Tax impact when bringing funds over to Oz

[Guest Bada boom]

Hi All,

 

We're moving out to Oz in a few months and have some money to bring out from the sale of our house. I'm considering bringing all the money out up front, especially if the rate looks good. Alternatively I may just bring a few thousand out and leave the remainder here until we are sure we'll be staying.

 

What are the rules on paying tax when bringing funds over. If we've been resident in Australia say for 6 months and then bring money over will we have to pay a higher rate of tax than if we bring the money over immediately?

 

Thanks!

 

:v_SPIN:

[Guest Maz14]

Hiya

 

I'm afraid i haven't got an answer for you, but would be interested in one, if anyone knows! We're in a simliar situation and wondering if we get taxed on savings if we put them into an Australian savings account??

[Guest BAZnDAF]

I'd love to know the answer too.

[duncan-clan]

hi i sold my house in april this year and sent my money over in october via HIFX when the rate really high i got mine changed at $2.55 ive not been taxed yet but i will speak to my bank westpac and find more info

[Andrew from Vista Financial]

H folks.

 

For tax residents of Australia who are permanent visa holders, you have to declare worldwide income, so for savings/deposit accounts in UK any interest earnt is assessable at marginal tax rates in Australia.

 

If you have paid tax to the UK already then you may be able to claim a tax credit in Australia to offset some of the tax due, you may still need to pay an additional amount in Australia though, dependant on your tax band.

 

Alternatively Interest can be paid gross (without tax deducted) by registering an R85 form with the Bank in the UK. Then you just pay the tax in Australia. So either way you have to pay tax on the income/interest.

 

Be aware that when/if you bring your money to Australia to provide the Bank etc with your tax file number otherwise you will have tax deducted at 46.5%. When you provide your tax file number no tax is deducted and you declare this interest in your annual tax return. Again this will be assessable at your marginal tax rate.

 

However if you are the holder of certain eligible temporary visa's then you do not have to declare the interest/income from these UK deposit/savings accounts in Australia.

 

 

Don't mean to be boring but this is just general advice as individual crcumstances have not been taken in to account.

 

Regards

 

Andy

[Guest Maz14]

H folks.

 

For tax residents of Australia who are permanent visa holders, you have to declare worldwide income, so for savings/deposit accounts in UK any interest earnt is assessable at marginal tax rates in Australia.

 

If you have paid tax to the UK already then you may be able to claim a tax credit in Australia to offset some of the tax due, you may still need to pay an additional amount in Australia though, dependant on your tax band.

 

Alternatively Interest can be paid gross (without tax deducted) by registering an R85 form with the Bank in the UK. Then you just pay the tax in Australia. So either way you have to pay tax on the income/interest.

 

Be aware that when/if you bring your money to Australia to provide the Bank etc with your tax file number otherwise you will have tax deducted at 46.5%. When you provide your tax file number no tax is deducted and you declare this interest in your annual tax return. Again this will be assessable at your marginal tax rate.

 

However if you are the holder of certain eligible temporary visa's then you do not have to declare the interest/income from these UK deposit/savings accounts in Australia.

 

 

Don't mean to be boring but this is just general advice as individual crcumstances have not been taken in to account.

 

Regards

 

Andy

 

 

Thanks Andy, that's really helpful and is starting to make sense now!

We're on a 475 visa which is a 3 year provisional visa. Do you know if we would be classed as permanent or temporary residents for tax purposes?

[Guest melissa and darren]

We transfered the money from the sale of our house into an account with the Commonwealth bank, and have just been charged 10% tax on our interest earned.

[Guest Libby1971]

Maz 14, you would be temp residents

[Andrew from Vista Financial]

Residency for tax purposes and residency for visa purposes are not the same.

 

You can be a temporary visa holder but also a tax resident at the same time.

 

Generally if you are going to be living and working in Australia you should be a tax resident of Australia.

 

This should help.

 

 

 

Residency - overview

 

http://www.ato.gov.au/individuals/content.asp?doc=/content/64131.htm

 

[Alan Collett]

The subclass 475 visa is technically a temporary residency visa under the Migration Act 1958 ...

 

Best regards.

[Andrew from Vista Financial]

So with regards to tax if a gain is made by delaying transferring funds due to waiting for a better exchange rate.

 

I have now spoken to several so called people in the know. ATO advisors, Accountants etc and have had differing answers. This morning I spoke to a technical advisor for the ATO on Foreign Investments.

 

Before I go on though I must make it clear that I am not a Tax Advisor nor a foreign exchange Advisor so please do not take this as advice for these purposes and this is general information.

 

This is the information that he gave me.

 

When you became a tax resident of Australia the exchange rate at the time should be used to ascertain the value of the interest in the Bank Account you hold overseas. Therefore if you subsequently transfer money over at a later date and the rate of exchange is higher thus giving you a gain then this gain is assessable as a capital gain in Australia. No timeline exemption exists.

 

So hopefully the above makes sense.

 

For me this would be the best explanation I have had and would seem to be the most accurate going on how other foreign investments are treated.

 

Also to let you know in Australia there is a 50% exemption on capital gains if the asset has been held for over 12 months.

 

Regards

 

Andy.

[Alan Collett]

Andy,

 

See also the forex provisions at the ATO website. These treat exchange gains and losses as income (or a deduction) with no regard had to the CGT discount.

 

Best regards.

[Andrew from Vista Financial]

Thanks Alan,

 

I'll have a look at this, the Advisor this morning did say that if the asset had been held over 12 months that the exemption would apply?

 

I'll do some more homework!