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Where Taxpayers and Advisers Meet

Dual Resident CGT

Posts: 1
Joined: Wed May 01, 2019 3:47 pm

Dual Resident CGT

Postby nrg1 » Wed May 01, 2019 3:56 pm

Dear all

I have a query on the taxation of capital gains for a dual resident of the UK And Australia for a previous tax year.

I am satisfied that I am Dual Resident in both the UK and Australia for the 2017/18 tax year. Having read the double tax agreement, the tie breaker results in Australia coming out as my primary country.

So, I am UK resident, but UK treaty non-resident. I am also Australian resident and Australian treaty resident.

In 2017/18, I disposed of commercial (i.e. non-residential) UK property. Under the DTA, my reading of this as a treaty non-resident in the UK, article 13 states that the gain may be taxed in the UK.

Does this mean that I should have included the gain on my 2017/18 UK tax return, and claimed foreign tax credit relief on my Australian return? Or does my treaty non-residence extend to me be treated as non-resident for UK CGT purposes altogether?

Any help gratefully received!



Posts: 7888
Joined: Wed Aug 06, 2008 3:25 pm

Re: Dual Resident CGT

Postby maths » Thu May 02, 2019 11:11 pm

In principle as a non-UK treaty resident any disposal of non-residential property situated in the UK is not subject to any UK CGT charge.

As however you were UK resident in the tax year of disposal a UK Tax Return should be completed with any claim being included in SA 109.

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Joined: Fri May 16, 2014 3:47 pm

Re: Dual Resident CGT

Postby AGoodman » Fri May 03, 2019 4:01 pm

maths - are you sure about that?

He is UK tax resident but treaty non-resident.
Art 13(1) seems pretty clear that the UK can levy tax on gains on UK land (without a resi/commercial distinction)

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Joined: Wed Aug 02, 2017 9:09 pm

Re: Dual Resident CGT

Postby darthblingbling » Fri May 03, 2019 6:29 pm

Treaty residency basically just tells you how to interpret the tax treaty in terms of contracting state and other state

Posts: 7888
Joined: Wed Aug 06, 2008 3:25 pm

Re: Dual Resident CGT

Postby maths » Sat May 04, 2019 12:37 am

I prepared two draft responses at different times and I appear to have posted the short incomplete draft which reached the wrong conclusion.

Article 13(1) merely allows/permits the UK to levy UK CGT on disposals of UK real estate by a non-resident (including a dual resident whose dual residence is resolved in favour of the UK); it does not itself actually levy any such charge.

The sale is of UK real estate in 17/18 but commercial not residential. As a consequence, under UK domestic law a non-resident isn't subject to UK CGT.

However, under Article 13(9) it would seem that the UK are in fact able to levy UK CGT on residential or commercial property gains despite treaty non-residence where the gain arises in a tax year when under UK domestic law the vendor is UK resident.

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