Does anyone know if there is any tax to pay on transferring money to Australia as an Australian resident?

Thanks

The quick answer is only on a foreign exchange gain, capital gain and interest etc. There is no tax on the capital as such. Have a search on the forum there is lots of information about this.

At your own risk as I am not an expert.

Brian.

There is no tax to pay on forex gains if it is yourown money transferred - see taxpack 2006.

Regards

I don't believe it is as straightforward as that. If in doubt please take professional advice.

quote:

Originally posted by jim:
There is no tax to pay on forex gains if it is yourown money transferred - see taxpack 2006.

Regards

Best regards.

Alan is quite right about taking advice if you're new in Australia. I took professional advice on this which is why I am passing it on gratis. The taxpack merely reinforces this.

Regards

Jim,

You should know that the position on foreign exchange gains and losses it is not as straightforward as you are indicating, and that even guidance from the ATO can differ depending on who you talk with.

I would invite interested persons to have a look at this article from Go Matilda News and the underlying ATO Interpretative Decisions:
http://www.gomatilda.com/news/article.cfm?articleid=327

Best regards.

All I am doing is relaying my own experience with both my professional advice and what the ATO have told me and what is written in the 2006 taxpack. There may be complications for other circumstances but not for me as a migrant transferring my own money.

Regards

quote:

Originally posted by Alan Collett:
Jim,

You should know that the position on foreign exchange gains and losses it is not as straightforward as you are indicating, and that even guidance from the ATO can differ depending on who you talk with.

I would invite interested persons to have a look at this article from Go Matilda News and the underlying ATO Interpretative Decisions:
http://www.gomatilda.com/news/article.cfm?articleid=327

Best regards.

Having done more research and found recent references on britishexpats website, I think your article, while factual wrt the ATO references, is rather misleading and does not state the true picture for the ordinary migrant to Australia.

Regards

I am becoming rather tired and annoyed with cheap shots at opinions which I have expressed on this subject in good faith based on due research, and given presently available ATO published material.

I have made it clear on several occasions on the other forum to which you refer that taxpayers can base a decision as to completing their Tax Returns based on material they read on discussion forums from those without professional qualifications (unwise in my view when there is conflicting commentary), or they can instruct a tax advisor to give a written opinion (on which they can sue if the advice turns out to be incorrect), or they can approach the ATO for a Private Ruling.

I have also written to the ATO suggesting that they might publish further guidance on the subject of foreign currency exchange gains and losses, because it is plainly causing concern.

Best regards.

Alan not all of us are seeking to take pot shots and some of us are qualified accountants from the UK who are researching all the available ATO publications and trying to make sense of all of the convoluted trails just as you have done.

The act of disposing of hard earned sterling cash into brand new Oz dollars is probably the biggest single event that most readers of this forum will be involved in and it is important to ensure that this forum is giving them the best information possible.

I am going to give you my opinion and tax references in relation to this single act of changing my UK bank balance to a new oz bank account in the same name in both cases.

Section 775-40 (2) says to use 104-10(2) to work out if you have disposed of foreign currency or a right or part of a right to receive foreign currency.

Section 104-10(2) says you dispose of a CGT asset if a change of ownership occurs from you to another entity. Since you are moving the asset from one currency to the next but are not giving up ownership of the asset (your bank balance) enroute then this section should not apply.

Section 775-15 (2) says that your assessable income does not include a forex realisable gain to the extent that it

a) is a gain of a private or domestic nature : and

b) is not covered by an item in the table

The table deals with various categories but in relation to this scenario includes a forex realisation event 1

Section 775-40 (1) defines event 1 as a CGT event A1 that happens when you dispose of foreign currency or the rights........etc.

It is my view that since you start out with cash and end up with cash in your own name albeit in another currency and the transaction was of a private nature involving your own domestic arrangements then a CGT event does not arise and therefore no forex realisation event can occur.

I am happy to be shot down in flames over this (as I may have missed something along the way) if it helps to establish a clear definition on this matter.

It would be helpful if Jim were to share the information he got from the ATO and to pinpoint where in the 2006 Tax Pack he is referring to.

Hello Paddy, and thanks for your posting. Agreed this is an area where clarity from the ATO is needed ... my understanding is that the forex provisions were introduced with the intention of affecting Australian businesses with foreign currency exposure/hedging/etc in mind. However, the legislation as presently prepared draws no distinction between businesses and individuals - if that is the intention the ATO should simply say so.

In respect of the points you have raised:

- My understanding is that if you sell (say) GBP's and buy A$'s you have disposed of the GBP's. I'm not a solicitor, but believe a bank account is what is called a "chose in action", and each withdrawal from a bank account constitutes a disposal - the Private Ruling here discusses this issue in more detail:
http://www.ato.gov.au/rba/content.asp?doc=/rba/content/58675.htm

- The "private nature" issue has been discussed on other forums and there is plainly disagreement about what constitutes a "private nature" disposal. My view is that foreign currency retained in anticipation of an improvement in its value in A$ terms is no different to retaining any other investment (eg shares, real estate) and as such is subject to capital gains tax (or the forex provisions), subject to any exemptions that might specifically apply to foreign currency.

In other words the taxpayer's intentions may (emphasis - MAY) be the factor that distinguishes a gain (or a loss) arising on the disposal of foreign currency that is of a (non assessable) private nature from one that is subject to tax.

That's just my opinion based on what I have seen and read on the subject to date, and because there are financial issues at stake here I must add that it is not intended to be an opinion that can be relied on in the event of financial loss. Hope that doesn't sound too defensive ...

Best regards.

quote:

Originally posted by Alan Collett:
I am becoming rather tired and annoyed with cheap shots at opinions which I have expressed on this subject in good faith based on due research, and given presently available ATO published material.

I have made it clear on several occasions on the other forum to which you refer that taxpayers can base a decision as to completing their Tax Returns based on material they read on discussion forums from those without professional qualifications (unwise in my view when there is conflicting commentary), or they can instruct a tax advisor to give a written opinion (on which they can sue if the advice turns out to be incorrect), or they can approach the ATO for a Private Ruling.

I have also written to the ATO suggesting that they might publish further guidance on the subject of foreign currency exchange gains and losses, because it is plainly causing concern.

Best regards.

I am sorry that you are upset by people challenging you opinion. I also accept that you have given an opinion in good faith.

This is not a cheap shot but a considered comment after paying (not cheap either) for professional advice

I am also aware of consultant practice of giving just enough information and to whet the appetite and leaving questions to attract consultation fees. (We should not forget that you are running a business on the back of this)

This is what you seem to have been doing on this thread by implying that there is more to my question. Incidentally, since I posted the question, I have taken professional advice, which I have in writing, that concurs with what others said in this thread – namely that I shall not have to pay tax on transferring cash.

Regards

I acknowledge your comments, and if you have an opinion from someone in writing that's super - there are clearly different views on this subject, and the very existence of differing views would indicate a degree of uncertainty.

Hopefully you can see the basis of my opinion on the subject given my posting above.

As to the comments regarding my motives in your third and final paras, yes I am a commercial animal, and in answering comments on a public forum have to be conscious of the degree of reliance people might place on a response that doesn't include appropriate caveats. Would you prefer that I don't express an opinion at all?

Best regards.

Alan

I have looked at the Private ruling that you mentioned and had another look at the relevant legislation. The good news is that the private ruling appears to support my contention that there is no forex gain under section 775 for the reasons that I have stated but then goes on to say that there is still a CGT event!! This flies in the face of section 775 saying that you need to assess if there is a CGT event in the first place under 104-10.

Section 104-10 says that there is no CGT event if you do not dispose of the asset to another entity. Therefore one could assume that if you instruct your bank to convert the asset to dollars first and then transfer the dollars your cost base will be the dollars therefore there will be no gain when you transfer the asset to an australian bank.

I agree with you that the legislation appears to be badly designed and open to interpretation to the point that the ATO must clarify what they mean.

Another aspect of the Private ruling is that if it is correct then the CGT event aspect has been with us since Sept 1985 and that anybody transferring cash would have been liable to CGT on any currency gain made. Are you aware that this has been enforced by the ATO in the past?

If the CGT exemption only applies to prior to Sept 1985 then the ruling about using a bank account opened prior to June 2003 becomes superflous. It would appear that rulings are being made on the fly.

I will need to dig into this in more detail but felt that i would share my initial thoughts.

I note that like Jim, Farmer says he has received an opinion but has chosen not to share it. If they want to help this forum then perhaps they need to be more forth-coming.

Regards

Thanks for your input Paddy. Let's hope that we can secure something authoritative through combined efforts ...

Best regards.

quote:

Originally posted by Alan Collett:
I acknowledge your comments, and if you have an opinion from someone in writing that's super - there are clearly different views on this subject, and the very existence of differing views would indicate a degree of uncertainty.

Hopefully you can see the basis of my opinion on the subject given my posting above.

As to the comments regarding my motives in your third and final paras, yes I am a commercial animal, and in answering comments on a public forum have to be conscious of the degree of reliance people might place on a response that doesn't include appropriate caveats. Would you prefer that I don't express an opinion at all?

Best regards.

I welcome your opinion but think that you should have been a little stronger on the caveats especially on this one because I think some (like myself at first) might have thought they should be paying tax.

Like if you had said (as above)

"That's just my opinion based on what I have seen and read on the subject to date, and because there are financial issues at stake here I must add that it is not intended to be an opinion that can be relied on in the event of financial loss. Hope that doesn't sound too defensive ..."

Regards

quote:

Originally posted by Paddy:
Alan

I have looked at the Private ruling that you mentioned and had another look at the relevant legislation. The good news is that the private ruling appears to support my contention that there is no forex gain under section 775 for the reasons that I have stated but then goes on to say that there is still a CGT event!! This flies in the face of section 775 saying that you need to assess if there is a CGT event in the first place under 104-10.

Section 104-10 says that there is no CGT event if you do not dispose of the asset to another entity. Therefore one could assume that if you instruct your bank to convert the asset to dollars first and then transfer the dollars your cost base will be the dollars therefore there will be no gain when you transfer the asset to an australian bank.

I agree with you that the legislation appears to be badly designed and open to interpretation to the point that the ATO must clarify what they mean.

Another aspect of the Private ruling is that if it is correct then the CGT event aspect has been with us since Sept 1985 and that anybody transferring cash would have been liable to CGT on any currency gain made. Are you aware that this has been enforced by the ATO in the past?

If the CGT exemption only applies to prior to Sept 1985 then the ruling about using a bank account opened prior to June 2003 becomes superflous. It would appear that rulings are being made on the fly.

I will need to dig into this in more detail but felt that i would share my initial thoughts.

I note that like Jim, Farmer says he has received an opinion but has chosen not to share it. If they want to help this forum then perhaps they need to be more forth-coming.

Regards

What else do you want me to add?

Rgds

Farmer,

The underlying basis of the opinion that you received would be helpful in order that we could consider what is being said and how that stacks up against the private opinion that Alan posted.

Regards

Well ... my view is that there are tax issues if you retain non-A$ currency when you move to Australia, particularly if you are doing so in anticipation of the non-A$ currency appreciating in value in A$ terms.

Your posting indicates I should be making comments to the contrary - it would be remiss of me to do so when I haven't (yet) seen any official ATO commentary that would support the making of such a comment.

If any readers of this forum can point me to an official commentary that sets out what constitutes a private nature forex gain or loss I'll be delighted.

In the meantime perhaps I should consider some sort of disclaimer on any comments I make on this and other forums.

Best regards.

quote:

Originally posted by Farmer:

quote:

Originally posted by Alan Collett:
I acknowledge your comments, and if you have an opinion from someone in writing that's super - there are clearly different views on this subject, and the very existence of differing views would indicate a degree of uncertainty.

Hopefully you can see the basis of my opinion on the subject given my posting above.

As to the comments regarding my motives in your third and final paras, yes I am a commercial animal, and in answering comments on a public forum have to be conscious of the degree of reliance people might place on a response that doesn't include appropriate caveats. Would you prefer that I don't express an opinion at all?

Best regards.

I welcome your opinion but think that you should have been a little stronger on the caveats especially on this one because I think some (like myself at first) might have thought they should be paying tax.

Like if you had said (as above)

"That's just my opinion based on what I have seen and read on the subject to date, and because there are financial issues at stake here I must add that it is not intended to be an opinion that can be relied on in the event of financial loss. Hope that doesn't sound too defensive ..."

Regards

Alan

I was preparing to give more detail for paddy about my professional advice. But having seen your last post realise that it will not change your view because although a well reasoned argument it does seem to rely on "private in nature".

So I have asked the ATO about this. They also say that I have no tax liability providing it is my own money and that it means not associated with a business or trader.

I see your point but why are you maintaining that there are tax issues when the ATO do not?

Regards