I would appreciate comments/agreement/disagreement with the following statement:-
A person buys shares at a cost of £50,000 in June 2009. He emigrates in January 2010 when the shares are valued at £100,000. He has just obtained a PR visa for Australia. He sells the shares for £150,000 in May 2010. He is not liable for tax in UK or Australia.
Any comments?

I have already told you that you will be liable for CGT in Oz on the difference between the value that you sell them - £150000 and the value that was assessed when you arrived to take up PR - £100000. Your capital gain will be £50000.Since you will have held the shares for longer than 12 months the CGT will be halved.

I should add that we are talking about quoted shares. If you have managed or investment fund shares that are not quoted on a recognised stock exchange then you have FIF problems to worry about and I would advise getting rid of them before the end of the Oz tax year on 30 June to avoid having to go through the FIF loop holes.

Oops just noticed that your suggested dates cover less than 12 months - so full CGT will apply on the £50000.

I agree with Paddy.

Wait until July 2010 to sell the shares and then take advantage of the 50% CGT discount.


Cheers,
Marilyn

Many thanks for the input Paddy & Lady M.
It would appear that you agree that if he does not sell the FTSE shares until May ( after the end of the UK tax year and after becoming resident in Australia) he will not have to pay UK CGT on the gain made prior to emigration, thereby saving a substantial sum. Therefore it would appear to be "a no-brainer" - do not sell until after April 6th 2010 .

Mmm...! Not quite that simple.

If the UK resident leaves UK in Jan 2010 to take up PR in Australia he will not have been outside the UK for a full 180 days nor a full tax year so any tax event happening in that period is still technically liable to UK tax.

The UK resident escapes UK tax by showing that he has moved out of the UK permanently and that the intention is to reside outside of the UK permanently. PR will do this.

Life in Australia does not suit everyone or they become homesick and end up returning to the UK. If this UK resident does return to the UK before say April 2011 then he will become liable to UK tax on the full profit made on the shares less tax relief for Oz tax paid on same transaction.

I reiterate my earlier message get professional advice from a tax expert who deals in both UK and OZ tax. The sums of money you are discussing are too large not to get it absolutely correct.

On the surface it would appear that Collett &Co disagree with your CGT interpretation.In their printout " Capital Gains for the Non-UK Resident" they state " If an individual arrives in Australia in July with a PR visa and is considered resident for tax purposes there would be over 11 months in which a decision could be made to dispose of the FIF interest before there is a FIF tax issue"
In the same printout they state " A taxpayer who leaves the UK permanently during one tax year and realises a gain in the following tax year can reasonably expect to completely shelter the gain from the charge to UK taxation"
Unless I am misreading these points it would appear that there would be no UK or Australian tax to pay in my original example.

You have already said that the shares you are talking about are FTSE quoted shares so the FIF rules don't apply in this case so let's forget about that.

The Australian Masters Tax Guide says that anyone migrating to OZ is regarded as a resident from the day he arrives. It further states that the residents assets become revalued at the date he arrives as if he has acquired new assets. This is your £100,000.

If the migrant then sells the shares he triggers a CGT event and becomes liable for CGT.

The bad news is that using your dates you will not be regarded as having held the shares for 12 months as they have been revalued and regarded as a new asset. You will be liable for the full CGT on the £50,000 profit. Sorry I had missed this point but the guide is explicit on it.

Regarding UK tax I DO agree with Collett & Co but the point is that this only remains true if you stay away from the UK for at least a full tax year. If you return on a permanent basis before then you will become liable to UK tax.

Bottom line - tax in OZ but not the UK unless you return.

Get the professional advice. Sorry but I am now going to close out on this topic.