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Go Matilda - Your Gateway to Australia The Go Matilda Forums The Go Matilda Forums The Tax and Money Forum UK tax free Capital Gains Payment
The Go Matilda Forums The Go Matilda Forums The Tax and Money Forum UK tax free Capital Gains Payment|
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Hi Everyone,
I have been in the UK for the last 5 years and plan to return to sunny Sydney Australia permanently as a returning Australian resident in December. I have been in a HIP income Ltd Company scheme where 1st Contact have collected and held on to a lot of my distributable cash This was so that I avoided paying the Higher Income Tax. I will be closing the company in December and am now due to receive a £65,000 capital gains payment which I am told is UK tax free as I stop being a UK resident for tax purposes. I take it that this means I must declare it as a capital gains in Australia right ???. Can anyone offer me any suggestions on the most tax efficient means of bringing this money back to Australia or alternatively accessing the funds from Australia. cheers |
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Drop us a line with the details and we would be happy to assist you.
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There are two issues here:
1. The capital gains tax treatment on departure from the UK. Note that in the UK capital gains arising after you depart the UK until the end of the same UK tax year remain subject to capital gains tax in the UK. 2. The tax treatment of a distribution from the UK once you have resumed tax residency in Australia. You should be aware that certain distributions of capital can be taxed as income ... eg upon the winding up of a company. I'd need to know more about the mechanism of the payment to you and its timing to comment further. Best regards.
Alan Collett alan-at-gomatilda-dot-com Registered Migration Agent Number 0102534 Fellow of the Institute of Chartered Accountants in England and Wales Member of the Institute of Chartered Accountants in Australia http://www.gomatilda.com and http://www.collettandco.co.uk Offices in Southampton - England; Melbourne, Perth, Brisbane, and Geelong - Australia |
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Hi Alan,
Its only the second issue that is applicable I believe. My Retained Funds in the company has been taxed according to Corporations tax, as the funds as of yet has not been released to me so there are no personal tax effects or rates. Thus, when I leave the (UK) in December I will cease to be a tax resident and that is how the Capital Gain can be transferred from my company to me tax free from the UK. They will either provide me a cheque in £ or transfer the funds to my UK bank account. Leaving out the other contributing factors factors relating to the exchange rate and timing (lets say I have all the time in the world). What is the best way for me to bring this money back into Australia or access the funds to minimise tax. |
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It all depends on timing. The Oz taxman is not interested in what happens before you become tax resident in OZ. On the date you become resident you need to value all your assets in Oz dollars (be it a company or pound sterling).
If you sell your company after being in Oz for 6 months the only tax you would be liable for would be on the gain from when you became resident to the time you sold. If you held the asset for 12 months in Oz 50% of the gain would be tax free. You have to work in Oz dollars so even if the asset went up in value but the pound fell you might not be liable for any tax in Oz. |
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Hmmm ... check this, as it is quite possible for the company to have paid tax on income and for a return of capital to also be taxable in the hands of the recipient individual, with no regard had to the tax already paid by the company - a capital distribution isn't like an income distribution (which is usually franked in full or in part).
Best regards.
Alan Collett alan-at-gomatilda-dot-com Registered Migration Agent Number 0102534 Fellow of the Institute of Chartered Accountants in England and Wales Member of the Institute of Chartered Accountants in Australia http://www.gomatilda.com and http://www.collettandco.co.uk Offices in Southampton - England; Melbourne, Perth, Brisbane, and Geelong - Australia |
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Yes but I am planning a long trip and as long as I receive the capital payment after I depart the UK and before I arrive in Australia everythings sweet.
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Make sure that the capital distribution takes place after the 5th of April ...
Best regards.
Alan Collett alan-at-gomatilda-dot-com Registered Migration Agent Number 0102534 Fellow of the Institute of Chartered Accountants in England and Wales Member of the Institute of Chartered Accountants in Australia http://www.gomatilda.com and http://www.collettandco.co.uk Offices in Southampton - England; Melbourne, Perth, Brisbane, and Geelong - Australia |
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huh ? why does it have to be after April 5th in the new tax year. I cease being uk tax resident when I leave the country no ?
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Not for CGT purposes, no.
If you want some formal tax advice you can send me an email ... Best regards.
Alan Collett alan-at-gomatilda-dot-com Registered Migration Agent Number 0102534 Fellow of the Institute of Chartered Accountants in England and Wales Member of the Institute of Chartered Accountants in Australia http://www.gomatilda.com and http://www.collettandco.co.uk Offices in Southampton - England; Melbourne, Perth, Brisbane, and Geelong - Australia |
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