Alan Collett

Recently published Australian Taxation Office Interpretative Ruling is here ...

If you're not sure what this is all about - request the Foreign Investment Fund Rules tax factsheet from here:
http://www.collettandco.com/factsheet.cfm

Best regards.

Nogo

This implies that peps/isas worth less than $50000 are not taxed. Is this correct? If so does this apply to cash isas as well as equity based isas?

Alan Collett

Your reading of the implication isn't correct ... you need to look at the total value of your (and your "associates'") FIFs in considering the $50,000 exemption ...

Best regards.

JAJ

Alan - as far as I know a cash ISA should not be considered an FIF, although the interest is of course fully taxable in Australia.

Jeremy

Alan Collett

I'd not be so sure about that actually, Jeremy - an ISA is an investment held under a trust arrangement so it would seem to be caught by the definition of a FIF ("any foreign company or trust").

However, being simply a cash deposit there wouldn't be any growth in the underlying capital sum, so the only assessable amount would be the interest received on the deposit.

Given that a cash ISA is a FIF though, I believe it would have to be considered in looking at the "small investor exemption."

Best regards.

JAJ

There's little tax benefit in keeping an ISA anyway once resident in Australia.

The one point I would make about any kind of tax planning on ISA/PEP/pensions is consider the options open if you subsequently want to return to the UK (as a suprising number of people seem to do) *or* move on to a third country (eg New Zealand).

Many UK investments - such as pensions - can't be recovered if you decide to transfer them to Australia, and later want to move back to the UK.

There is also the question of whether you want all your financial eggs in the one currency basket - many past UK emigrants to South Africa have discovered the perils of this.

As Alan would probably agree, tax is only *one* of the important factors to consider.

Jeremy

Wol

>>As Alan would probably agree, tax is only *one* of the important factors to consider.<<

The problem in the real world is that, if you take literally EVERYTHING into account the permutations are so mind-numbing that there is paralysis by analysis (to quote a golfing mantra!)

At some stage you have to bite the bullet and make up your mind whether you are emigrating or not.

WRT PEPs and ISAs, so far as I am aware they are just "foreign" investments like everything else, once you become tax resident. The UK's tax treatment becomes irrelevant - just makes it a bit simpler since you don't have to reclaim tax paid as you would with any other investment.