bjbrian

Since I am hoping to move to OZ next year, I have started looking into how this will work out financially.
I have managed to find that OZ has a mean tax regime, but I really want to find out more. Does anybody have any information or can you point me to some good web sites.

Basically the kind of thing I am wanting to know about is what if you keep some investments in UK, what about life insurance and other long term savings, are there any good 'tax efficient investments to be had in OZ, and what issues are there if (you decide to come back to UK!).

Any ideas, experience or sites appreciated.


Brian.

JAJ

ATO - http://www.ato.gov.au
also - http://commerce.flinders.edu.au/tax/

Basically you need professional advice, if the above sites don't help.



Jeremy

Alan Collett

Free tax factsheets here:
www.collettandco.com

Best regards.

NedKelly

I would disagree that it has a mean tax regime.

Top rate in the UK is 40% but then you have to add the NI at 10% making 50%, more than Australia's 47% top rate.

GST here is 10% as opposed to VAT at 17.5% So you pay and extra 7.5% on everything you spend.

Petrol is half the price as we don't pay 85% of every gallon in tax.

Our council tax is about a third of what we paid in the UK and the water is included.

I know it's not as simplistic as that but also the government seem to be more mindful of where the money is spent as opposed to the UK where is seems to go on MP's pensions, handouts to asylum seekers, the Iraq war and into EU coffers to support the French peasant farmers.

AliMay

WE used financial advisors in the UK and now have one in Oz (the UK one was OKish the Oz one seems great). WE have found that, because husband is really busy at work and I am no financial whizz, these guys were essential to help us through the endowment, pension tranfer, life insurance mire. Yes they do cost us money but we feel secure in having the advice. Our Oz advisor has already saved us 1000's of dollars with one simple piece of advice that we would never have thought of. For us the advice was to transfer everything (which has felt quite scary).

Good luck
Ali

Megalania

National Insurance can be much higher - try £2,000 per month (£2204 total employers cost):

Payslip Calculator - UK

Employee: £175.
Employer: £204.
Total: £379; £379 / £2204 = 17.2%

kirsty&al

Hello,

There are no real tax dodges (sorry tax free schemes) in Oz and Oz does, to a certain degree, treat the UK (and other countries) as a bit of a tax haven.

Some points to think about:
- UK Term Life Insurance Polices (endowments) are teated as Foreign Life Policies which are treated as FIFs (see later).
- Benefit on death only polices are not treated as FLPs.
- ISAs and PEPS are treated as FIFs.
- The interest on a cash ISA is treated as normal interest and can be taxed.
- Managed Funds and personal pension plans, including stakeholder pensions, are treated as FIFs.
- FIFs (Foreign Investment Funds): if you and your associates (i.e. family) hold less than $50k then the ATO shows no interest until they payout at which point any profits are taxed. If you have more than $50k then the increase in value is taxed every year (even though you don't see the money).
- There is no CGT tax free allowance although you get a 50% discount on any gains made on assets held for more than 12 months. There is no limit on the amount that can be discounted.
- Insurance Bonds are taxed at 30% regardless of your marginal tax rate and attract no further tax if you hold them for 10 years. So these may be of use if you are a higher tax payer.
- Most (but not all) dividends from Australian shares come with a 30% franking credit, this means that 30% tax has already been paid and you only have to pay (or collect) the difference between 30% and your marginal rate.
- Premium Bond winnings are taxable.
- Gambling winnings are tax free.
- There is no Inheritance Tax
- There is no Gift Tax
- Don't use your kids as a tax dodge, they will be taxed at a higher rate than you.
- Corporate tax rate is 30%. This could be used to protect wealth but you have to make sure that it passes the sole purpose test (i.e. that the sole purpose of the company is to dodge tax).
- Family trusts can be used to spread income around the family but whether this is worth doing will depend on your circumstance. If you have an adult child or disabled child that you are supporting then you can take advantage of their tax allowances.
- You can get some tax advantages from investing in certain types of property and certain industries (forestry and agriculture) but it's not quite up to the tax avoidance potential of investing in Scottish forests.

Generally speaking whether you pay more or less tax in Oz will depend on what you are earning. The Oz taxes are more visible and to most people it appears that they are paying more. Higher earners pay more tax in Oz but for everyone else it is more or less the same.

For the tax years ending in 2004 the tax rate as a proportion of GDP were:
UK 38.3%
Aus 30.9%

Hope this helps
Alistair

bjbrian

Thanks all for the information provided so far.

If anybody has any more to add, perhaps from experience, then I would be most grateful.

Brian.

storerg

Who in Oz did you use?

JAJ

Maybe you were trying to say this, but a term life policy is not necessarily an endowment and does not usually fall within the FIF net if it has no savings element.

In other words cash ISAs are treated like any other bank account - not an FIF.

Jeremy

kirsty&al

That's what I was trying to say. If you have a policy that pays an amount of money if you survive then it is a FLP (and thus a FIF). If you have a policy that only pays out if you die then it is not a FIF.

Regards
Alistair

jumbo

The fact that the adviser received commission ( and trail) on the transfers did not have any bearing on this?