Capital Gains on Foreign income

Hi there, I'm sure others have asked this before but I'm having trouble finding a thread so I'll ask as well...! :-)

I'm a Kiwi living and tax resident in Australia. I have an IP in New Zealand which I'm looking to sell, and bring the money over here so as to start a more active investment strategy here in Aus. Its been an IP from day one, and I've held it for 5 years. Its been negative the whole time, so I've never paid tax on any profit.

1. Am I liable for capital gains from a foreign sale?
2. Is all the profit added to my income for the purposes of CGT? Or what %age of the overseas profit is added to my income for CGT?
3. Any ideas for reducing this?

Thanks in advance..

Jude

Did you have the IP before you became an Australian resident? 

Hi crj,

I'm not Australian resident, but am resident for tax purposes. Is there a difference in this regard?

I bought the property immediately after I moved to Australia so it would be touch and go, but I think I did own it before becoming tax resident in Australia.

So I'm guessing that makes a difference in my liability for CGT?

Cheers,

Jude

Immigration status is of no real concern to the ATO. Residence for tax purposes is what counts.

If Australia resident, I think you will be taxed on the foreign income as if it was australian income and then given a credit for any tax paid overseas.

Terryw
Finance Broker
Solicitor

http://www.ato.gov.au/content/downloads/NAT14233_06.pdf

Possibly if you had bought in NZ before becoming a tax resident of Australia your cost base might be the value at the time you entered Australia http://www.ato.gov.au/corporate/content.asp?doc=/content/64155.htm

As you would have been declaring the income in your tax return there will be a red flag at the ATO once income stops being shown unless the capital gain is declared

Cool thanks guys,

Actually I haven't declared any income from the foreign IP as its been consistently negative.. :-( I've been receiving tax credits for this in NZ, but was advised that I don't need to declare it over here until it becomes positive.

Think I need to find a good accountant over this side..! Any suggestions? (I'm in Sydney)

I also think you should get a good accountant. He might be able to help you most. As you are receiving tax credits you already getting an facility.