Tax on UK Savings & Delaying Money Transfer
Jul 23rd 2009, 9:33 pm
#1
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Tax on UK Savings & Delaying Money Transfer
Hello to all, we leave for Sydney at the end of August and are in the process of selling our house. With the money realised from this sale (
) am I correct in my assumption that if we transferred the funds to Australia upon completion this would be tax free. However, with the exchange rate much less than we hoped, if we decided to wait and see whether there was any rise during the next year and deposited the money in a UK savings account, what are the tax implications other than the usual tax on interest earnt we would declare in Australia. For example, say the exchange rate is $2.00/£1 when we arrive in Aus in September but decided to transfer our funds if the exchange rate peaked at $2.25/£1 sometime next year?
As an aside, cannot stress how helpfull this forum has been in enabling us find answers to soooo many questions!!
) am I correct in my assumption that if we transferred the funds to Australia upon completion this would be tax free. However, with the exchange rate much less than we hoped, if we decided to wait and see whether there was any rise during the next year and deposited the money in a UK savings account, what are the tax implications other than the usual tax on interest earnt we would declare in Australia. For example, say the exchange rate is $2.00/£1 when we arrive in Aus in September but decided to transfer our funds if the exchange rate peaked at $2.25/£1 sometime next year?As an aside, cannot stress how helpfull this forum has been in enabling us find answers to soooo many questions!!
Jul 23rd 2009, 10:58 pm
#2
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Re: Tax on UK Savings & Delaying Money Transfer
If you sell your house after you arrive and before you buy your 1st house in Aus you are exempt from CGT (assuming you do this within 6 years) plus you then have 12 months to transfer the money for it to be considered part of the same (tax free) transaction (i.e. selling the house).
Last edited by MartinLuther; Jul 23rd 2009 at 11:05 pm.
Jul 23rd 2009, 11:37 pm
#3
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Joined: Dec 2003
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Re: Tax on UK Savings & Delaying Money Transfer
Yes, as far as I know, you would be liable for Australian income tax on any forex gains.
Jul 23rd 2009, 11:45 pm
#4
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Re: Tax on UK Savings & Delaying Money Transfer
If you sell your house after you arrive and before you buy your 1st house in Aus you are exempt from CGT (assuming you do this within 6 years) plus you then have 12 months to transfer the money for it to be considered part of the same (tax free) transaction (i.e. selling the house).
Jul 24th 2009, 7:25 am
#5
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Re: Tax on UK Savings & Delaying Money Transfer
Then your money (if still in the UK) is treated as an asset and is in theory valued in $s on the day you arrive meaning that any increase in the value may be subject to gains tax (foreign or capital). Best thing in this case is to bring it in from an account you opened before 1985 (if you have one).
Jul 24th 2009, 7:57 am
#6
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Re: Tax on UK Savings & Delaying Money Transfer
If you sell your house after you arrive and before you buy your 1st house in Aus you are exempt from CGT (assuming you do this within 6 years) plus you then have 12 months to transfer the money for it to be considered part of the same (tax free) transaction (i.e. selling the house).
Jul 24th 2009, 8:02 am
#7
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Re: Tax on UK Savings & Delaying Money Transfer
If the transfer is within 12 months of the sale.
Jul 24th 2009, 8:04 am
#8
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Re: Tax on UK Savings & Delaying Money Transfer
Cool, good to know! We are hoping that that is the case, if not we might have to weigh up what we'll "lose" on the exchange rate and what the tax would be if we didn't transfer within that time. Any ideas how much the tax would be?
Jul 24th 2009, 9:54 am
#9
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Posts: 375
Re: Tax on UK Savings & Delaying Money Transfer
Each individual has their own tale, their own situation? With me, mine is like this; all i can say is i will be transferring my cash when i can, when i have the availability of the cash in my bank to transfer. If between now, well, and when i land and when the cash becomes available, the exchange rate hits what i call a rate which is too attractive to turn down, then i will do a forward contract up to a maximium of a year, only, and i say only if i know my cash will become AVAILABLE within that year time frame?
My cash is tied up in a term bond, i cannot access it at the time of entering Australia, so have to wait until the bond matures, once it matures, i will transfer it over to Australian dollars. But it does not stop me from entering into a forward contract prior to this date.
Regarding tax on Forex gains, a very very grey area, i have approached a tax specialist, here in the UK, you make your own decisions on what and how you do it. But one thing you do not do, like many state on here is, assume yes all your Forex gains are taxable, because each situation is unique, each individual is unique, you argue your own case as an individual IF the ATO want to ask any questions, and i re-iterate IF the ATO ask?
But do not assume for one moment Forex gains tax for an individual who is transferring their life savings across to an Australian bank account for the purpose of deciding they are staying in Australia for good, is taxable, that there stands a generic tax band for any gains, there is not, i re-iterate, there is not.
Worse come worse, and to me this is by the by, but if you move to Australia, and the exchange rate is 2:1, then it hits 2.7:1 in say two years time after initial entry, on every £100k sterling you make £70,000.00, then would you not be better off taking this gain, paying say 20% tax on this gain, so $14,000.00. As you are still $56,000.00 better off for each £100k sterling transferred at the time of the rate hitting 2.7:1.
Take you own advice, and share, i did, i have, Sooty.
My cash is tied up in a term bond, i cannot access it at the time of entering Australia, so have to wait until the bond matures, once it matures, i will transfer it over to Australian dollars. But it does not stop me from entering into a forward contract prior to this date.
Regarding tax on Forex gains, a very very grey area, i have approached a tax specialist, here in the UK, you make your own decisions on what and how you do it. But one thing you do not do, like many state on here is, assume yes all your Forex gains are taxable, because each situation is unique, each individual is unique, you argue your own case as an individual IF the ATO want to ask any questions, and i re-iterate IF the ATO ask?
But do not assume for one moment Forex gains tax for an individual who is transferring their life savings across to an Australian bank account for the purpose of deciding they are staying in Australia for good, is taxable, that there stands a generic tax band for any gains, there is not, i re-iterate, there is not.
Worse come worse, and to me this is by the by, but if you move to Australia, and the exchange rate is 2:1, then it hits 2.7:1 in say two years time after initial entry, on every £100k sterling you make £70,000.00, then would you not be better off taking this gain, paying say 20% tax on this gain, so $14,000.00. As you are still $56,000.00 better off for each £100k sterling transferred at the time of the rate hitting 2.7:1.
Take you own advice, and share, i did, i have, Sooty.
Jul 24th 2009, 10:51 am
#10
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Posts: 9,316
Re: Tax on UK Savings & Delaying Money Transfer
It'll depend on how much you earn. It's just added on top. Treat it like income. 30% is usually a good estimate. If you're a higher earner then you'll be looking at more. Also if you think it'll push you into the next tax bracket then you might want to consider shoving some into super.
Jul 24th 2009, 10:53 am
#11
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Joined: Jun 2005
Posts: 9,316
Re: Tax on UK Savings & Delaying Money Transfer
Each individual has their own tale, their own situation? With me, mine is like this; all i can say is i will be transferring my cash when i can, when i have the availability of the cash in my bank to transfer. If between now, well, and when i land and when the cash becomes available, the exchange rate hits what i call a rate which is too attractive to turn down, then i will do a forward contract up to a maximium of a year, only, and i say only if i know my cash will become AVAILABLE within that year time frame?
My cash is tied up in a term bond, i cannot access it at the time of entering Australia, so have to wait until the bond matures, once it matures, i will transfer it over to Australian dollars. But it does not stop me from entering into a forward contract prior to this date.
Regarding tax on Forex gains, a very very grey area, i have approached a tax specialist, here in the UK, you make your own decisions on what and how you do it. But one thing you do not do, like many state on here is, assume yes all your Forex gains are taxable, because each situation is unique, each individual is unique, you argue your own case as an individual IF the ATO want to ask any questions, and i re-iterate IF the ATO ask?
But do not assume for one moment Forex gains tax for an individual who is transferring their life savings across to an Australian bank account for the purpose of deciding they are staying in Australia for good, is taxable, that there stands a generic tax band for any gains, there is not, i re-iterate, there is not.
Worse come worse, and to me this is by the by, but if you move to Australia, and the exchange rate is 2:1, then it hits 2.7:1 in say two years time after initial entry, on every £100k sterling you make £70,000.00, then would you not be better off taking this gain, paying say 20% tax on this gain, so $14,000.00. As you are still $56,000.00 better off for each £100k sterling transferred at the time of the rate hitting 2.7:1.
Take you own advice, and share, i did, i have, Sooty.
My cash is tied up in a term bond, i cannot access it at the time of entering Australia, so have to wait until the bond matures, once it matures, i will transfer it over to Australian dollars. But it does not stop me from entering into a forward contract prior to this date.
Regarding tax on Forex gains, a very very grey area, i have approached a tax specialist, here in the UK, you make your own decisions on what and how you do it. But one thing you do not do, like many state on here is, assume yes all your Forex gains are taxable, because each situation is unique, each individual is unique, you argue your own case as an individual IF the ATO want to ask any questions, and i re-iterate IF the ATO ask?
But do not assume for one moment Forex gains tax for an individual who is transferring their life savings across to an Australian bank account for the purpose of deciding they are staying in Australia for good, is taxable, that there stands a generic tax band for any gains, there is not, i re-iterate, there is not.
Worse come worse, and to me this is by the by, but if you move to Australia, and the exchange rate is 2:1, then it hits 2.7:1 in say two years time after initial entry, on every £100k sterling you make £70,000.00, then would you not be better off taking this gain, paying say 20% tax on this gain, so $14,000.00. As you are still $56,000.00 better off for each £100k sterling transferred at the time of the rate hitting 2.7:1.
Take you own advice, and share, i did, i have, Sooty.
Jul 25th 2009, 10:46 pm
#13
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Joined: Apr 2007
Location: Brisbane
Posts: 199
Re: Tax on UK Savings & Delaying Money Transfer
Then your money (if still in the UK) is treated as an asset and is in theory valued in $s on the day you arrive meaning that any increase in the value may be subject to gains tax (foreign or capital). Best thing in this case is to bring it in from an account you opened before 1985 (if you have one).
Is there a specific link - gets a bit bogged down reading it on the ato site. I have seen stuff about rules and regs for cgt and certain dates.
Have you done it and got the nod 'officially' from ato.
Plus, being thick, not sure what you meant about 'cutting your own throat to beat the tax man'.
Jul 26th 2009, 11:15 am
#14
Banned
Joined: Aug 2007
Posts: 375
Re: Tax on UK Savings & Delaying Money Transfer
Like i said in my post, a very very grey area, if you are unsure ask the ATO for a hearing prior to moving, call the ATO, let us know how you get on? Me, i have done my research, and outlined my answers on my previous post.
Sooty.
Jul 26th 2009, 11:24 pm
#15
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Joined: Jun 2005
Posts: 9,316
Re: Tax on UK Savings & Delaying Money Transfer
Do you have to get an ATO ruling for this? Otherwise do you declare it somehow, or just not put it in your tax return. We have an old account, but can only transfer £5k a day (or something rubbish). Real pain, but worth it to avoid tax. Just not sure how to go about making sure it is water tight.
Is there a specific link - gets a bit bogged down reading it on the ato site. I have seen stuff about rules and regs for cgt and certain dates.
Have you done it and got the nod 'officially' from ato.
Plus, being thick, not sure what you meant about 'cutting your own throat to beat the tax man'.
Is there a specific link - gets a bit bogged down reading it on the ato site. I have seen stuff about rules and regs for cgt and certain dates.
Have you done it and got the nod 'officially' from ato.
Plus, being thick, not sure what you meant about 'cutting your own throat to beat the tax man'.
It is always worth getting a ruling where the rules are confusing. Some would say get an accountant in this case. I did and it turned out to be a bad decision.