Tax on capital brought to Aus

[KalahariHarry]

Hi All,

Just a quick one....

Do we get taxed on capital brought to Aus when we immigrate?

Trev

[Renny]

You get a R1m allowance pp per year. If you bring more than that per financial year then you need SARS clearance and need to pay tax

[Nev]

Last i heard if you bring it with you when you arrive, and therefore not yet a tax resident in auz then no, if you bring it afterwards, like selling your house later and are a tax resident in Auz then you are in for the tax in Auz

[acmac]

http://www.expatarrivals.com/article/finances-101-a-guide-to-money-management-for-expats-emigrating-to-australia

Even though it states the following, still not clear as to whether you have a time limit or not, and I suspect there is...

You don’t have to pay tax on any money you bring into Australia when you emigrate. To start earning an income in Australia you need to apply for a Tax File Number from the Australian Tax Office and you then become a tax resident.

[BronPreston]

Hi Trevor,

No you do not get taxed on capital brought from SA into Australia.

If you need any further help then please feel free to contact me. I work for a company that specialises in assisting private clients to move their funds out of South Africa at guaranteed best exchange rates and no fees. Our service includes free SARS tax clearances (if required). We are happy to help and assist in any way.

Thanks

Tara

tlawrie@exchange4free.com

[Nev]

Hi Tara

So if you have been in the country for say 2 years and sell a house in south Africa, then move the money over, you wont be taxed in Auz?

[KalahariHarry]

Hi Nev,

I reckon there will be tax in that situation. One probably gets a 6-12 month time limit to bring in funds tax free. That would make sense.

I did read somewhere, once you are a tax resident your RSA income also becomes taxable in Aus. I don't think the ATO is that nice... :-)

[Nev]

Yep, that's my understanding as well, but as i understand it you become a tax resident when you land and can say we live in auz now and not RSA, so pretty much straight off the plane

At which point you need to pay on funds coming in, im really interested if there is a time limit though (Hoping for an answer from the experts)

[Brad76]

No tax unless you're a resident. In the scenario you presented there would most likely be a tax implication.

I think Tara is referring to people who sell up, transfer their money and hop on a plane!

Hi Tara

So if you have been in the country for say 2 years and sell a house in south Africa, then move the money over, you wont be taxed in Auz?

[KalahariHarry]

Brad76,

Thx so for example

We open an Aus account from RSA - Transfer cash for example AUD100K, arrive in Aus and become tax residents when we land there.

The money, having arrived in Aus before us is now NON-taxable???

Is this correct?

Trev

[Bronwyn&Co]

If you still have a tax number in SA and income is earned in SA you pay tax in SA. You prove it to the ATO and you do not pay again, in terms of the reciprocal tax agreement between the two countries. It just shows in & out on your Aus tax return.

If you have formally emigrated and closed your SA tax affairs, I believe you would have to pay capital gains tax to the ATO on a property sold in SA, as it is not your principle place of residence and you are liable for tax on your worldwide income.

Please get independent tax advice and don't rely on the forum, we are clearly not experts

Brad76,

Thx so for example

We open an Aus account from RSA - Transfer cash for example AUD100K, arrive in Aus and become tax residents when we land there.

The money, having arrived in Aus before us is now NON-taxable???

Is this correct?

Trev

Trev presumably before you got the lump sum of money you paid tax on it, so you only pay tax once.

As soon as the money is in an Australian bank account it will start to earn interest and that interest forms part of your Australian income, so only the interest earned is taxable.

The Australian bank will withold half your interest until you give them your Tax File Number (TFN), after which they pay you all the interest and it's your responsibility to declare interest income in your first Aussie tax return at the end of June each year.

Edited June 27, 2014 by Bronwyn&Co

[KalahariHarry]

Hi Bronwyn,

This was my understanding. Thank you

Trev

[BronPreston]

Hi All

Sorry for the wait,

The short answer is that you will be liable for CGT on the disposal of your house, and you will have to file a return in South Africa to pay that CGT.

The long answer follows:

With regard to the capital gains tax implications for your direct interest in a home section 9H of the Income Tax Act applies:

On becoming a tax non-resident of South Africa all persons legal or otherwise are deemed to have disposed of all assets for CGT purposes on the day immediately prior to becoming a tax non-resident, subject to exclusions to this rule.

One such exclusion effective 2012/04/01 is your direct interest in immovable property. Note this applies to direct interest in fixed property only, and not indirect interest.

So your home will not be a deemed disposal when you became a tax non-resident however, this disposal will be subject to CGT when you actually dispose of the asset.

Paragraph 2(1) of the Eighth Schedule states that tax non-residents are liable to pay CGT on disposals of immovable property situated in South Africa.

Other issues to address:

You are deemed to dispose of all capital assets (subject to exclusions) and are liable to pay CGT on them the day before you become a tax resident of a different country. So figuring out when this day is, is quite important.

You do not become a tax non-resident of South Africa the day you hop off a plane in Australia. It is actually way more complicated than that. Seek professional assistance if you are in doubt.

South Africa also has various “source” provisions where certain income or capital received from South Africa by a tax non-resident is taxable in South Africa. Rental income received from immovable property in South Africa by a tax non-resident is an example, and is taxed in South Africa. You have to essentially file 2 returns, one in SA and another in Aus.

Disclaimer** This information is not intended to be construed as advice, it is a simple statement of fact. Always seek advice from a consultant who has all of your details and can make a recommendation based on your personal case.

[Nev]

Nice one thanks

[Brad76]

The capital sum itself would most likely not be taxable (no connection with Australia and you not being resident at the time of transfer) - any interest earned would be subject to tax though

Brad76,

Thx so for example

We open an Aus account from RSA - Transfer cash for example AUD100K, arrive in Aus and become tax residents when we land there.

The money, having arrived in Aus before us is now NON-taxable???

Is this correct?

Trev

[Bronwyn&Co]

The capital sum itself would most likely not be taxable (no connection with Australia and you not being resident at the time of transfer) - any interest earned would be subject to tax though

You have to pay tax in one country or the other. Anything else is trying to pull a 'Paul Hogan' which will probably be classed as tax evasion

The problem is that you have to be a tax 'resident' somewhere and capital gains are taxable.

http://www.australiantax.com.au/australian-taxation/paul-hogan-tax-scandal-crocodile-dundee-call-home/

Of course if the sum is already taxed, that's different.

Edited July 2, 2014 by Bronwyn&Co

[Gerhardk]

Bringing capital over (effectively your after tax savings) should not attract any Australian tax - before or after you become an Australian tax resident. As noted above, if you have another event (such as selling an asset) before it is converted to capital (savings) the answer may be different and it may also depend on your tax resident status (such as dual tax resident, temporary tax resident etc.).

I am not aware of any time limit to bring your capital (savings) over, the capital will retain its nature as capital unless you invest it in say unit trusts and make a gain on this. As noted earlier it may however attract interest if left in South Africa which will be subject to tax at source (South Africa) and probably also subject to tax in Australia (say if you are a dual tax resident - not a temporary tax resident).

[KalahariHarry]

Thank you all for your comments, very helpful, its as i suspected.

Trev

[Hugo2]

Hi Trevor

I looked at your profile, you now being granted or in the process of a 190 skilled worker PR i.e. you are currently on work visa or permit?

If so, you will only face ATO taxes on Australian sourced income and CGT events, provided the CGT event is not tax exempt in Australia.

CGT events at home and the income earned at home (assume SA) is taxable in SA only but may enjoy tax exemption in SA. The tax exemption in SA will NOT result in the ATO taxing you.

A primary residency in SA (family home) sold is normally CGT exempt or largely CGT exempt in SA, not taxable in Australia (for work visa residents of Australia) and most other SA income (dividend, salary, portion of any interest income) is tax exempt in SA and should not be taxed in Australia

The transfer of funds will NEVER trigger tax. The event triggers the tax and the country allowed to tax is dependant on treaty rules read with the VISA type / PR or passport status in Australia.

Please inbox me and I can assist.

www.taxmigration.com

Edited July 2, 2014 by Hugo2

[KalahariHarry]

Thank you Hugo, will do

Trev

[fouche's]

If you are a tax resident of Australia and keep your primary residence in South Africa you will:

1. pay tax on net rental income in South Africa and Australia
2. not pay tax on the gain (selling price in A$ less value A$ at date of becoming a tax resident) if you sell the property within 6 years of becoming a tax resident of Australia and you don't buy a primary residence in Australia.
3. pay tax (CGT) when sold in South Africa and Australia if 2 does not apply

Foreign income tax offset should apply in Australia for tax paid in South Africa on net rental income/CGT

Regards

Louis