cookiestar

When we make the move over to Australia, we will have a not inconsiderable amount of money to transfer over - about £150k (the equity from our flat here)

We'll probably use something like Ozforex/Hifx to do the transfer to an Australian account that we can open from the UK. The money will then stay in the account until we complete the purchase of a house in QLD.

However, I'm curious to know if this money will be subjected to any tax, and if so at what level? We'll be over on a PR visa (all going well!), and I understand we'll need to apply for a TFN number as soon as we get there.

Is there anything else I need to know?

stephen elaine

Hi Cookie

You will pay 10% tax until you get your TFN you will also need to start thinking about opening a trading account to exchange your £ to Oz $.

Hope this helps

cookiestar

Thanks. Will that 10% tax be refundable? Have you got some links to info about this I can have a read of ?

stephen elaine

Try Wespac website or any other Oz banking site, all the information you require will be available there.

carlap

Hi, I am no expert, but I think you will find you will be subject to 46.5% tax on money in an Oz bank until you have a TFN. When you have a TFN you will not be deducted tax by the bank, so you get all interest until year end when you pay tax on it in Oz.

Here are statement descriptions from our westpac account
GROSS INT 64.08 TAX 46.50% 29.00 NET INTEREST
Next month with TFN - plain and simple
INTEREST PAID

I am also sure that you can reclaim the higher tax paid at year end (but you will of course have to pay some at a lower rate).

The 10% tax (I assume this is what stephen elaine were referring to) is what you get deducted (by default) by the UK bank if your money is left there (which can be offset against Oz tax at year end).

Lots of threads on here, sorry no specific links

Windsor2

Hi there Cookiestar

Obviously individual circumstances will have a direct impact on what you can do but hopefully the following will help. You might want to consult the experts - Prism Xpat for example.

If you move your funds at the same time of your move there should be no direct tax on the funds entering Australia. However, should you delay the transfer of your funds, for example due to a weak pound, Australia does have Foreign Exchange Taxation which could impact a subsequent transfer. It simply taxes any gain on the exchange rate from entry into Australia to the time the transfer is made. Australian tax advice should be sought should delay a transfer of funds after entering Australia.

Best Regards

Mark Bodega
Director - HiFX

chilliman

You can reclaim, I got stung with the withholding tax & had to complete a tax return at the end of the year to get the money back. Bit of a pain but do have a TFN now!

cookiestar

Thanks very much, in particular to you Mark. I may have more questions closer to the time, but the intention will be to transfer the money at the same time as we move. Very useful to know.

With regards timescales for getting a TRF number, how long does that take? Is it pretty quick?

louie

There do seem to be a lot of misconceptions about bank accounts, TFNs and tax.

If you are a non-resident (and the banks work on the basis that you are a non-resident if you give them a non-Oz address) banks should withhold 10% tax from your interest regardless of whether you have/give them a TFN or not. Interest earned whilst you are a non-resident is not taxable in Oz, so you cannot claim it back when you become a resident, nor should it be included in your Oz tax return. It is taxable in the UK if you are resident in the UK. The 10% tax credit can be set against your UK liability but cannot be repaid to you by the UK Revenue.

If you are resident and do not have a TFN, tax will be deducted at source from the interest at 46.5% (top rate of tax plus medicare levy). This should be repaid by the bank if you give them a TFN before the end of the tax year. If not, it is taken into account when you do your tax return and the vast majority of people will get some of the tax back.

If you are resident and give your bank a TFN they will not deduct tax at source. You then pay over your tax on that interest as part of your annual tax liability calculation (or it is deducted from your repayment if you are due one).

cookiestar

Thanks louie! For this bit in particular.

Keith Moon

Great post, thanks very much, its nice to see true facts rather than guesstimations made by people who have some kind of asssumption!

Jules Europe

Man didn`t know you were still alive Maybe John Bonham is out there somewhere as well

lastone

Hi Mark

We've tranferred a significant sum through yourselves already (excellent service - enough ass kissing?).

Anyway, is the tax on the difference in exchange rate set at a level or does it fluctuate.

I'm asking this question due to an alright-ish offer on our house and we'll be entering OZ on the 14th of Jan so the exchange rate should be low, unfortunately. I don't want to be walloped in tax if it's a high rate.

ABCDiamond

I have just read a few replies, not all, but want to clarify something:

• You will NOT pay any tax on the £150,000 itself.

• You may pay tax on any interest that it earns, whilst in an Australian account, depending on your total taxable income in the year.

• Any tax that you do pay, before you lodge your TFN with the bank, will be included in your annual tax assessment and refunded if you have overpaid anything.

With a sum as large as yours, the Banks can offer an excellent FX rate, if pushed. I used HSBC UK to HSBC Aus for mine, and they beat all others at the time.

ABCDiamond

Technically, any capital gain made by holding your money in a foreign currency, once you become resident, will be added to your normal annual income, and taxed at normal income tax rates.