tax on company reserves-anyone know?
Jun 23rd 2006, 9:36 am
#1
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tax on company reserves-anyone know?
We have been advised to leave the company reserves in the UK when we come to OZ in September- thus avoiding the extra 10% tax for winding up the company.
We should then be able to transfer the money to OZ after April 2007 and as long as we do not come back to UK all fine.
However does anyone know how Australian tax authorities would view this money when we transfer it. It will already have been taxed via corporation tax VAT etc in the UK but will we have any liability to Australian tax authorities?
Would there be a time limit to bring these assets into OZ?
Anyone able to point me in the right diection please?
Rammygirl
We should then be able to transfer the money to OZ after April 2007 and as long as we do not come back to UK all fine.
However does anyone know how Australian tax authorities would view this money when we transfer it. It will already have been taxed via corporation tax VAT etc in the UK but will we have any liability to Australian tax authorities?
Would there be a time limit to bring these assets into OZ?
Anyone able to point me in the right diection please?
Rammygirl
Jun 23rd 2006, 12:21 pm
#2
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Joined: Jan 2003
Location: Inner Western suburbs of Sydney
Posts: 4,483
Re: tax on company reserves-anyone know?
Originally Posted by rammygirl
We have been advised to leave the company reserves in the UK when we come to OZ in September- thus avoiding the extra 10% tax for winding up the company.
We should then be able to transfer the money to OZ after April 2007 and as long as we do not come back to UK all fine.
However does anyone know how Australian tax authorities would view this money when we transfer it. It will already have been taxed via corporation tax VAT etc in the UK but will we have any liability to Australian tax authorities?
Would there be a time limit to bring these assets into OZ?
Anyone able to point me in the right diection please?
Rammygirl
We should then be able to transfer the money to OZ after April 2007 and as long as we do not come back to UK all fine.
However does anyone know how Australian tax authorities would view this money when we transfer it. It will already have been taxed via corporation tax VAT etc in the UK but will we have any liability to Australian tax authorities?
Would there be a time limit to bring these assets into OZ?
Anyone able to point me in the right diection please?
Rammygirl
As far as the ATO is concerned, if you weren't resident when the money was earned then it just arrives as any capitalised asset would. See www.ato.gov.au for relevant details.
Cheers,
George Lombard
www.austimmigration.com.au
Jun 23rd 2006, 12:28 pm
#3
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Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
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Re: tax on company reserves-anyone know?
Given that you will not be a temporary resident for tax purposes what you are proposing sounds to me as if it will be a distribution and will therefore almost certainly be taxed as dividend income - and will therefore be taxable at your highest marginal rate/s of income tax in Australia (plus the Medicare Levy).
It may be preferable to wind up the company in the UK and to seek UK Revenue concessionary treatment so that the reserves are distributed as a return of capital to you as shareholders, thereby enabling you to make use of UK CGT tapering relief.
Note that it is probable this "return of capital" treatment does not pertain when you are tax residents of Australia - such a distribution would probably be considered to be income in Australia (a fact often unknown to UK tax accountants).
Depending on the amounts of tax involved you may want to consider taking further advice ...
Best regards.
It may be preferable to wind up the company in the UK and to seek UK Revenue concessionary treatment so that the reserves are distributed as a return of capital to you as shareholders, thereby enabling you to make use of UK CGT tapering relief.
Note that it is probable this "return of capital" treatment does not pertain when you are tax residents of Australia - such a distribution would probably be considered to be income in Australia (a fact often unknown to UK tax accountants).
Depending on the amounts of tax involved you may want to consider taking further advice ...
Best regards.
Originally Posted by rammygirl
We have been advised to leave the company reserves in the UK when we come to OZ in September- thus avoiding the extra 10% tax for winding up the company.
We should then be able to transfer the money to OZ after April 2007 and as long as we do not come back to UK all fine.
However does anyone know how Australian tax authorities would view this money when we transfer it. It will already have been taxed via corporation tax VAT etc in the UK but will we have any liability to Australian tax authorities?
Would there be a time limit to bring these assets into OZ?
Anyone able to point me in the right diection please?
Rammygirl
We should then be able to transfer the money to OZ after April 2007 and as long as we do not come back to UK all fine.
However does anyone know how Australian tax authorities would view this money when we transfer it. It will already have been taxed via corporation tax VAT etc in the UK but will we have any liability to Australian tax authorities?
Would there be a time limit to bring these assets into OZ?
Anyone able to point me in the right diection please?
Rammygirl
Jun 23rd 2006, 3:59 pm
#4
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Thread Starter
Joined: Sep 2005
Posts: 1,204
Re: tax on company reserves-anyone know?
Depending on the amounts of tax involved you may want to consider taking further advice ...
Best regards.[/QUOTE]
Would love to but cn't find anyone who understands both sides. Our accountant unable to give advice on Oz tax.
You seem to have completely differing views and the website doesn't really help.
The money left will be in a business account and will be what is left after corporation tax and dividends to shareholders etc. I appreciate we will be taxed on the interest generated in OZ but now worried about tax on moving the capital to OZ
Not trying to cheat the system just don't want to pay more tax than we have to.
On winding up in the UK this final reserve would only attract a flat 10% to UK tax do you think OZ will take more?
still confused
Best regards.[/QUOTE]
Would love to but cn't find anyone who understands both sides. Our accountant unable to give advice on Oz tax.
You seem to have completely differing views and the website doesn't really help.
The money left will be in a business account and will be what is left after corporation tax and dividends to shareholders etc. I appreciate we will be taxed on the interest generated in OZ but now worried about tax on moving the capital to OZ
Not trying to cheat the system just don't want to pay more tax than we have to.
On winding up in the UK this final reserve would only attract a flat 10% to UK tax do you think OZ will take more?
still confused
Jun 24th 2006, 1:58 am
#5
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Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,459
Re: tax on company reserves-anyone know?
I have given you my opinion as a UK and Australian qualified CA. The monies left in the company are likely to represent undistributed earnings, and therefore on payment to you they must (by definition) be a distribution.
I'm happy to give you contact details of another Australian tax accountant if you want confirmation of what I have said.
Best regards.
Would love to but cn't find anyone who understands both sides. Our accountant unable to give advice on Oz tax.
You seem to have completely differing views and the website doesn't really help.
The money left will be in a business account and will be what is left after corporation tax and dividends to shareholders etc. I appreciate we will be taxed on the interest generated in OZ but now worried about tax on moving the capital to OZ
Not trying to cheat the system just don't want to pay more tax than we have to.
On winding up in the UK this final reserve would only attract a flat 10% to UK tax do you think OZ will take more?
still confused[/QUOTE]
I'm happy to give you contact details of another Australian tax accountant if you want confirmation of what I have said.
Best regards.
Originally Posted by rammygirl
Depending on the amounts of tax involved you may want to consider taking further advice ...
Best regards.
Best regards.
Would love to but cn't find anyone who understands both sides. Our accountant unable to give advice on Oz tax.
You seem to have completely differing views and the website doesn't really help.
The money left will be in a business account and will be what is left after corporation tax and dividends to shareholders etc. I appreciate we will be taxed on the interest generated in OZ but now worried about tax on moving the capital to OZ
Not trying to cheat the system just don't want to pay more tax than we have to.
On winding up in the UK this final reserve would only attract a flat 10% to UK tax do you think OZ will take more?
still confused[/QUOTE]
Jun 24th 2006, 2:37 am
#6
Reg. Migration Agent
Joined: Jan 2003
Location: Inner Western suburbs of Sydney
Posts: 4,483
Re: tax on company reserves-anyone know?
Hi Rammy,
No, wasn't disagreeing with Alan, just stating the obvious that if that's a capitalised asset then it ain't income. But as he points out, if it's income then it isn't an asset. There are some major accounting firms who work with international tax issues, eg UHY Haines Norton - I'd recommend you email amccombie[at]uhyhn.com.au for an opinion for example.
Cheers,
George Lombard
www.austimmigration.com.au
No, wasn't disagreeing with Alan, just stating the obvious that if that's a capitalised asset then it ain't income. But as he points out, if it's income then it isn't an asset. There are some major accounting firms who work with international tax issues, eg UHY Haines Norton - I'd recommend you email amccombie[at]uhyhn.com.au for an opinion for example.
Cheers,
George Lombard
www.austimmigration.com.au
Jun 25th 2006, 12:05 pm
#7
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Thread Starter
Joined: Sep 2005
Posts: 1,204
Re: tax on company reserves-anyone know?
Just a thought but looking on the ATO site and the new legislation from 1st July, and bearing in mind we are on 165 TR visa, does this fall into the exempt category for bringing assets into OZ.
Otherwise where is the incentive to invest the money in Australia?
Rammygirl
Otherwise where is the incentive to invest the money in Australia?
Rammygirl
Jun 25th 2006, 12:14 pm
#8
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Joined: May 2002
Location: Offices in Melbourne, Brisbane, Perth, Geelong (Australia), and Southampton (UK)
Posts: 6,459
Re: tax on company reserves-anyone know?
Ah hah! That could change things ... the new provisions affecting "temporary residents" may indeed mean a different outcome for you.
We're starting to get into quite technical areas of tax now, and seeing as how I earn an income from taxation advice I'll leave it with you to decide whether or not to contact me "off forum" ...
Best regards.
We're starting to get into quite technical areas of tax now, and seeing as how I earn an income from taxation advice I'll leave it with you to decide whether or not to contact me "off forum" ...
Best regards.
Originally Posted by rammygirl
Just a thought but looking on the ATO site and the new legislation from 1st July, and bearing in mind we are on 165 TR visa, does this fall into the exempt category for bringing assets into OZ.
Otherwise where is the incentive to invest the money in Australia?
Rammygirl
Otherwise where is the incentive to invest the money in Australia?
Rammygirl
