tax on money transferred to Australia
 

Hello

Further to the "should we sell the house now or rent it for a bit" debate, does anyone know what the situation is on money transferred from UK to Australia, and where the best place to get advice is?

For example, if we sell our house here and transfer the proceeds to Aus, will we be charged lots of tax? I know in Austalia there is no capital gains tax on the family home, but not sure on situation in UK, or whether Aus will recognise this if the house was abroad.

I've looked at the Australian Tax Office website but its not much help.

Thanks
Zena

Re: tax on money transferred to Australia
 

Hi Zena.

If you are selling your UK property before you arrive in Australia (or even soon after you arrive) and you have occupied it as your main residence for the whole period of time that you have owned it then there shouldn't be a liability to tax in the UK or in Australia.

Hope this helps.

Re: tax on money transferred to Australia
 

Thanks Alan

What would the situation be if we were to sell the house say 12-18 months after moving to Australia, with the house being rented during that time. This is likely to be the situation, as my partner is not keen to "burn his bridges" without experiencing a bit of time in Australia first.

Cheers
Zena

Re: tax on money transferred to Australia
 

Hi again Zena.

Hmm .... starts to get more tricky, as much depends on your personal circumstances.

So far as Australia is concerned, you should work on the basis that the net rental income from your UK property is assessable income in Australia.

Any capital gain arising on the property's value between the date you become a tax resident and the date you sell it will also be assessable, possibly with a 50% discount applying to the gain if you hold the property for more than 12 months after your arrival.

The net rental income will also be taxable in the UK, but you should retain an entitlement to UK personal allowances, which may well eliminate any tax charge on the net rentals, at least in the UK tax year following that in which you leave the UK. In the tax year that you leave the UK you may well have other income which means there could then be tax payable on the net rental income in the UK => you would want to claim relief for the UK tax already suffered on the rental income when completing your Aussie Tax Return.

And UK capital gains tax can be even more complicated ...! I'll be happy to look into your situation in more detail if you mail me directly.

Hope this helps.



Alan Collett
alan-at-gomatilda-dot-co-dot-uk
Registered Migration Agent Number 0102534
and a Fellow of the Institute of Chartered Accountants in England and Wales
http://www.gomatilda.co.uk, and
http://www.collettandco.co.uk

Re: tax on money transferred to Australia
 

    >On 12 Jun 2002 14:20:58 GMT, Zena <[email protected]> wrote: Hello
    >
    >Further to the "should we sell the house now or rent it for a bit" debate, does
    >anyone know what the situation is on money transferred from UK to Australia, and
    >where the best place to get advice is?

Use properly licensed banks, not exchange bureaux to begin with. A lot of money
vanished when Exchange Direct plc collapsed in December 2001.

    >
    >For example, if we sell our house here and transfer the proceeds to Aus, will we be
    >charged lots of tax? I know in Austalia there is no capital gains tax on the family
    >home, but not sure on situation in UK, or whether Aus will recognise this if the
    >house was abroad.

UK has no CGT on the family home either. If you sell at the time of moving to
Australia there will be no tax on transferring the money. If you sell later there
will still be no tax on transfer but there may be an Australian CGT liability.

I would say it would be worth getting some financial advice tailored to your
situation. I'm sure Alan Collett will have something to say on this :)

    >
    >I've looked at the Australian Tax Office website but its not much help.

I'm not convinced it's the most useful Australian government site. A lot of simple
questions are not answered simply, or at all. A section of the site devoted to
answering the typical questions of new and leaving residents would be a good start.

Jeremy