Move to Australia

[Wunderlust]

Hi,

We have a permanent residency visa for Australia and are moving out there in the middle of Sept 2005.

I have a house here which I am renting out. I have sent out the relevant Non Resident Landlord for to the Inland revenue.

What has me worried is that I will have to declare this to the Australian Tax office and off course the consequences.

I will be planning on working over there and in a years time comming back to the UK to sell the house and move permanently to Austrlaia. What are the tax implications of such a move.? I would think that the house in the UK is still my main residency but are worried that when I sell in a years time I'll be liable to Capital Gains Tax in Australia.

Please help!

[jj9582]

Your question isn't all that straightforward. I am a tax agent in Australia, moving to England so I will offer the following:

If you had a house in Australia that you lived in, rented it for a year, and went back to sell it, it would not be taxed - however it is not in Australia.
Normally the house would be viewed as a capital gain (presuming a gain) and given you will be an australian residence for tax purposes when you sell it, you will pay tax on the sale in australia, but only a percentage.
Eg: you owned the house for 3 years. lived in it for 2, in australia for 1. Gain on sale is 90000, you will pay tax on 1/3 of the profit (there is also a 50% discount so you will actually pay 1/6 but this is just geting technical).

If, as I said, the house was in Australia, you can claim it as your main residence for up to 6 years after, even if you don't live in it (and you rent it) you still won't pay capital gains tax (CGT)(Only if you "choose" to claim it as your primary residence).

Just because the house is in the UK - I would still apply the Australian Tax rules as thought it were in Aus - ie. treat it as non taxable. To be sure you could apply for a private ruling from the Australian Tax Office which is free and they will tell you, but be sure to include all the facts as it is a very complex issue.

I hope this confusing information helps!!!!!

[jackiew]

I rented out my house in the UK and then sold it after moving to Australia.

Provided that you don't buy a house in Australia before selling the house in the UK then it will still count as your main residence. You can confirm this with the ATO - they have a help line with an international number www.ato.gov.au.

At the risk of banging my drum again on the subject of the Australian Foreign Investment Fund legislation. If you move to Australia and have either a permanent residency visa or take up citizenship and have non-employer superannuation funds you will be taxed on the growth of those funds (even though you can't touch them ) as if you earned the growth as income. This includes any money contracted out of SERPS into a pension fund. If the fund is small (<$50,000) you will be exempt but even small funds become big funds over time ( we hope ) and a good year for your pension fund can mean a big tax bill when you don't need it. There can also be a tax liability when you transfer your pension across.

I recommend anyone emigrating to Australia take tax advice ASAP. If the tax agent can't give you a run down on the FIF legislation or section 27CAA find another one ( and use the ATO search tool to do your own research ).

Jackie ( not an accountant - just a regular Australian tax payer ex UK )