SuperSeagulls

Hi everyone

I was wondering if I am allowed to keep a UK Mini Cash ISA ticking over in the UK, even if I have moved to Australia? As I wont be paying any tax on the interest I earn, is this a bit of a tax dodge? Do I have to declare the interest earnt on my UK ISA on my Australia tax return each year?

Cheers,

SS

marco121068

Unfortunately the Aussie tax man will want his cut. ISA's have no validity as tax shelters in Oz. I don't think it's a problem keeping it - but I'm sure interest earnt during the year will be added to the rest of your income and taxed accordingly.

laneylou

Sorry marco121068 but you can only have a Mini Cash ISA (or any other ISA for that matter) if you are a UK resident. As soon as you move to Oz you will no longer be a UK resident, even though you will still have UK citizenship. Talk to your Bank or Building Society and tell them what you are doing. You will be classed as a "Non-ordinary Resident" and any accounts you leave open in the UK will be tax-free - although that will be an "ordinary account" and not an ISA so will not earn as much gross interest. It is worth talking to the Financial Planner based in your branch - this service is usually free. Depending on the Bank/Building Society you may need to contact the Inland Revenue as well.

Hope this helps.

marco121068

Good point. Forgot about the non resident bit.

Still going to have to declare it in Oz though.

laneylou

At least if the account pays less interest then that's less tax you have to pay to keep John Howard in his Holden Statesman!!!

Or you could take all the money out and put it into an account in Oz. The interest rates are higher. Check out: http://au.pfinance.yahoo.com/banking/ for more info.

JAJ

That is not correct. You cannot make additional contributions to a cash ISA, but you can keep what you have.

As someone else has noted, it's not tax-exempt as far as Australia is concerned but if the interest rate is good, it may be worth keeping (also if you return to the UK, it becomes tax-exempt again).



Jeremy

SuperSeagulls

Thanks everyone

JAJ - does this mean I have to tell the company that holds my ISA that I am moving overseas?

This bit, "You will be classed as a "Non-ordinary Resident" and any accounts you leave open in the UK will be tax-free - although that will be an "ordinary account" and not an ISA so will not earn as much gross interest." sounds interesting. So I wont pay any tax on any interest I earn in my current accounts?

Cheers, SS

CreditCardKing

It is morally wrong to do so but there is no way that the Australian Tax Office would ever find out that you had a bank account or an ISA in the UK unless you informed them. It all depends if you can sleep at night knowing that you are not giving the ATO a slice of the funds that you have worked for in the UK.

marco121068

Hmmm. So you have gone to great lengths to convince the Aussie Government (via DIMIA) to give you a visa (having first confirmed you are of good character).......then go for a bit of tax evasion?

CreditCardKing

I am not saying that I would recommend this, I am just putting forward an opinion. I would doubt that many people would have the option to leave money behind in the UK since the costs of moving countries just about wipes out any money one has.

Techno Freak

This is all very interesting, I had not thought about our ISA's.

We have a stocks and shares ISA which we pay into monthly as the repayment vehicle for our mortgage.

Hypothetically speaking, if we sold the house and paid off the mortgage but left the ISA dormant in the UK, how would we be taxed on it?

The value of the pot would be changing constantly, up and down. It would be unfair to pay tax on its value as the next year it may be worth much less than the previously taxed year ( if you know what I mean? ).

Would it be a case of not paying tax on it yearly but giving the tax man his cut when you cash it in and take the money to Oz?

Which leads on to another thing.....if we go and we take our life savings with us, do we have to pay a percentage of that money straight to the taxman when we get there, or just a portion of the interest that the money accrues once its in Oz?

I hope its the latter otherwise I can imagine that a large chunk of your house equity is swallowed up as soon as you get to Oz.

Shaun&Dee

I would just keep quiet. Its similar with a mortgaged house if you rent it out while in Oz. You are meant to tell the mortgage company so that they can change your mortgage to a buy to let and then charge you higher interest.
Why tell them, oops I forgot about my ISA's if ever asked.

JAJ

There is such a thing as capital *gains* tax but no such thing as capital *transfer* tax.




Jeremy

Techno Freak

Phew, thats a relief.

So, my understanding of the ISA situation is that so long as you stop paying into it you wont need to declare it? It just becomes a fluctuating pot of money?

JAJ

You'll need to declare the interest for Australian tax.




Jeremy