rab

My mother sadly passed away in March in UK and we are currently sorting out the settlement of her estate. We will probably receive the proceeds in September.

I live and work full time and own a house here in SA. If I import the money to Australia does anyone know if I will have to pay capital gains tax or any other tax here?

thanks if you reply

rab

rab

and by the way i know the exchange rate is currently fantastic but not so good if you are moving south. I am seriously thinking of going home to UK, is there any tax advantage if I do and leave the money there and just sell my house here and go before the exchange rate deteriorates?

Vicky88

There is no inheritance tax in Oz so you should be ok.

Eastend Girl

You'll be taxed on any bank interest earned but not sure if there are any other charges though

pompeyblonde

First sorry to hear you lost your mum.

Second, I think if you are seriously planning to return you may be better leaving the money there, exchange rate is awful and you will also be charged to move it over. Just my thoughts.

Pollyana

If you can afford to, leave the money in a UK bank for now - move it later, or as you need it.

JAJ

Australia has no inheritance tax. If you inherit assets (any UK Inheritance Tax is levied on the estate, not beneficiary) there is no immediate tax to pay, however future income from the asset is taxable in principle, as are future capital gains.

As a broad principle. Detail, as always, will be much more complex and will depend on whether you are a temporary or permanent resident.

rab

Thanks all for your replies and those kind words too. It is sad of course and bereavement itself is even more difficult to deal with as a migrant.

All 3 of us (me, wife and toddler) are dual citizens, with blue and red passports. We are entirely taxed here. We are lucky that we can afford to leave the money in UK.

To be honest we are more likely to want to go back to UK than wait for the exchange rate to improve and stay here. That sort of a decision is a lot more fundamental than being just about tax.

I just wanted to check that we won't be double taxed in any way.

But there's one other question. Do I lose either of my tax free thresholds? In other words I will continue to be taxed here while I work here, but will I get any nil rate band in the UK on the first part of my future income there, or will I lose that and get taxed on every penny I earn of (mum's) house rent or interest?

I appreciate it if you have anything else to add.

rab

ozhappy981

If you continue to live and work in Australia but leave the money from your inheritance in a UK bank account ...

In the above scenario you are not liable to any UK tax on the UK bank interest. However, UK banks deduct tax automatically from bank interest until you inform them you are not liable. For that, you need to send form R85 to your bank (which tells them you are not liable to UK tax).

Somewhere on your bank's website will be the form (just put R85 in the "search" box and it should pop up). You can also downoload it from the UK taxman's website: www.hmrc.gov.uk

Once you've sent form R85 to your bank, they will pay all interest to you gross.

At the end of the Australian tax year, you declare the UK interest on your Australian tax return under "foreign income". If you were a bit slow in sending in form R85 and you ended up having some UK tax deducted from your UK interest, you declare that on your Aus tax form as well.

None of the above has any effect on your Aus tax free earnings amount or on your UK tax situation when you at some point move back to the UK.

If you are renting out your Mum's house and you do this through an estate agent who collects the rent for you, looks after the house etc, then the estate agent also has a form for you where you declare you are not liable for UK tax.

When you come to do your Aus tax return, you declare the rental income less allowable deductions again under "foreign income".

For the first Aus tax return after all of this has happened, you might want to get a tax agent to do it for you. Just to make sure you claim all the allowable deductions and get it all into the correct boxes in your tax return so you don't pay more tax than you have to.

One last thing: Before you dispose of all your Mum's things, search for the paperwork on when your Mum bought the house and how much she paid for it and keep that in a safe place. This will be needed when you come to sell the hosue for the capital gains tax calculation.

louie

No; you are only liable to tax on any gain you make ie the increase over the probate value when you inherit it. So you just need to know probate value.

markntracy

Thanks for that information it was really useful especially as so many people are putting off transfering money until the rate HOPEFULLY inproves.

One thing that crossed my mind however is whether as a PR in australia,are your savings are still covered by the british bank guarantees.

Mark and Tracy

Red_V_Roger

Abbey refused to accept out R85 forms and told is instead that we could put the money in one of their tax free offshore accounts. Decided it wasn't worth the hassle of changing, so what UK tax we pay on it, we declare against the interest made on foreign investments on the Aus tax return.

As they don't double tax, you don't have to pay Aus tax on what you have already paid tax on in the UK.

rab

Fantastic info everyone many thanks, especially OzHappy, thanks.

I got some news today that the valuation of the estate is a lot less than we thought. I don't have the detail but I guess it's the house valuation and the equities that have suffered.

I have read back through this thread and it is all very factual. Can I just say that when and if you receive money from you parents' estate it is such a fantastic gift, completely unnecessary but very welcome. I am a later than average father and at 45 years old I now have a 19 month old daughter and my every wish is to make life brilliant for her and ease her way into life through whatever my wife and I can do as we grow older and care for her in every way including financially.

Good night,

rab

jandal

I manage my tax on line and one of the questions on the forms is have you received money as gifts etc. It would seem that your inheritance would be included in your annual taxable income and you would be taxed accordingly.

JAJ

A gift is not income and any interpretation that it is should be challenged as strongly as possible. See also:
http://www.ato.gov.au/youth/content....tent/48101.htm

"Amounts you receive as gifts or win as prizes are not usually treated as income."