what are my ATO obligations - Permanent resident wanting to transfer money to AU from US stock accou

[#1]

Hello. I’m am from the US. I am a Permanent Resident of AU and pay AU tax in addition to US tax. I reside & work full-time in AU. I still have a US stock/bond account in the US from when I use to live there. I’m about to renovate my home in AU and want my US investment broker send me the equivalent of $20k AUD from an investment stock/bond account. Is there anything I need to do, or anyone I need to advise before I do it? What do I need to do or report on my AU tax return? What if any tax will I owe? Thank you for your guidance. I want to do this legally and properly.

[#2 · Accepted solution]

Hi @Cslade305 ,

If the money sent from your US investments is a result of selling or disposing of some investments, then you will need to pay Capital gains tax  (CGT) See quote from this linked webpage -

"If you’re an Australian resident, CGT applies to your assets anywhere in the world.".

  However, if this is not the case, then you only need to declare income relating to this when it generates CGT or there is some interest resulting from investments of this money. You may want to consider getting independant taxation advice eg tax agent/accountant to assist you with this or any other complex issues. Also bear in mind, a foreign tax credit may apply on your overseas income on your Aust tax return, if you have paid tax already on your US income in your US tax return (as per Item 20 Foreign service income.. ).

You may want to consider Rental expenses you can claim.

[#3]

Thank you for getting back to me. I pay US tax so if I was to have any capital gains, I would likely pay CGT in the US which would likely offset my tax here. Isn’t that correct? However when I bring the money over if the USD is stronger then I would get more AUD dollars. I would need to pay tax of the difference wouldn’t I? Assuming yes, on the tax return where do I report it? Does it fall under overseas income? Is there a heading that it would fall under?

And if the money came from savings which was already taxed in the US, if I brought some of that money over, again would I just pay tax on the favourable exchange rate if the amount was larger when exchanged into AU dollars? Assuming so is that a different category/heading or the same as the previous question?

Thanks so much!

[#4]

Hi @Cslade305

You should convert your foreign income to Australian dollars at the exchange rate prevailing on the day that the income is received. An average rate can be used in certain circumstances.

Additional links to those we have already provided:

Have a look at Guide to foreign income tax offset income rules 2020; When a foreign income tax offset applies; Foreign income of Australian residents working overseas; Calculating and claiming your foreign income tax offset

Appendix A shows a list of countries and other jurisdictions that have a tax treaty with Australia; the United States of America is one of those countries. Tax treaties foster co-operation and prevent double taxation.

I hope this helps

Tracey

[#5]

Thank you Tracey.