Oz Tax - FOREX loss/$50k + assets ?

[KathK]

If we've had an ex rate loss in transferring funds from UK to Oz can we claim it as a FOREX loss? (ie ex rate was less when we transferred it than when we arrived in Oz) I read on ATO website that we can't claim for personal/domestic issues - is that correct?

 

AND

one of questions is 'any assets outside Oz in excess of $50k?', we had funds in a UK bank a/c which was brought over before end of tax year, does this count as assets? Do we need to answer 'yes'? And why do they need to know coz there is no tax payable on this is there?

 

Thank you to anyone who can shed light on this. (I did ring ATO & after being passed from person to person, with promise of a ring back to clarify issues..which has never happened...I thought I'd ask on here, coz am sure one of you will know!)

 

Kath:confused:

[Guest acem8]

Hi Kath,

 

We are in the same situation as you. I believe the answer is yes because if you had made a gain they would certainly want some of that off you! This link that has been posted here before explains a few different scenarios Go Matilda - Your Gateway to Australia - News

 

The rules would be a) you must have had those funds on the day you became an Australian resident for tax purposes b) they have been held in an account opened since July 2003.

 

I agree the ATO website is very vague on this and other items for individuals. I would read that 'personal/domestic' means private transactions between friends/family?

 

With the 50k thing they just want to know who has money stashed elsewhere in case money arrives in oz out of thin air. For example, if you said no this year and next year you transfer over 100k they will figure someone is owed some tax somewhere (inheritance, capital gains, income tax!!)

 

I hope this helps. The ATO website has the exchange rates on the exact day you arrived and did the money transfer. I figure you use these to calculate your loss rather than the rate the bank gave you.

[KathK]

Hi Kath,

 

We are in the same situation as you. I believe the answer is yes because if you had made a gain they would certainly want some of that off you! This link that has been posted here before explains a few different scenarios Go Matilda - Your Gateway to Australia - News

 

The rules would be a) you must have had those funds on the day you became an Australian resident for tax purposes b) they have been held in an account opened since July 2003.

 

I agree the ATO website is very vague on this and other items for individuals. I would read that 'personal/domestic' means private transactions between friends/family?

 

With the 50k thing they just want to know who has money stashed elsewhere in case money arrives in oz out of thin air. For example, if you said no this year and next year you transfer over 100k they will figure someone is owed some tax somewhere (inheritance, capital gains, income tax!!)

 

I hope this helps. The ATO website has the exchange rates on the exact day you arrived and did the money transfer. I figure you use these to calculate your loss rather than the rate the bank gave you.

 

Thanks for your reply, but ATO got back to me & confirmed I can NOT declare FOREX losses for our own personal funds (I was hoping we might get some benefit - but no chance, tho like you said if we'd gained it would probably be a different matter!)

 

Kathx

[Les Avalook]

Thanks for your reply, but ATO got back to me & confirmed I can NOT declare FOREX losses for our own personal funds (I was hoping we might get some benefit - but no chance, tho like you said if we'd gained it would probably be a different matter!)

 

Kathx

 

No they would not tax a 'personal' gain of less than $50k (business is a different matter), so they are being even handed by not giving a rebate on forex losses.

[Alan Collett]

Thanks for your reply, but ATO got back to me & confirmed I can NOT declare FOREX losses for our own personal funds (I was hoping we might get some benefit - but no chance, tho like you said if we'd gained it would probably be a different matter!)

 

Kathx

 

And on what basis did the ATO tell you that, Kath? Was the response verbal, or in writing?

 

Here is a Private Ruling extract that discusses forex losses:

Private Ruling Number 92415

 

Please recognise that a Private Ruling is specific to the taxpayer that applied for it, but I find they give a good basis for making an informed decision about your tax affairs.

 

Best regards.

[Alan Collett]

No they would not tax a 'personal' gain of less than $50k (business is a different matter), so they are being even handed by not giving a rebate on forex losses.

 

Les,

 

Please advise, where is this exemption for $50k of gains to which you refer?

 

My understanding is that the question on the tax return re the $50k of overseas assets refers to the Foreign Investment Fund de minimus exemption:

Foreign investment funds guide 2009-10

 

Best regards.

[Alan Collett]

PS. Note this comment from the Private Ruling:

Any Forex realisation loss made when you transferred the balance of your overseas bank account was not a loss of a private and domestic nature since the account was opened with the purpose of earning a greater return than possible elsewhere.

 

(my emphasis added)

[KathK]

And on what basis did the ATO tell you that, Kath? Was the response verbal, or in writing?

 

Here is a Private Ruling extract that discusses forex losses:

Private Ruling Number 92415

 

Please recognise that a Private Ruling is specific to the taxpayer that applied for it, but I find they give a good basis for making an informed decision about your tax affairs.

 

Best regards.

 

 

Thanks Alan, but I'm still as confused as ever, even more so after reading the ruling!!

 

I cannot imagine that ATO would give individuals any benefit for fluctuations in exchange rates if they choose to bring in their money from overseas, and then happen to lose out because the ex rate drops from when entering country to exchanging it? Have you ever heard of anyone having to declare profit from forex, and being taxed on it?

 

The woman who rang me from ATO was in response to a callback request, so I assume she knew specifically about foreign issues, so I guess I just go by her word?

 

I've posted the tax return now tho, so its all irrevalent!!

Thanks anyway

 

Kath

[Alan Collett]

Thanks Alan, but I'm still as confused as ever, even more so after reading the ruling!!

 

I cannot imagine that ATO would give individuals any benefit for fluctuations in exchange rates if they choose to bring in their money from overseas, and then happen to lose out because the ex rate drops from when entering country to exchanging it? Have you ever heard of anyone having to declare profit from forex, and being taxed on it?

 

The woman who rang me from ATO was in response to a callback request, so I assume she knew specifically about foreign issues, so I guess I just go by her word?

 

I've posted the tax return now tho, so its all irrevalent!!

Thanks anyway

 

Kath

 

Hi again Kath.

 

My view is that if a taxpayer retains GBPs in anticipation of an improvement in A$ terms and the exchange rate moves against that taxpayer such that a loss arises, the loss that crystallises on the sale of the GBPs is allowable.

 

The flipside also pertains to forex gains.

 

I know there are some that disagree with me - but I have yet to see any provision in the tax legislation that causes me to change my view.

 

As to a verbal comment from the ATO, it is your call if you choose to rely on it.

 

I wouldn't.

 

Note also that amendments to tax returns are definitely do-able. We have actioned tax return amendments for clients who have come to us after incorrect advice previously.

 

=> Consider whether you want to pay more tax that is necessary.

 

Best regards.

[Guest girlwizz99]

If you hold funds of any amount in an offshore account surely you do not need to declare interest or forex gains/losses on those?

[Alan Collett]

Why not?

 

Best regards.

[Guest girlwizz99]

Why not?

 

Best regards.

 

Because you are not bringing it in to the country?

[Alan Collett]

Remittance to Australia is not relevant in the context of Aus tax.

 

Best regards.

[Guest girlwizz99]

Does this apply to temporary as well as permanent residents?

[Alan Collett]

Temporary visaholders who are Aus residents => only subject to tax on Aus source income and gains.

 

Best regards.

[Guest girlwizz99]

Super! Whilst I have your attention could I ask you another?

 

I sailed over here as a temporary resident on a skilled work visa 3 years ago on my yacht. I am now selling this for a) breakeven if I use the exchange rate at the time I bought it or b) a profit if I need to use the current exchange rate. Is this anything you might know about?

[Alan Collett]

The cost base for CGT purposes is likely to be the value of the yacht on the day that your tax residency commenced.

 

Best regards.

[Guest girlwizz99]

Thank you very much. You have been helpful in the extreme.