there would be no change in the value so no tax issue?

An interesting point though is that with a forward contract I have only made a deposit against the value and not paid for it yet. So if the value date (when I actually buy the currency) occurred after residency my capital is still in GBP at the strike date. So I could make a taxable loss or gain depending on the exchange rate at the value date compared with that on the strike date?

Perhaps this is one for Alan Collett to comment on.

Don

Not sure where you stand with regard to UK taxation. I would imagine that you have not made a capital loss/ gain as far as UK tax is concerned until you converted AUD back into GBP (and whilst you are resident in the UK). You don't seem to plan to do this so safe to ignore.

With regard to Australian taxation, you currently own AUD (or will do at contract completion). The fact that the AUD/ GBP exchange rate moves for or against you by the time you get to Australia will not IMHO create a gain or loss in AUD terms. So nothing to worry about there either.