keeping money in UK whilst waiting for exchange rate to improve

Hi

anyone out there know the answer to this please....

we have a considerable sum of money in the UK from the sale of our home, we will become tax residents in Oz sometime later this year when our cpv143 comes through. As the exchange rate is so awful we are thinking of renting until something better happens to the exchange rate. Does the ?ATO charge tax on anything else other than the interest made in the UK. I seem to recall reading something a long time ago that mentioned tax on gains made from exchange rate increases. I may have got this mixed up with pensions! Any help greatly appreciated. Thanks.

Julie

Hi

anyone out there know the answer to this please....

we have a considerable sum of money in the UK from the sale of our home, we will become tax residents in Oz sometime later this year when our cpv143 comes through. As the exchange rate is so awful we are thinking of renting until something better happens to the exchange rate. Does the ?ATO charge tax on anything else other than the interest made in the UK. I seem to recall reading something a long time ago that mentioned tax on gains made from exchange rate increases. I may have got this mixed up with pensions! Any help greatly appreciated. Thanks.

Julie

You need to post this on a different section of the forum for "anyone" to give you an answer!

You need to post this on a different section of the forum for "anyone" to give you an answer!

Can't see any restrictions under money and finance? Has the thread been moved?

First question is, assuming brexit takes many years to unfold, how long are you prepared to wait? Five years?

You say the exchange rate is terrible, but if you look at the history there are times when it has been much worse. We may look back to the glory days of 2016 when the pound was so high.

Depending on where you are moving, Australian house prices have generally increased and are still doing so.

Predicting a time to move your money is a very difficult thing. True, when it is at one of the extremes, you know it will come back eventually. But no one can know when, and at the moment, no one can know the direction.

You are better tosing a coin.

And yes, there are tax on currency gains to consider on top of that.

Can't see any restrictions under money and finance? Has the thread been moved?

 

First question is, assuming brexit takes many years to unfold, how long are you prepared to wait? Five years?

 

You say the exchange rate is terrible, but if you look at the history there are times when it has been much worse. We may look back to the glory days of 2016 when the pound was so high.

 

Depending on where you are moving, Australian house prices have generally increased and are still doing so.

 

Predicting a time to move your money is a very difficult thing. True, when it is at one of the extremes, you know it will come back eventually. But no one can know when, and at the moment, no one can know the direction.

 

You are better tosing a coin.

 

And yes, there are tax on currency gains to consider on top of that.

Hi Julie

ive no advice to offer, just wanted to say that we are going to be in the same boat very soon and are also trying to decide whether to wait or not. Good advice from Newjez I think ... Lowest I've seen the x rate is 1.43 to the pound in 2009 and it took six years to come back up to 2 ..... Thanks for raising this, we too would be grateful for advice. I think a big factor has to be how much more settled we will feel in our own place ... That said, we'll have to rent for a bit anyway, while we look for somewhere to buy. Timing of the referendum couldn't have been worse for us could it?

Can't see any restrictions under money and finance? Has the thread been moved?

 

First question is, assuming brexit takes many years to unfold, how long are you prepared to wait? Five years?

 

You say the exchange rate is terrible, but if you look at the history there are times when it has been much worse. We may look back to the glory days of 2016 when the pound was so high.

 

Depending on where you are moving, Australian house prices have generally increased and are still doing so.

 

Predicting a time to move your money is a very difficult thing. True, when it is at one of the extremes, you know it will come back eventually. But no one can know when, and at the moment, no one can know the direction.

 

You are better tosing a coin.

 

And yes, there are tax on currency gains to consider on top of that.

Thread was in Ask Vista earlier.

Anyway, I would agree with this summary. The pound has fallen since Brexit but it is still better than it was for much of the time I was investigating my move and living in Australia which was 2009-2014. And during that time I was always monitoring house proces and they have gone up hugely over that period, I remember before we moved there were plenty available for $1million in the Sydney suburbs we were thinking of, definitely not now.

So yes an improvement in exchange rates, if it happens, could be totally negated by rising house prices and money spent on rent.

Hi Julie

 

ive no advice to offer, just wanted to say that we are going to be in the same boat very soon and are also trying to decide whether to wait or not. Good advice from Newjez I think ... Lowest I've seen the x rate is 1.43 to the pound in 2009 and it took six years to come back up to 2 ..... Thanks for raising this, we too would be grateful for advice. I think a big factor has to be how much more settled we will feel in our own place ... That said, we'll have to rent for a bit anyway, while we look for somewhere to buy. Timing of the referendum couldn't have been worse for us could it?

Hi Fisher

i agree with you about feeling more settled in your own home, and that is a factor we are taking into account. it would seem we are are damned if we do and damned if we don't. We are waiting it out in Oz for our CPV 143 to be granted, almost at 2 years 2 months now, thoroughly fed up with the waiting and having absolutely no control over our future plans. End of moan! How's your house sale going?

Julie

Thread was in Ask Vista earlier.

 

Anyway, I would agree with this summary. The pound has fallen since Brexit but it is still better than it was for much of the time I was investigating my move and living in Australia which was 2009-2014. And during that time I was always monitoring house proces and they have gone up hugely over that period, I remember before we moved there were plenty available for $1million in the Sydney suburbs we were thinking of, definitely not now.

 

So yes an improvement in exchange rates, if it happens, could be totally negated by rising house prices and money spent on rent.

Thanks Bungo, yes the original post was in 'Ask Vista' and also as you say one can hope for more favorable exchange rates but one would also have to hope house prices (and mortgage rates if needed) stay static during the same period.

To the OP you will not get charged tax on anything to do with exchange rates, unless of course you are a currency dealing business, you will only be taxed on any interest or other investment gains made on your money.

good luck with it all.

Hi Fisher

i agree with you about feeling more settled in your own home, and that is a factor we are taking into account. it would seem we are are damned if we do and damned if we don't. We are waiting it out in Oz for our CPV 143 to be granted, almost at 2 years 2 months now, thoroughly fed up with the waiting and having absolutely no control over our future plans. End of moan! How's your house sale going?

Julie

Hi Julie. Not selling till next year ... Complicated family issues. I feel frustrated watching house prices going up in Kiama and not being able to do a thing about it. I try not to think about it most of the time but will be glad when it's all finally settled! Good luck with your visa, I've been lurking on the parents thread a bit and know how frustrated you all are - it has to come through soon!!!

So.....in my crystal ball I see the excange rate going back to $2 to the £.....and a big lotto win for me!! Ha, I wish....the house money and redundancy cheque went in the bank the day we flew to Oz - about a week or so before the brexit vote! Thought it was all going too well.....

Mind you, I did buy some land here when it was 1.47 to the £, so was just hoping things mighr have gone my way, just for a change......?

Thanks Bungo, yes the original post was in 'Ask Vista' and also as you say one can hope for more favorable exchange rates but one would also have to hope house prices (and mortgage rates if needed) stay static during the same period.

To the OP you will not get charged tax on anything to do with exchange rates, unless of course you are a currency dealing business, you will only be taxed on any interest or other investment gains made on your money.

good luck with it all.

Are you sure? I thought currency gains were taxed similar to capital gains?

Are you sure? I thought currency gains were taxed similar to capital gains?

What if it goes the other way whilst waiting? Can you claim losses lol?

I'm sure I read somewhere on here that you are excused capital gains on currency if it is the money from your house and there hasn't been too long a gap. One for a tax expert I think.

No one person has the answer. You will have to be brave, like the rest of us, and send your money over when you think it's the right time. The required knowledge is hindsight, but as you know, it will only be acquired after the event. It can be tough this migrating lark.

What if it goes the other way whilst waiting? Can you claim losses lol?

Good question. What if your UK house increased by 20%, but the pound dropped 20% within a year? In the UK you would have a capital gain, but in Australia you would be neutral. Definitely one for an international tax expert.

What if it goes the other way whilst waiting? Can you claim losses lol?

Isn't there a section on the Australian tax return for currency gains and losses?

Are you sure? I thought currency gains were taxed similar to capital gains?

Please tell me where one has made a currency gain? You change your money once at the rate at that time so where is the gain? One may get a better (or worse) rate but it is not a gain, much like trying to find which bank or exchange company will give you a slightly better rate. Folk do not get taxed on their currency exchange for holiday money when travelling to any country do they?

No one person has the answer. You will have to be brave, like the rest of us, and send your money over when you think it's the right time. The required knowledge is hindsight, but as you know, it will only be acquired after the event. It can be tough this migrating lark.

You are quite right, hindsight is the required knowledge.

We are however living in peculiar times. According to reports that I read online Australia is heading for a recession and the spiralling house prices are due to tumble, other economists say that Invoking article 50 may or may not happen and that it can even be reversed, delays to negotiations for Brexit can go on for ever. A crystal ball is definitely required!

Julie

Please tell me where one has made a currency gain? You change your money once at the rate at that time so where is the gain? One may get a better (or worse) rate but it is not a gain, much like trying to find which bank or exchange company will give you a slightly better rate. Folk do not get taxed on their currency exchange for holiday money when travelling to any country do they?

The gain is the difference in how much the money was worth in dollars at the point you moved to Australia compared to the amount it is worth when you actually exchange it. In theory there could be tax to pay on the gain. Whether there actually is on practice may be subject to all sorts of rules that might need a tax expert to advise on.

You are quite right, hindsight is the required knowledge.

We are however living in peculiar times. According to reports that I read online Australia is heading for a recession and the spiralling house prices are due to tumble, other economists say that Invoking article 50 may or may not happen and that it can even be reversed, delays to negotiations for Brexit can go on for ever. A crystal ball is definitely required!

Julie

I had money to ship over to the UK during the Brexit, Reading and listening to many views saying it would be close but generally a remain and even the bookies giving the odds on remaining in the EU so two days before the vote I changed the money to pounds, 5 days later I could of been almost 20,000 pounds better off.

Moral of the story............. do not believe all you read and hear.................. like the lottery where we have no control over the numbers, it will be more a game of chance/luck rather judgment, and at the end of the day you will be forced to ship it at whatever rate.

Good luck

The gain is the difference in how much the money was worth in dollars at the point you moved to Australia compared to the amount it is worth when you actually exchange it. In theory there could be tax to pay on the gain. Whether there actually is on practice may be subject to all sorts of rules that might need a tax expert to advise on.

No it is not! there is no gain, there is a difference in exchange rates and that's all you have not MADE any money. You are only liable for tax on any gains made on that money via investments, be it just in a savings account or other dealings, which would include currency if you were buying and selling in the currency markets which in this thread we are not.

Please tell me where one has made a currency gain? You change your money once at the rate at that time so where is the gain? One may get a better (or worse) rate but it is not a gain, much like trying to find which bank or exchange company will give you a slightly better rate. Folk do not get taxed on their currency exchange for holiday money when travelling to any country do they?

If you leave the UK for Australia, but leave a large pot of cash in the bank for five years, then bring it to Australia at a profit, that is deemed exactly the same as if someone living in Australia had moved an equal sum to the UK when you moved to Australia, and then shipped it back the same time you did.

I don't know the rules on taxation. But from an accounting point of view it would be a currency gain. I think it needs to be a significant amount to interest the ato. But I'm not sure if you have to make a significant gain, or whether it's just the principal that matters. I'm not an accountant or a tax expert. But I do remember reading threads on this in the past.

There is a good link here.

http://www.pomsinoz.com/forum/money-finance/178320-exchange-rate-movements-capital-gains-tax.html

...

If you leave the UK for Australia, but leave a large pot of cash in the bank for five years, then bring it to Australia at a profit, that is deemed exactly the same as if someone living in Australia had moved an equal sum to the UK when you moved to Australia, and then shipped it back the same time you did.

 

I don't know the rules on taxation. But from an accounting point of view it would be a currency gain. I think it needs to be a significant amount to interest the ato. But I'm not sure if you have to make a significant gain, or whether it's just the principal that matters. I'm not an accountant or a tax expert. But I do remember reading threads on this in the past.

 

There is a good link here.

 

 

http://www.pomsinoz.com/forum/money-finance/178320-exchange-rate-movements-capital-gains-tax.html

From your link and from the ATO/RBA

Private and domestic

For most individual taxpayers forex gains or losses will generally be ignored if the gain or loss is of a private or domestic nature, but where the gain or loss results from carrying on a business or a profit-making undertaking or plan, the gain or loss will be assessable income or an allowable deduction.

There are limited circumstances where forex gains or losses of a private or domestic nature are subject to Australia's capital gains tax (CGT) provisions. Foreign currency bank accounts are a CGT asset and may be subject to the capital gains provisions each time a CGT event happens to them. CGT event C2 happens each time an amount is withdrawn from a foreign currency bank account. If the gain is assessable, or the loss is allowable, under the CGT provisions the forex gain or loss will be subject to the forex provisions.

Where the forex provisions do apply there is a provision that may allow the taxpayer to disregard any forex gain or loss. The '$250,000 balance' or 'limited balance' election enables a taxpayer to disregard specified forex gains or losses on certain foreign currency denominated bank accounts with low balances. Any capital gain or loss made as a result of CGT event C2 happening is also disregarded.

From your link and from the ATO/RBA

Private and domestic

For most individual taxpayers forex gains or losses will generally be ignored if the gain or loss is of a private or domestic nature, but where the gain or loss results from carrying on a business or a profit-making undertaking or plan, the gain or loss will be assessable income or an allowable deduction.

There are limited circumstances where forex gains or losses of a private or domestic nature are subject to Australia's capital gains tax (CGT) provisions. Foreign currency bank accounts are a CGT asset and may be subject to the capital gains provisions each time a CGT event happens to them. CGT event C2 happens each time an amount is withdrawn from a foreign currency bank account. If the gain is assessable, or the loss is allowable, under the CGT provisions the forex gain or loss will be subject to the forex provisions.

Where the forex provisions do apply there is a provision that may allow the taxpayer to disregard any forex gain or loss. The '$250,000 balance' or 'limited balance' election enables a taxpayer to disregard specified forex gains or losses on certain foreign currency denominated bank accounts with low balances. Any capital gain or loss made as a result of CGT event C2 happening is also disregarded.

So you want to spread your money around in different foreign accounts making sure each is less than 250,000 dollars? You would probably do this anyway to gain capital protection should the bank go under.

So you want to spread your money around in different foreign accounts making sure each is less than 250,000 dollars? You would probably do this anyway to gain capital protection should the bank go under.

Well you could if you were a millionaire, but if you were I think you would have and get better ideas with how to invest. This thread is about money from your own home which in a lot of circumstances would come with-in the 250k limits for each person. Also reading the info from your link then so long as you do not exchange more than the 250k per transaction then all is ok, so no need for your idea of several foreign accounts!

In general there is no need to worry about exchange rates