We are planning on emmigrating to Australia in October. We are looking to live in Melbourne. We are migrating on a Skilled Independant Visa.

One question we do have is: when do you become a tax resident? As this seems to kick in a number of issues regarding assets, etc, left in the UK?

Also, the money we have from the sale of the house is obviously going to be wired transferred to an Australian bank - how do we avoid paying tax on this? Is there a period by which any money injected into the country is not taxed?

You become a tax resident the day you arrive in australia on a visa allowing you to work.

the money you bring from the UK is not taxed as a capital gains as it is from the sale of your primary residence, same as UK. However, if you hsend that money before you leave the UK you will not be taxed. if you leave it in the UK and have it transferred at a later date, if the exchange rate has improved since the day you arrived you will be taxed on the profit. however if the exchange rate has got worse then you can offset the loss against tax on other earnings. the catch is, the losses of foreign monies can only be offset against gains of foreign monies.

the up shot is, you are not taxed by bringing money in, but i do recommend you get some professional advice before you leave the UK, must be from someone who is up to date with australian tax laws as they are changing all the time.

there are a few things to be aware of, if you leave money in the UK best in shares rather than managed funds.

Australian tax sounds very high, but although income tax sounds high there are many ways in which to make the system work for you. Can you believe in some jobs you can buy your weekly groceries out of your pre-tax wages!!

good luck withthe move, i am not far from Melbourne, anything else i can help with , send me a mail

Mike

quote:

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Originally posted by MikenSuze2:
You become a tax resident the day you arrive in australia on a visa allowing you to work.

the money you bring from the UK is not taxed as a capital gains as it is from the sale of your primary residence, same as UK. However, if you hsend that money before you leave the UK you will not be taxed. if you leave it in the UK and have it transferred at a later date, if the exchange rate has improved since the day you arrived you will be taxed on the profit. however if the exchange rate has got worse then you can offset the loss against tax on other earnings. the catch is, the losses of foreign monies can only be offset against gains of foreign monies.

the up shot is, you are not taxed by bringing money in, but i do recommend you get some professional advice before you leave the UK, must be from someone who is up to date with australian tax laws as they are changing all the time.

there are a few things to be aware of, if you leave money in the UK best in shares rather than managed funds.

Australian tax sounds very high, but although income tax sounds high there are many ways in which to make the system work for you. Can you believe in some jobs you can buy your weekly groceries out of your pre-tax wages!!

good luck withthe move, i am not far from Melbourne, anything else i can help with , send me a mail

Mike

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Why do you say best in shares rather than managed funds?

Regards

What's worrying me to some extent is if we have to return to the UK. We want to give it at least a year. We intend to stay. Hopefully we will have jobs and be happy within six months.

If we are not we face moving our financial connections away from the UK, mostly the pensions, and we will have already moved our equity.

If we need to return, for reasons beyond our control, life sometimes deals a bumb card after all, is what financial hit we will take on our cash and pensions when we return.

I don't think you automatically become tax resident the day you arrive with a "working" visa. If you did, those who do a validation visit are in trouble!

Tax residency involves the fact of residency and overall evidence, IMO.

a reply to jims questions:

as i understand it, you are taxed on world wide income. that means share dividends. also when you sell the shares you are subject to capital gains tax, there is no tax free threshold of 7k here! however, if you sell the shares having held them for more than 12 months you get half of them untaxed.

if you hold money in a managed fund then you get taxed on the growth each year. the growth is seen as the 'income'.

on balance, i am told shares are better, but get some financial advice from a professional that understands the Aus tax laws before you leave.

also remember that you are taxed on the value in Aus dollars, so if the value of your shares/funds increase because the exchange rate changes then you are taxed on that as well!! best bit is, if you lose money on your shares/funds/exchange rate, then it is tax deductabel. Sharing the risk withthe government!!!

tax residency; there are rules about what constitutes a resident, however, from personal experience my residency status started as i landed.

the point being, you cannot sort your financials out once you are here, do it before you leave as you may incur a large tax bill!

quote:

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Originally posted by Ian ORourke:
What's worrying me to some extent is if we have to return to the UK. We want to give it at least a year. We intend to stay. Hopefully we will have jobs and be happy within six months.

If we are not we face moving our financial connections away from the UK, mostly the pensions, and we will have already moved our equity.

If we need to return, for reasons beyond our control, life sometimes deals a bumb card after all, is what financial hit we will take on our cash and pensions when we return.

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If you own property and shares abroard before arriving in Oz, you find it's not worked out and you have to return to UK within 5 years you can avoid paying any CGT on these assets so long as you've not sold them whilst in Oz.

This is designed for people comming to work here for a few years and then going home. So as long as you continue holding these assets whist in Oz and it's less than 5 years you won't have to pay CGT on them when you leave.

The sting in the tail for this is that you cannot come back to Oz again as PR as then the Oz taxman will consider you liable for any CGT from your origional PR date once you sell them. (even if you sold them whist not PR in Oz).

This only applies to stocks, shares and property without a connection to Oz. Dosn't apply to PEPS, ISA, endowments or pensions.