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Tax on overseas shares as new resident

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Hi,

 

I am previously a tax resident in Singapore and a new tax resident here in Australia and moving in permanently. I have acquired a few ETFs through an online stock broker. These ETFs doesn't exceed AU $100,000 and over 12 months. FYI, I'm NOT a trader.

 

Due to complicated Australia tax laws as opposed to Singapore's low taxes, no tax on interests and dividends and no capital gain tax (CGT), I would like to liquidate some of those to make life simpler and plan the next strategy in life.

 

So a few questions:

 

1) CGT computation on selling the overseas shares:

a) It is already clear to me that the initial cost includes the cost of the shares, the security exchange clearing fees, the security exchange trading fee and the stock brokerage/commission fee (plus 7%GST).

b) When selling the share, I must also pay the same set of fees (above).

c) Include GST in the cost base.

 

Please correct me if assumed wrongly with 1a), 1b), 1c) and 1d).

 

Now, what I don't see on many examples is about the other fees as part of "cost of owning CGT asset".

e) My stock broker charges SG $2 (plus 7%GST) as a custodian fee for having the shares. This custodian fee is charged per ETF invested (e.g. SG$4.28 for 2 ETFs). This custodian fee is charged monthly. Should I include this in the cost base?

f) A stock broker administration fee per year regardless of the number of shares or ETFs. Should I include this?

 

 

2) Dividends generated by the shares and ETFs:

a) It is already clear to me that I will include the withholding foreign tax and the broker/comission fee (and 7%GST).

 

b) What is not clear to me is that Singapore and Australia has a double tax agreement (DTA), that Australian residents are taxed at 0% for interests and dividends. That means my income from Singapore dividends will be taxed in Australia? Shouldn't it be exempted?

 

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Hi @valcaro

 

Firstly a warm welcome to joining our community.

 

As an investor and not a trader and as an Australian Resident for tax purposes you declare your world wide income. You are correct to say  that the sale of shares will form a CGT event. So adding eligible expenses into the cost base is important. Hence when you sell it is then you realize the benefit in the CGT Calculation.  See Elements of the cost base and reduced cost base.  The links described here should assist in identifying clearly what is included. Be aware Net CGT profit is added to other income as reported in your tax return. That is what will determine your final tax obligation. See also Working out your capital gain or loss.

 

 As for dividends they form income and are reported as such at the Dividend label item 11 and not included as CGT.  Claiming or adding GST does not enter into your CGT event. The cost is the cost. See myTax 2019 Dividends - Do not show at this section.

 

Where a DTA exists it allows due consideration per any agreement as to tax treatment which will be reflected in the foreign income tax offset. See myTax 2019 Foreign income tax offset


I hope this takes you in the right direction.

Thanks again for your post.
Kind Regards
MarkA

 

1 REPLY 1

Best answer

Community Support

Replies 0

Hi @valcaro

 

Firstly a warm welcome to joining our community.

 

As an investor and not a trader and as an Australian Resident for tax purposes you declare your world wide income. You are correct to say  that the sale of shares will form a CGT event. So adding eligible expenses into the cost base is important. Hence when you sell it is then you realize the benefit in the CGT Calculation.  See Elements of the cost base and reduced cost base.  The links described here should assist in identifying clearly what is included. Be aware Net CGT profit is added to other income as reported in your tax return. That is what will determine your final tax obligation. See also Working out your capital gain or loss.

 

 As for dividends they form income and are reported as such at the Dividend label item 11 and not included as CGT.  Claiming or adding GST does not enter into your CGT event. The cost is the cost. See myTax 2019 Dividends - Do not show at this section.

 

Where a DTA exists it allows due consideration per any agreement as to tax treatment which will be reflected in the foreign income tax offset. See myTax 2019 Foreign income tax offset


I hope this takes you in the right direction.

Thanks again for your post.
Kind Regards
MarkA

 

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