keeping money in UK whilst waiting for exchange rate to improve

[Patphillips47]

Reading through the notes am wondering how we would go if we transferred the funds from our house sale in the uk now as we would have around $265,000

We were thinking of leaving it for a while because of the £ to $ value but the interest rate in UK is only 0.25

My bank has an offer of an account with good interest so thinking its swings and roundabouts syndrome

would we be liable for capital gains though as its over 250 ?

[Keith and Linda]

Reading through the notes am wondering how we would go if we transferred the funds from our house sale in the uk now as we would have around $265,000

We were thinking of leaving it for a while because of the £ to $ value but the interest rate in UK is only 0.25

My bank has an offer of an account with good interest so thinking its swings and roundabouts syndrome

would we be liable for capital gains though as its over 250 ?

 

Very doubtful, It would be $250K each person and the pound exchange rate is probably weaker now than when you sold your house so you would have a loss and not a gain. Really there is nothing to worry about.

[Patphillips47]

Very doubtful, It would be $250K each person and the pound exchange rate is probably weaker now than when you sold your house so you would have a loss and not a gain. Really there is nothing to worry about.

Cheers just don't want the tax man getting a cut if I can help it lol

[Keith and Linda]

Cheers just don't want the tax man getting a cut if I can help it lol

 

Also as previously mentioned, it is based on the amount of the transaction so limit any transaction below the $250k

good luck

[newjez]

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

 

 

Many houses in the UK and Australia are easily worth over a million dollars. But looking at the links it doesn't look like it's hard to avoid the tax. Probably worth talking to accountant if you are dealing with that sort of money as the implications of getting it wrong could be quite expensive.

[Ken]

Also as previously mentioned, it is based on the amount of the transaction so limit any transaction below the $250k

good luck

 

The $250K refers to the size of the bank balance not the size of the transaction. But that's irrelevant anyway since if the source of the funds was the sale of a UK home there won't be any doubt that it's private and domestic and not a profit making enterprise. Now if you had used Australian Dollars to buy pounds (or any other foreign currency) then you'd need to be thinking about whether or not you had more than $250,000 in your account and needed to keep track of the gain or loss on each currency sale - but don't complicate your life with problems that you don't have.

[lp77]

The way I read it before we sold up was you couldn't leave your money in UK to gain on. Exchange rate... We thankfully moved money pre brexit vote and we moved money at different times... Figured we could explain using UK money to sort stuff there before moving it... Still got cash in UK account to pay credit cards n for holidays.. We'd be better moving our aus money to UK the now... We'd gain... We got a quote at 1.93 but within 24hrs it went to 2.03.... Hindsight is a wonderful thing.. But you can only do what is right for u at the time x tbh put the money in a long term savings account and benefit from interest rates in Oz compared to UK x

[Keith and Linda]

The $250K refers to the size of the bank balance not the size of the transaction. But that's irrelevant anyway since if the source of the funds was the sale of a UK home there won't be any doubt that it's private and domestic and not a profit making enterprise. Now if you had used Australian Dollars to buy pounds (or any other foreign currency) then you'd need to be thinking about whether or not you had more than $250,000 in your account and needed to keep track of the gain or loss on each currency sale - but don't complicate your life with problems that you don't have.

 

Not according to the info from the ATO/RBA as posted earlier and again below. But rules do change or get interpreted differently I suppose.

I am not complicating my life and I am trying to uncomplicated others, it is some posters that have placed the unnecessary doubt, worry and concern, but thanks for your assistance in easing folks minds on this subject.

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.

[newjez]

It is important, so would it be possible to get a professional opinion? I've reported my post and asked if this can be arranged.

[acb]

Hi , it seems like nobody has actually interpreted the ATO statement the same as me , somebody has it wrong ? who

my interpretation would be 

1)private & domestic will be ignored 

2)bank accounts holding foreign currency may fall into CG territory when a CG realisation takes place

3)where the forex provisions do apply ( a foreign currency account would be an example, not a currency transfer ) for balances below $250k forex  gains or losses will be ignored .

 

could an expert  please step

ACB

[Ken]

On 22/10/2019 at 15:47, acb said:

Hi , it seems like nobody has actually interpreted the ATO statement the same as me , somebody has it wrong ? who

my interpretation would be 

1)private & domestic will be ignored 

2)bank accounts holding foreign currency may fall into CG territory when a CG realisation takes place

3)where the forex provisions do apply ( a foreign currency account would be an example, not a currency transfer ) for balances below $250k forex  gains or losses will be ignored .

 

could an expert  please step

ACB

Your interpretation of points 1 and 2 is correct. On point 3 you seem to be suggesting that the forex provisions automatically apply to all foreign currency accounts (they don't - the rules merely say they may apply - the source of the funds and what you are doing with them is important to determine whether or not it is private & domestic) and that gains or losses will automatically be ignored on balances under $250k (they won't - you need to make an election unless the private & domestic exemption applies).

[acb]

thank you Andy , your interpretation does improve the clarity.

could I ask what is a C2 capital gains tax event ?

[Guest]

Can I just check that as a total newbie I've understood this?

My wife and I sell our home in the UK, move to Aus and become PRs and leave the money in our UK bank accounts for a year until everyone's forgotten about Brexit and GBP hits world-beating record highs again... We then each transfer the equivalent of $249,999 into our Aussie bank accounts on day X and then do this again a month later on day Y.

Am I right in thinking there'd be no taxable foreign currency gains as the money was purely "private and domestic"? And no CGT either because each transaction is below $250k and CGT is calculated on a per transaction basis?

[newjez]

1 hour ago, Frank Oz said:

Can I just check that as a total newbie I've understood this?

My wife and I sell our home in the UK, move to Aus and become PRs and leave the money in our UK bank accounts for a year until everyone's forgotten about Brexit and GBP hits world-beating record highs again... We then each transfer the equivalent of $249,999 into our Aussie bank accounts on day X and then do this again a month later on day Y.

Am I right in thinking there'd be no taxable foreign currency gains as the money was purely "private and domestic"? And no CGT either because each transaction is below $250k and CGT is calculated on a per transaction basis?

The effect of brexit on the pound isn't a psychological phenomenon. The pound won't just go up because people forget about brexit.

The pound will go up if the UK starts raising interest rates. 

That could happen. But is far from guaranteed. If I had to bet whether Australia would recover from covid faster than the UK can recover from covid and brexit, it will be Australia that gets my money.

Longer term is anyone's guess. But short term there is a good chance you would lose.

[Ken]

13 hours ago, Frank Oz said:

Can I just check that as a total newbie I've understood this?

My wife and I sell our home in the UK, move to Aus and become PRs and leave the money in our UK bank accounts for a year until everyone's forgotten about Brexit and GBP hits world-beating record highs again... We then each transfer the equivalent of $249,999 into our Aussie bank accounts on day X and then do this again a month later on day Y.

Am I right in thinking there'd be no taxable foreign currency gains as the money was purely "private and domestic"? And no CGT either because each transaction is below $250k and CGT is calculated on a per transaction basis?

It would be private and domestic so you wouldn't be taxed. If you were liable to CGT the fact that the transfers are below $250K wouldn't help unless you were holding them in different bank accounts as it's the total balance in the account before the transfer that is the measure for the eligibility to elect to have the gain ignored not the amount of the transfer.