Hi,
I'm a newbie to this forum, so apologies if this is structured incorrectly in any way (or in the wrong section).
My wife and I are from NZ, but are living in Sydney and are Australian residents (been here 4 years) and have two IP's in NZ. We are about to sell the 2 NZ IP's, for a modest gain (potentially $500k NZD in total), and are unsure how this needs to be managed with regard to Australian tax law.
My wife is not working (new baby), so potentially putting the properties in her name before selling will be beneficial. We have been filling in NZ tax forms for the income / mortgage, and have been effectively neutrally geared. There will be a capital gain, but not significant.
When we sell the properties in NZ, and pay off the remaining mortgage etc, and noting the exchange rate, we should have an estimated cash amount of approx $150k AUD to bring across into Australia.
Are there any suggested approaches to most efficiently bring the $$ across into Australia, and comply with Australian Tax Law. I am assuming we will be subject to Australian CGT, given we are Australian tax residents, but we have not declared the properties to the ATO as we didn't believe we needed to given we were completing NZ Tax Submissions (and we would have been double taxed had we have done Australia submissions also).
If anyone is able to provide any advice on how we might proceed, that would be very much appreciated.
Many thanks in advance,
Nathan.
You should go and see a tax advisor as you would be required to declare the income from the properties and the CG too.
Transferring them to your wife now would be a CGT event so wouldn't save anything on the tax.
Before bringing the money in you should consider some asset protection strategies and there may be some tax strategies too.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks for your reply Terryw, the properties were effectively neutrally geared, so I am assuming the tax on income will be minimal.
Both properties are in my wife and my name, so would removing my name still equate to a CG? And as she isn't working at the moment (new baby), if the properties were in her name only when we bought the sale money over, I would have thought this would be more cost-effective, as she has no income other than the $$ from the property sale (in NZ).
And I will look to contact and Australian based tax advisor, do you have any suggestions?
Thanks again for your help.
Nathan.
changing names would trigger CGT and bringing money into Australia is generally not taxable so working or not doesn't really matter. For further investing it would be worth considering though.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
What also needs to be remembered is that when the NZ rental property is included on Australian tax returns it needs to be prepared based on Australian tax law. You can not just take the figures off the NZ tax return and convert to $A. Often the Australian tax return version can result in a better tax position as while building depreciation can no longer be claimed on a NZ tax return it can be claimed on an Australian one. Most of the Australian depreciation specialists can prepare depreciation schedules on NZ properties through affiliations they have. Also any income tax paid in NZ can be claimed as a credit on your Australian tax return. Finally in relation to the CGT the cost base is the value in $A of the properties on the date you left NZ. As you have only been here 4 years and property in NZ has been pretty flat you may not have a CGT issue. Finally if one of your properties was a PPR in NZ the same 6 year rule applies as to if the property was in Australia, so this needs to be taken in to account. Basically I am saying lot's of things to think about, things may not be as bad as they seem, go and see an accountant. I think Terryw offers accounting services.
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