Before or after we move ... what's the difference?

[Zim]

Hi everyone,

I have been trawling through the last few pages of the money forum and have been trying very hard to gleam some info relating to my question but havent made much headway, so apologies if this question has already been addressed along the way!

My husband and I are hoping to leave Zimbabwe before our activation date in June and of course ideally it would be great to have sold up before then...but its pretty unlikely! So the question is, how will we be affected if sale of business and home only goes through after we are officially aus residents? Does it make much difference tax wise, paperwork wise etc. We have a business to sell, which we are most likely going to do asset by asset (earthmoving), a house and unpaid debts to recover.

Thanks for your ideas and advice.

[Brad76]

If you're tax resident in Aus by the time those assets get sold you will be liable for tax on any profit made (income / capital gains tax). The house will probably be less of a problem though, provided it gets sold fairly quickly after becoming an Aus tax resident, there is an in exclusion in Aus tax law pertaining to gains made on the sale of principal residences.

Edited March 21, 2013 by Brad76

[Mara]

You need to get official advice on that aspect. To my knowledge, if you can show that it was already owned assets, that were just being sold off, then there is no charge on the capital if you bring it in after you are an Aus Resident, but you will need the ability to prove that. So check in the money section, and ask one of the knowledgeable ones.

[Brad76]

Are your business assets housed in a structure ie Company? If so any gain made would be contained within the co! If you have loan accounts any funds drawn after settling liabilities would constitute a repayment of capital / loan accounts in Zim. If that's the case there won't be any further tax implications at least, not in your new place of residence anyway!

[Brad76]

You need to get official advice on that aspect. To my knowledge, if you can show that it was already owned assets, that were just being sold off, then there is no charge on the capital if you bring it in after you are an Aus Resident, but you will need the ability to prove that. So check in the money section, and ask one of the knowledgeable ones.

There should be. Perhaps you're referring to the revision of base cost on the date you first become resident?

[fouche's]

The tax implications would depend on the structure, loan account balances etc. of your existing business and would depend on the underlying nature of the cash received. e.g. if you need to declare a dividend from the company, the dividend would not be taxable if it was declared before you migrated however would be taxable in Australia if declared after migration. Your personal residence would probably not be taxable provided you sold within 6 years of migrating and you did not buy another personal residence in Australia before selling the Zim property. Also date of contract of sale is important rather than when cash received. It is important to structure your affairs correctly so you can make informed decisions about the timing of the sale of assets in order to minimise tax payable. It may sometimes be better to sell an asset at a lower price before migration rather than after migration as the net after tax return may be better.

Louis

[jcl]

Hi all,

Can anyone then conclusively answer the following:

If I move money to my Aus bank account after we have arrived, will I have to pay tax on this money and if so, how much?

Thanks

John

[fouche's]

Hi John

It is not possible to give a conclusive answer as the tax implications depend on the underlying nature of the money received. The transfer on money from a bank account should not have tax implications but the tranasaction that occurred resulting in money in the bank account could have a tax implication in Australia eg dividends, distributions and Capital Gains from sale of
business/shares.

I have dealt with many instances where somone becomes a tax resident in Australia (sometimes before they became a tax resident) and the ATO Transaction and Reporting Analysis Centre will pick up money transfers into Australia. The ATO then includes these transfers in taxable income unless you are able to prove that the source of these money transfers are not taxable income.

Basically you need to structure your affairs before migration to ensure that the underlying transaction has zero/minimal tax implications by understanding which transactions are taxable related to your individual circumstances as there is a fairly good chance that the transactions will be scrutinized by the ATO.

PM if you need more specific assistance.

Rgds

Louis