Investing Your Money I The Channel Islands??

[BRAMBLE]

Investing your money in the channel islands??

Hi,Does anyone have any information on investing your money in the channel islands? The exchange rate is so low we are wondering if to invest our money in a high interest tax free place and use the interest to help us out until the x rate improves. Any information welcome??

[Pinhead]

Most of the major UK banks will have an offshore section based in the Channel Islands.

HSBC have an offshore website but the interest rates aren't very good. Strangely enough Nationwide also have an offshore section that is administered by HSBC but the rates are much better.
I've found that the rates of the banks in the UK are generally better than those offshore so assuming they will allow you the keep the account once you are in Oz you may be better off leaving it in a UK account and getting the interest paid gross.

Note there are provisions in the Oz taxation system to tax you on the exchange rate gains of balances over $250K once you become a resident. You also have to put all the interest income you receive worldwide on your oz tax return.

I will be in the same situation as you once I sell my house as I only managed to get half of my money into Oz as a decent ex rate (2.45).

[BRAMBLE]

Thanks for that Pinhead, it was a great help. How did you manage to get 2.45 on the x rate? and do you have to declare all your money if it is under 250, 000 AD and will it be taxed if it is from the sale of your house. Sorry about all the queations I'm a bit niave.

sarah.

[Col-and-Sara]

Thanks for the info. pinhead. I was told that we'd be taxed on any exchange rate gains if we kept our funds in the UK. Can you tell me where/who gave you the info. that gains are only taxed over $250k? The reason I ask is because we won't be taking that much with us so we could really benefit if we can leave our funds in the UK until the exchange rates improve (assuming they do!)

Cheers
Colin

[Pinhead]

I took a mortgage out on my UK house in 2006 & bought an investment apartment in Melbourne. I'm glad I did now as not only did I get a better exchange rate I've received more income than I've paid in interest plus the property has gone up in value quite a bit.

I not sure on the precise rules but if you have under $250K I think there are rules that allow you not to declare the gain, check out the ATO website in Oz.
You won't be taxed on the sale of your house either in the UK or Oz if you have lived in it before selling it (or within 3 years before).

[AndrewL]

Originally Posted by Pinhead

Most of the major UK banks will have an offshore section based in the Channel Islands.

HSBC have an offshore website but the interest rates aren't very good. Strangely enough Nationwide also have an offshore section that is administered by HSBC but the rates are much better.
I've found that the rates of the banks in the UK are generally better than those offshore so assuming they will allow you the keep the account once you are in Oz you may be better off leaving it in a UK account and getting the interest paid gross.

Note there are provisions in the Oz taxation system to tax you on the exchange rate gains of balances over $250K once you become a resident. You also have to put all the interest income you receive worldwide on your oz tax return.

I will be in the same situation as you once I sell my house as I only managed to get half of my money into Oz as a decent ex rate (2.45).

Re the tax part, not quite.

Exchange rate gains if the balance is ever over $250k and it's not a transactional account.

On the interest, you are assuming the individual is not a temp res.

If you're going to give out complex tax advice, always be aware that people may make decisions based on what they see here so if you don't fully know the detail, please don't state your thoughts as fact.

Cheers, Andrew

[AndrewL]

Originally Posted by Pinhead

I took a mortgage out on my UK house in 2006 & bought an investment apartment in Melbourne. I'm glad I did now as not only did I get a better exchange rate I've received more income than I've paid in interest plus the property has gone up in value quite a bit.

I not sure on the precise rules but if you have under $250K I think there are rules that allow you not to declare the gain, check out the ATO website in Oz.
You won't be taxed on the sale of your house either in the UK or Oz if you have lived in it before selling it (or within 3 years before).

The Capital Gains tax rules are a little more complex than that. It should be noted that Pinhead's advice will only hold true if you first lived in it before renting and have only ever owned one property at its time of sale.

Cheers, Andrew

[ozdog]

Originally Posted by AndrewL

Re the tax part, not quite.

Exchange rate gains if the balance is ever over $250k and it's not a transactional account.

On the interest, you are assuming the individual is not a temp res.

If you're going to give out complex tax advice, always be aware that people may make decisions based on what they see here so if you don't fully know the detail, please don't state your thoughts as fact.

Cheers, Andrew

Being in the same position of having to invest capital until exchange rates improve I have been reseaching the tax situation.

I had come to the impression that the exchange gain rules were really aimed at commercial operations eg currency dealers and that the limit of 250k applied to each 'account'. In other words you could spread larger amounts between several accounts and avoid any tax.

If anyone can confirm that it would be very helpful.

[Pinhead]

Originally Posted by AndrewL

Re the tax part, not quite.

Exchange rate gains if the balance is ever over $250k and it's not a transactional account.

On the interest, you are assuming the individual is not a temp res.

If you're going to give out complex tax advice, always be aware that people may make decisions based on what they see here so if you don't fully know the detail, please don't state your thoughts as fact.

Cheers, Andrew

What is a 'transactional account'?
Is a deposit account by definition not a transactional account?
Aren't most offshore high interest bearing accounts deposit accounts?

I did state that I didn't know the full details of forex rules so please get off your high horse.

Most people's circumstances are that they are selling their homes and moving to Oz not investment properties. If it was an investment property the question would have been phased differently or more details provided.

No one should act on the posting on this website by anyone in isolation on tax matters without doing there own research or consulting with a professional.

[Reasonable]

Originally Posted by Pinhead

Most of the major UK banks will have an offshore section based in the Channel Islands.

HSBC have an offshore website but the interest rates aren't very good. Strangely enough Nationwide also have an offshore section that is administered by HSBC but the rates are much better.
.

What makes you think Nationwide International is administered by HSBC?