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Exchange rate movements and capital gains tax


aster

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I recall reading that if you relocate to Australia but decide to leave your savings/funds in GBP then any future conversion to AUD will involve capital gains tax if the exchange rate has moved in your favour in the meantime. Is this definitely the way things are?

 

Are there any legit ways around this, like spending the funds you have in GBP for instance without converting them? What if you decided to buy a property in Australia and the transaction was finalised... in GBP? :)

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Not sure I quite understand the entire lot.

 

Does CGT only apply when you actually convert the currency or would a cash withdrawal in GBP from a GBP account also mean CGT even though nothing has actually changed?

 

And this $250,000 limit, is it only above that amount that CGT kicks in?

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  • 2 weeks later...

Sorry Alan, but this is a discussion forum and threads like these are meant to seek opinions and answers.

 

Unfortunately you seem to have made a habit here to drive users to paid advice which you yourself happen to offer. Sorry, but no thanks.

 

If I cannot discuss things here then I will seek answers elsewhere, simple as that. And if I need a local professional then I will find one, for this I certainly do not need your advice.

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Sorry Alan, but this is a discussion forum and threads like these are meant to seek opinions and answers.

 

Unfortunately you seem to have made a habit here to drive users to paid advice which you yourself happen to offer. Sorry, but no thanks.

 

If I cannot discuss things here then I will seek answers elsewhere, simple as that. And if I need a local professional then I will find one, for this I certainly do not need your advice.

 

There is no need to be rude.

 

Do you work for free out of interest?

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  • 1 month later...

Fair enough, but this is a discussion forum. Most of us help out others in numerous areas, we put time into this and never expect anything in return. Let's not turn this forum into a scavenger hunt aimed at extorting money from users who are simply looking for answers and a fair discussion from others in this community.

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Fair enough, but this is a discussion forum. Most of us help out others in numerous areas, we put time into this and never expect anything in return. Let's not turn this forum into a scavenger hunt aimed at extorting money from users who are simply looking for answers and a fair discussion from others in this community.

 

Agreed absolutely. But sometimes questions are so specific to one's circumstances and technical in nature that you are unlikely to get a reply on which you can reasonably rely from a forum such as this.

 

Having been involved on internet discussion forums for over 10 years my belief is that your question above is likely to be one such question.

 

Best regards.

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If your situation is complicated then you need to pay.

 

Have to say, this doesn't seem to be an overly complicated question. You leave the UK and have X pounds in the bank - when you decide to move the money over, the exchange rate fluctuation means it's worth X + Y (Y being the gain due to the exchange rate). The simple question is - Do you have to pay CGT on Y?

 

I don't know the answer, but if it's true then I want a rebate for the money I've lost by not transferring it before the pound collapsed!

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Have to say, this doesn't seem to be an overly complicated question.

 

=> I can assure you the answer is not straightforward, and is likely to be specific to the OP's circumstances, including factors such as when the GBP bank account in question was first opened, and the type of the bank account.

 

See also the forex provisions on the ATO website.

 

Best regards.

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I don't know the answer, but if it's true then I want a rebate for the money I've lost by not transferring it before the pound collapsed!

Yes, it doesnt seem fair that you are charged capital gains for appreciation in currency, house prices etc, but not able to claim capital loss!

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Yes, it doesnt seem fair that you are charged capital gains for appreciation in currency, house prices etc, but not able to claim capital loss!

 

You can be allowed a tax deduction for a forex loss - but only if it arises in respect of a qualifying bank account and isn't of a private or domestic nature.

 

Best regards.

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  • 1 year later...
Interesting read, you can make an election for qualifying accounts under a certain balance: https://www.ato.gov.au/Business/Forex/In-detail/Elections-and-choices/Foreign-exchange-%28forex%29--the-$250,000-balance-election/

 

Is this a game-changer when it comes to dealing with accounts in foreign currencies under the 250k threshold?

 

 

Hi Aster.

 

This provision has been in place since the forex rules came into being.

 

Note also:

"The limited balance test applies to all of the accounts for which a $250,000 balance election is in force. Credit and debit balances of these accounts are separately added, without netting, to arrive at the total credit balance and the total debit balance. The limited balance test is passed at a particular time if the total credit balances, and the total debit balances, of all qualifying forex accounts for which an election is in force are each not more than the equivalent of A$250,000."

 

Best regards.

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It still seems like a very good way to get out of the forex trap for small transactions when keeping within the 250k balance election.

 

For debit balances do they meet that the 250k limit is a transactional total for both incoming and outgoing transactions? Are these cumulative over time, say a 12-month period?

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  • 4 weeks later...

Just a quick question regarding fx rates and conversions where rates both improve and go against you. Can you basically list all conversions you have made in a fiscal year and summarise them all in terms of NET profit on currency movements?

 

So say transaction 1 from currency ABC to AUD, list the AUD received (today's rate) and compare the ATO rate for the day on which the foreign currency was acquired (or date of moving to Australia for those coming with foreign funds).

Then transaction 2 from currency XYZ to AUD, list the AUD received and compare...

 

Then summarise any profits and losses at the end of the year, so movements against you can offset any positive movements?

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