British Expats

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-   -   UK financial help (https://britishexpats.com/forum/australia-54/uk-financial-help-339302/)

touchingcloth Nov 24th 2005 11:24 am

UK financial help
 
Good afternoon all, :)

For all those in the know.....

I am hopefully moving to OZ on a PR.
My parents have said that yearly they help me by contributing financially.
Obviously, I don't wan't to pay any tax on this.

I have a UK bank account, which has been open since before July 2003.

Question: My parents will deposit in my UK account over the next few years. When I transfer the funds to my Oz bank , will I have to pay any income tax or Capital gains tax?

ie. what is the Oz tax ruling on loans from overseas parents?(which I may not pay back)

what if it was my money in the uk?

Whats the best way to avoid CGT?

Thanks in advance

TC

CreditCardKing Nov 24th 2005 12:48 pm

Re: UK financial help
 

Originally Posted by touchingcloth
Good afternoon all, :)

For all those in the know.....

I am hopefully moving to OZ on a PR.
My parents have said that yearly they help me by contributing financially.
Obviously, I don't wan't to pay any tax on this.

I have a UK bank account, which has been open since before July 2003.

Question: My parents will deposit in my UK account over the next few years. When I transfer the funds to my Oz bank , will I have to pay any income tax or Capital gains tax?

ie. what is the Oz tax ruling on loans from overseas parents?(which I may not pay back)

what if it was my money in the uk?

Whats the best way to avoid CGT?

Thanks in advance

TC

Your parents can give u as much money as they like, there are no tax implications, they could give you a million pounds per week if they could afford it, it is their money. If they are giving it to you to reduce their assets to claim benefits then thats not allowed. My parent give me money sometimes and they pay it into a Nationwide Current Account, Nationwide do not charge the usual currency conversion fee 2.75% like most other banks. This account is a must if moving to OZ. You could always get a UK credit card aswel and pay your bills in OZ with this and have your parents pay this off in the UK. Nationwide Credit Card is best for this.

touchingcloth Nov 24th 2005 1:38 pm

Re: UK financial help
 

Originally Posted by CreditCardKing
Your parents can give u as much money as they like, there are no tax implications, they could give you a million pounds per week if they could afford it, it is their money. If they are giving it to you to reduce their assets to claim benefits then thats not allowed. My parent give me money sometimes and they pay it into a Nationwide Current Account, Nationwide do not charge the usual currency conversion fee 2.75% like most other banks. This account is a must if moving to OZ. You could always get a UK credit card aswel and pay your bills in OZ with this and have your parents pay this off in the UK. Nationwide Credit Card is best for this.


Thanks for the reply.

But don't you have to declare where this money is coming from on your Oz tax return? e.g if my parents deposited £100k into my account in the UK, and I transferred it over.

I read somewhere that my UK bank account would have to have been opened from before July 2004 or I would have to pay income tax?

Surely if the fx moves in my favour, then wouldn't i have to pay tax on the gain?

TC

elksa Nov 24th 2005 1:53 pm

Re: UK financial help
 

Originally Posted by CreditCardKing
Your parents can give u as much money as they like, there are no tax implications, they could give you a million pounds per week if they could afford it, it is their money. If they are giving it to you to reduce their assets to claim benefits then thats not allowed. My parent give me money sometimes and they pay it into a Nationwide Current Account, Nationwide do not charge the usual currency conversion fee 2.75% like most other banks. This account is a must if moving to OZ. You could always get a UK credit card aswel and pay your bills in OZ with this and have your parents pay this off in the UK. Nationwide Credit Card is best for this.

Thats not true because your liable to capital gains tax on any money given to you. Somebody can't just give you £100,000 not even immediate members of your family. You would have to declare this gift to the tax office and they would charge you capitial gains tax on some of the money. I think the current tax limit for capital gains is around £8000 any more than this amount given to you in any tax year will incur Capital Gains Tax.

touchingcloth Nov 24th 2005 1:56 pm

Re: UK financial help
 

Originally Posted by elksa
Thats not true because your liable to capital gains tax on any money given to you. Somebody can't just give you £100,000 not even immediate members of your family. You would have to declare this gift to the tax office and they would charge you capitial gains tax on some of the money. I think the current tax limit for capital gains is around £8000 any more than this amount given to you in any tax year will incur Capital Gains Tax.

Yes..but this £8000 limit is a UK limit.
Do you know what the OZ limit is?

and how can it be proven that it isn't your money in the first place i.e moeny which you didn't move over when you emigrated and instead left in a a UK bank?

OzTennis Nov 24th 2005 2:05 pm

Re: UK financial help
 
I appreciate you are looking for a quick answer but often such matters are complicated and sometimes you have to pay for a professional (in other words I'm not exactly sure what the position is!)

http://www.collettandco.com/contact.cfm
http://www.gomatilda.co.uk/
http://www.ato.gov.au/

Fact Sheets available at the first 2, the 3rd is the definitive source.

OzTennis :)

CreditCardKing Nov 24th 2005 3:00 pm

Re: UK financial help
 

Originally Posted by touchingcloth
Thanks for the reply.

But don't you have to declare where this money is coming from on your Oz tax return? e.g if my parents deposited £100k into my account in the UK, and I transferred it over.

I read somewhere that my UK bank account would have to have been opened from before July 2004 or I would have to pay income tax?

Surely if the fx moves in my favour, then wouldn't i have to pay tax on the gain?

TC

If you earn any interest on your money, you should really inform the Australian Tax Office and declare this on your Australian Tax return, but really there is no way that they can find out that you have money in the UK.

CreditCardKing Nov 24th 2005 3:07 pm

Re: UK financial help
 

Originally Posted by elksa
Thats not true because your liable to capital gains tax on any money given to you. Somebody can't just give you £100,000 not even immediate members of your family. You would have to declare this gift to the tax office and they would charge you capitial gains tax on some of the money. I think the current tax limit for capital gains is around £8000 any more than this amount given to you in any tax year will incur Capital Gains Tax.

Rubbish, its up to me what I do with my money, once I have paid my income tax on my salary I can burn my money if I wanted to, or if i decide to buy my kids a house then i can do that or i could gamble it all away. As far as I am aware there are no restrictions with what i can spend my money on unless I deliberately gave it all away so that i could claim benefits. There is no way that the tax office could prove that the money was not yours or that someone owed it to you.

touchingcloth Nov 24th 2005 3:10 pm

Re: UK financial help
 

Originally Posted by CreditCardKing
Rubbish, its up to me what I do with my money, once I have paid my income tax on my salary I can burn my money if I wanted to, or if i decide to buy my kids a house then i can do that or i could gamble it all away. As far as I am aware there are no restrictions with what i can spend my money on unless I deliberately gave it all away so that i could claim benefits.

Good point.

Can anyone enlighten us on the ATO's view on CG on international gifts?

TC

CreditCardKing Nov 24th 2005 3:47 pm

Re: UK financial help
 

Originally Posted by elksa
Thats not true because your liable to capital gains tax on any money given to you. Somebody can't just give you £100,000 not even immediate members of your family. You would have to declare this gift to the tax office and they would charge you capitial gains tax on some of the money. I think the current tax limit for capital gains is around £8000 any more than this amount given to you in any tax year will incur Capital Gains Tax.

In America there is a Gift Tax.

If you give people a lot of money or property, you might have to pay a federal gift tax. But most gifts are not subject to the gift tax. For instance, you can give up to the annual exclusion amount ($11,000 in 2004) to a person, every year, without facing any gift taxes, and without the recipient owing an income tax on the gifts. And you can give up to $1,000,000 in gifts, total, in your lifetime, before you start owing the gift tax.

But I don't think there is such a thing in the UK or Australia, In the UK you can gift anything you like so long as you live for at least 7 years and don't have to be put into a care home paid for by the tax payer within 7 years after you have given the gift otherwise the gift could form part of your estate for the calculation of Inheritence Tax.

touchingcloth Nov 24th 2005 3:56 pm

Re: UK financial help
 

Originally Posted by CreditCardKing
In America there is a Gift Tax.

If you give people a lot of money or property, you might have to pay a federal gift tax. But most gifts are not subject to the gift tax. For instance, you can give up to the annual exclusion amount ($11,000 in 2004) to a person, every year, without facing any gift taxes, and without the recipient owing an income tax on the gifts. And you can give up to $1,000,000 in gifts, total, in your lifetime, before you start owing the gift tax.

But I don't think there is such a thing in the UK or Australia, In the UK you can gift anything you like so long as you live for at least 7 years after you have given it otherwise the gift could form part of your estate for the calculation of Inheritence Tax.

Yes, but on Oz, the impression I get is that just about everything is taxable...worse than the Inland Revenue in the UK!

I can't find anything about gift allowances from abraod anywhere on the ATO website.

TC

Alan Collett Nov 24th 2005 9:38 pm

Re: UK financial help
 
That's because there's no tax on gifts in Australia ...

Issues to consider include your parents' Inheritance Tax position in the UK (the monies given to you would probably be considered to be Potentially Exempt Transfers), income tax on interest earned, and Australia's forex tax provisions if you retain any non-A$ currency as an Aussie tax resident.

Best regards.





Originally Posted by touchingcloth
Yes, but on Oz, the impression I get is that just about everything is taxable...worse than the Inland Revenue in the UK!

I can't find anything about gift allowances from abraod anywhere on the ATO website.

TC



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