Will my UK Inheritance money be taxed in Australia
 

I have 90k GBP sat in my UK bank which I inherited from my Grandfather last year. I have been reluctant to transfer to Australia as I am a greedy cow who wants as many $$$$ as I can get and as we all know the exchange rate isn't that flash just now.

Someone got me worried this week because they told me that because I didn't bring it within 6 months of receiving it that I would be taxed on it here in Australia.

Anyone know if this is indeed the case.

Much appreciated in advance.

Re: Will my UK Inheritance money be taxed in Australia
 

Wonder if thats just a version of the common (but wrong) belief that you have to move any money within 6 months of arriving, or be taxed on it? I would imagine it would be treated like house sale money etc, and you'd get taxed only on any gain since you inherited the money, but I'd be intereeted to hear the official view.

Re: Will my UK Inheritance money be taxed in Australia
 

No you don't get taxed on it by Australia. This urban myth has been around for some time, but is exactly that. It's your money and you can exchange it whenever you want. Technically you have to declare the no doubt massive amount of interest you receive whilst its sat in a UK bank account on your Australian tax return but thats it.

Purely for interests sake - the money you inherited would be have been dealt with by probate in the UK and thus any tax that would have been payable by the deceased estate there to the Revenue would have been.

In Australia there is no inheritance tax.

Re: Will my UK Inheritance money be taxed in Australia
 

New ironing board cover on the way for you then!

Re: Will my UK Inheritance money be taxed in Australia
 

Thanks for posting this, NB. Just applied for Probate re. my mother's finances and trying to work out the best way to keep the money in savings/PIPs (where it is currently) for my nieces without being penalised, so it's very topical.

Alternatively, anybody know anything about putting money in trust in the UK? e.g., would it affect their student grants? Sister is a single parent with no maintenance being paid, and the eldest has just finished her A levels. Hoping she might get some help with finance as her small inheritance wouldn't even keep her for the first year.

edit: Of course I will get professional advice but the allegedly professional advice my mother got a year ago seems to have been a bit off.

Re: Will my UK Inheritance money be taxed in Australia
 

No inheritance tax. And if you move the money within 12 months of receiving it, it is treated as a single transaction so it's all treated as an inheritance.

Technically if you move it after 12 months you could be subject to tax on any gains made from the exchange rate. But practically the ATO has it's head in the clouds about this so if you don't declare the gain I doubt if anyone will pick it up. If they do pick it up then just say it wasn't clear.

As always the interest earned in the UK is taxable and any tax paid in the UK can be claimed as a tax credit.

The 6 month rule is one that applies to pensions.

Re: Will my UK Inheritance money be taxed in Australia
 

Sorry it's not clear what your asking. Has your mother passed away in the UK with UK assets and your making application for UK probate ?

Re: Will my UK Inheritance money be taxed in Australia
 

Yes, unfortunately she didn't make a Will, intended the money to go to the girls as they each turned 21 but was advised to keep it in her own name. There may be a good reason for that but I spoke to her FA/bank 3 times, including face to face, and couldn't seem to find one.

(To be more accurate, I applied for Probate - as demanded by the bank -on my father's behalf as I would have had to attend an interview in the UK and needed to get back to Oz. In fact I only initially went over for a wedding :( )

Re: Will my UK Inheritance money be taxed in Australia
 

You are correct. Example: Exchange rate say 6months ago was $1.60 & now is $2.00 so if you bring the money into oz now you will pay tax on the money you have profited by.On the bright side you have still made a profit so your still a winner.

Re: Will my UK Inheritance money be taxed in Australia
 

I am really confused here Seasider. If your father is still alive and there was no will, he surely "inherits" everything, no? And of course spouse's do not pay IHT.

Re: Will my UK Inheritance money be taxed in Australia
 

By rights he does, even though they have been separated a very long time, but the bank requested we go to Probate and, according to the Probate helpline, they are entitled to do so.

Personally I think the bank has cocked up. They knew my mother's intentions, i.e., to split the money between her grandkids, and that she was still legally married, but for some reason they set up separate accounts in her name. It was her responsibility to check this but she never was good with money - she really should have written a will, too. I did talk to her about it at the time she sold the house but she seemed to think it was all covered by what she'd done at the bank. I'd put the whole amount on her not reading the statements :rolleyes: (Oh the perils of being so far away.)

So it will all go to Dad initially, although we are all in agreement on who will eventually get it. I'm just trying to work out what to do with it until the girls turn 21, which was the age my Mum wanted them to have it. The bank says my father can cash in the plans or keep them running; they do seem to be performing very well. Whose name they should go into, and any penalties (e.g., girls' grants, my UK tax implication) is currently the great unknown.

Re: Will my UK Inheritance money be taxed in Australia
 

Sounds like a complete nightmare to sort out 12,000 miles away. Good luck.

Re: Will my UK Inheritance money be taxed in Australia
 

The bank have truly messed up if these accounts are in your mother's name. You do not have any UK tax implication, the estate is liable to UK IHT not the individuals involved and there will not be any IHT here as your father will inherit and as such the estate is not liable to IHT. I would imagine that the only tax implications you would need to understand would be around your father "gifting" the assets to other members of the family, but gifts do not attract any immediate tax charges only possible future ones.

Re: Will my UK Inheritance money be taxed in Australia
 

In the UK there is gift tax so you are limited on how much you can give away. Don't know what it is now but it used to be £6k per year but you could use last year's allowance if it wasn't already used. This means that a gift of £12k could be made without any tax implications. After that you could give £6k per year.

However there is (or was when I was there) another rule around IHT which allows you to give away as much money as you want as long as you survive 7 years after you make the gift. If you didn't survive the 7 years then there was the possibility of some tax (although none if the total estate was less than the IHT threshold).

With trusts you have to be wary of trust tax. You can have an adult hold the money for the benefit of the girls but I don't know if they then have legal claim to it when they are 18.

Re: Will my UK Inheritance money be taxed in Australia
 

Thanks, guys. We'd already made a call to our Oz accountant but I think I need to get one in the UK, too. (I haven't even done a UK tax return for a couple of years as I no longer own property there.)

The total estate is definitely under the IHT threshold of 325k and I will look into trusts very carefully.

At the risk of sounding morbid (or worse still, a vulture) I suspect I'll be going through this again soon with my Dad, so I'd like to get it as much in order this time as possible. Along with a list of things I needed him to look into once I'd left, I left him a 3" high note, "Make a bloody WILL" :)