CGT on crypto sale for non-resident ?

[that_person]

I have some crypto bought a few years ago when I live in Aus.  With the current gains I'm thinking of selling some.  I'm an Aussie permanent resident living back in UK.  What are the capitals gains tax implications if I sell my crypto in Aus ?  I have no income there.  I'll have to declare and pay CGT but at what rate for someone in my circumstances ?

Just trying to weigh up whether to sell in Aus or UK for minimum CGT

TIA

[Parley]

2 hours ago, that_person said:

I have some crypto bought a few years ago when I live in Aus.  With the current gains I'm thinking of selling some.  I'm an Aussie permanent resident living back in UK.  What are the capitals gains tax implications if I sell my crypto in Aus ?  I have no income there.  I'll have to declare and pay CGT but at what rate for someone in my circumstances ?

Just trying to weigh up whether to sell in Aus or UK for minimum CGT

TIA

I don't think you get the tax free threshold in Australia as a non resident.

It is probably easiest just to sell them via a UK exchange and add to your UK tax return.

[Wanderer Returns]

3 hours ago, that_person said:

I have some crypto bought a few years ago when I live in Aus.  With the current gains I'm thinking of selling some.  I'm an Aussie permanent resident living back in UK.  What are the capitals gains tax implications if I sell my crypto in Aus ?  I have no income there.  I'll have to declare and pay CGT but at what rate for someone in my circumstances ?

Just trying to weigh up whether to sell in Aus or UK for minimum CGT

TIA

How much profit are you talking about? If it's 'substantial' then it might be worth forming a company, moving the asset into it, and then paying yourself dividends. I think you'd pay less tax that way, but your next stop should definitely be an accountant. There's no CGT allowance in Australia, so you're profits would form part of your total income, and - at a guess - you'd pay more tax here.

As you've stated that you're living back in the UK, I'd assume you're British and have returned to the UK at some point. It would seem unlikely that you'd be an Australian resident for tax purposes, unless you can show that you're only living in the UK temporarily. Again, you should get professional advice before pressing that button. 

[newjez]

18 minutes ago, Wanderer Returns said:

How much profit are you talking about? If it's 'substantial' then it might be worth forming a company, moving the asset into it, and then paying yourself dividends. I think you'd pay less tax that way, but your next stop should definitely be an accountant. There's no CGT allowance in Australia, so you're profits would form part of your total income, and - at a guess - you'd pay more tax here.

As you've stated that you're living back in the UK, I'd assume you're British and have returned to the UK at some point. It would seem unlikely that you'd be an Australian resident for tax purposes, unless you can show that you're only living in the UK temporarily. Again, you should get professional advice before pressing that button. 

If you transferred the coins to a company, wouldn't they be deemed as sold and subject to tax? I understand there may have been advantages to doing that previously, but hasn't the horse bolted?

[Wanderer Returns]

2 hours ago, newjez said:

If you transferred the coins to a company, wouldn't they be deemed as sold and subject to tax? I understand there may have been advantages to doing that previously, but hasn't the horse bolted?

Maybe! I'm no expert, which is why I suggested the OP that (s)he got financial advice before selling them.

I know people who have moved their UK homes into a company into the past to reduce tax liability, but not sure if that's still doable either.

[Ken]

If you move back to Aus and sell here then (assuming you've held the asset for at least 12months and they don't change the rules - I mention that as there have been proposals to do so) then 50% of the gain is tax free and the other 50% is added to all your other income (wages, interest etc) and taxed as any other income would be. Effectively you'll pay whatever your marginal tax rate is.

If the gain is less than $40,000 (which discounts down to $20,000) and you sell when you are in Australia for an entire tax year and you have no other income in that year then the whole gain will be tax free.

If on the other hand your other income in the year that you sell is more than $180,000 you'll be paying a marginal tax rate of 23.5% on the whole of your gain (the top tax rate is 47% but there's that 50% discount for assets held over 12 months - and be warned the rate is higher if you're earning over $180K and don't have health insurance).

Edited January 8, 2021 by Ken

[Marisawright]

On 08/01/2021 at 06:13, that_person said:

I have some crypto bought a few years ago when I live in Aus.  With the current gains I'm thinking of selling some.  I'm an Aussie permanent resident living back in UK.  What are the capitals gains tax implications if I sell my crypto in Aus ?  I have no income there.  I'll have to declare and pay CGT but at what rate for someone in my circumstances ?

Just trying to weigh up whether to sell in Aus or UK for minimum CGT

TIA

So, are you really considering moving back to Australia, and staying long enough to establish tax residency, so you can avoid the CGT?  

If you're a tax resident of the UK, you're liable to pay tax in the UK on all your worldwide income.   

[Wanderer Returns]

7 hours ago, Ken said:

If you move back to Aus and sell here then (assuming you've held the asset for at least 12months and they don't change the rules - I mention that as there have been proposals to do so) then 50% of the gain is tax free and the other 50% is added to all your other income (wages, interest etc) and taxed as any other income would be. Effectively you'll pay whatever your marginal tax rate is.

Does this only apply to assets you dispose of that you have owned for 12 months or more prior to moving to Australia? 

[Wanderer Returns]

2 hours ago, Marisawright said:

So, are you really considering moving back to Australia, and staying long enough to establish tax residency, so you can avoid the CGT?  

If you're a tax resident of the UK, you're liable to pay tax in the UK on all your worldwide income.   

It would've been helpful it @that_person had just stated how much profit they stand to make - they are completely anonymous after all.

[Ken]

12 hours ago, Wanderer Returns said:

Does this only apply to assets you dispose of that you have owned for 12 months or more prior to moving to Australia? 

It applies to any CGT assets that you have owned for 12 months or more when you sell them. It doesn't matter if some of that period of ownership was before you moved to Australia or not.

[Ken]

14 hours ago, Marisawright said:

So, are you really considering moving back to Australia, and staying long enough to establish tax residency, so you can avoid the CGT?  

If you're a tax resident of the UK, you're liable to pay tax in the UK on all your worldwide income.   

It won't take any time at all to establish his Australian Tax residency. It's ensuring he has lost his UK tax residency that needs time.

If the OP is moving back to Australia with the intent of making it his permanent home he'll be tax resident as soon as he arrives and his UK tax residency will end at the same time. But if he turns up, sells the assets and then returns to the UK then HMRC isn't going to accept he ever left.

[Marisawright]

6 hours ago, Ken said:

It won't take any time at all to establish his Australian Tax residency. It's ensuring he has lost his UK tax residency that needs time.

If the OP is moving back to Australia with the intent of making it his permanent home he'll be tax resident as soon as he arrives and his UK tax residency will end at the same time. But if he turns up, sells the assets and then returns to the UK then HMRC isn't going to accept he ever left.

That’s what I was getting at

[Parley]

Why would he have to move back to Australia to sell them here. 

I assume he is just asking about selling them using an Australian exchange like Coinspot vs a UK exchange like Coinbase UK. 

[Marisawright]

2 hours ago, Parley said:

Why would he have to move back to Australia to sell them here. 

I assume he is just asking about selling them using an Australian exchange like Coinspot vs a UK exchange like Coinbase UK. 

Yes but what good would that do him tax-wise?

[Wanderer Returns]

3 hours ago, Parley said:

Why would he have to move back to Australia to sell them here. 

I assume he is just asking about selling them using an Australian exchange like Coinspot vs a UK exchange like Coinbase UK. 

 

1 hour ago, Marisawright said:

Yes but what good would that do him tax-wise?

The OP wishes to know whether it would be financially advantageous to return to Australia and become an Australian resident for tax purposes, before realizing the capital gain on his crypto assets. You'd need to know their taxable income from employment and other sources to make an accurate calculation, but based on my 'back of a fag packet' sums (which I do in Excel nowadays, as it's healthier), the short answer 'No'. In almost every scenario they would pay more tax in Australia, not to mention the costs and the hassle involved in getting back here in the first place. 

[Parley]

3 minutes ago, Wanderer Returns said:

 

The OP wishes to know whether it would be financially advantageous to return to Australia and become an Australian resident for tax purposes, 

He didn't actually say that but if you think that is what he meant, ok.

[Parley]

2 hours ago, Marisawright said:

Yes but what good would that do him tax-wise?

I have no idea.

[newjez]

It's a shame the OP hadn't thought about it before brexit.

Do you have right of abode for any of these countries op?

https://www.google.com/url?sa=t&source=web&rct=j&url=https://news.bitcoin.com/eight-countries-that-dont-tax-your-bitcoin-gains/&ved=2ahUKEwj74_uFsZDuAhVxxYUKHYdJCtAQFjAMegQIFhAB&usg=AOvVaw12iEhF2748WRiCX33aryrU&cshid=1610248240154

[Marisawright]

23 minutes ago, Parley said:

He didn't actually say that but if you think that is what he meant, ok.

Er, yes he did.  He said, "What are the capitals gains tax implications if I sell my crypto in Aus ?" and "Just trying to weigh up whether to sell in Aus or UK for minimum CGT"

As I'm sure you know, he can't choose which country he pays CGT in.  If he's legally a tax resident of the UK then he'll have to pay CGT there no matter where he sells. 

I'd have thought he would know that.  If he does, then the only other interpretation of his post is that he's planning to wait until he's moved back to Oz before selling. 

Edited January 10, 2021 by Marisawright

[Wanderer Returns]

1 hour ago, Parley said:

He didn't actually say that but if you think that is what he meant, ok.

 

47 minutes ago, Marisawright said:

Er, yes he did.  He said, "What are the capitals gains tax implications if I sell my crypto in Aus ?" and "Just trying to weigh up whether to sell in Aus or UK for minimum CGT"

As I'm sure you know, he can't choose which country he pays CGT in.  If he's legally a tax resident of the UK then he'll have to pay CGT there no matter where he sells. 

I'd have thought he would know that.  If he does, then the only other interpretation of his post is that he's planning to wait until he's moved back to Oz before selling. 

@Parley has made a fair point. We've assumed that the OP is considering physically returning to Oz to sell his crypto here, but rereading his post I think he was trying to decide whether to sell them on a British or an Australian exchange, without realizing it's irrelevant where they are sold. What's important is where (s)he is resident for tax purposes.

Edited January 10, 2021 by Wanderer Returns

[Marisawright]

37 minutes ago, Wanderer Returns said:

 

@Parley has made a fair point. We've assumed that the OP is considering physically returning to Oz to sell his crypto here

Speak for yourself.  To be honest, I was being a bit sarcastic, asking whether he planned to move here.

[Ken]

 

2 hours ago, Parley said:

He didn't actually say that but if you think that is what he meant, ok.

 

49 minutes ago, Marisawright said:

Speak for yourself.  To be honest, I was being a bit sarcastic, asking whether he planned to move here.

You have a point. The title is "CGT on crypto sale for non resident" so perhaps he means to sell them in Australia while remaining in the UK and hence non-resident in Australia.

If he did have a CGT taxable gain in Australia while non-resident then he would not be entitled to the tax free threshold and would not be entitled to the 50% discount on his gain. Assuming he had no other Australian income that would mean paying 19% tax on the first $26,800 of the gain. He'd be taxed on the gain in the UK as well but the tax due would be reduced by the tax paid in Australia.

However CGT only applies to "Taxable Australian Property" for non-residents. Taxable Australian property includes direct and indirect interests in real property situated in Australia, business assets used in an Australian branch, an option to acquire any of the above, or a CGT asset elected by an individual to continue to be subject to Australian CGT after they cease to be an Australian Tax Resident. Consequently cryptocurrency isn't normally a CGT asset for a non-resident and under normal circumstances there would be no Australian Tax to pay.

[Parley]

1 hour ago, Ken said:

 

 

You have a point. The title is "CGT on crypto sale for non resident" so perhaps he means to sell them in Australia while remaining in the UK and hence non-resident in Australia.

If he did have a CGT taxable gain in Australia while non-resident then he would not be entitled to the tax free threshold and would not be entitled to the 50% discount on his gain. Assuming he had no other Australian income that would mean paying 19% tax on the first $26,800 of the gain. He'd be taxed on the gain in the UK as well but the tax due would be reduced by the tax paid in Australia.

However CGT only applies to "Taxable Australian Property" for non-residents. Taxable Australian property includes direct and indirect interests in real property situated in Australia, business assets used in an Australian branch, an option to acquire any of the above, or a CGT asset elected by an individual to continue to be subject to Australian CGT after they cease to be an Australian Tax Resident. Consequently cryptocurrency isn't normally a CGT asset for a non-resident and under normal circumstances there would be no Australian Tax to pay.

I would be amazed if that was true. The AT declared crypocurrencies as assets several years ago and any gains on disposal taxable like any other asset for investment purposes.

Some people this year are making millions in crypto profits this year. I find it hard to believe governments won't want their. share That is a crazy loophole if true.

[Parley]

I assume you mean full British tax would be payable. You can't escape the tax totally I'm sure.

[Ken]

1 hour ago, Parley said:

I would be amazed if that was true. The AT declared crypocurrencies as assets several years ago and any gains on disposal taxable like any other asset for investment purposes.

Some people this year are making millions in crypto profits this year. I find it hard to believe governments won't want their. share That is a crazy loophole if true.

They are a CGT asset for residents. People also hold listed shares for investment purposes. Like Cryptocurrencies they are also not "Taxable Australian Property" and so not normally a CGT asset for non-residents.