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confused with CGT implication for overseas investment

Discussion in 'Accounting, Tax & Legal' started by poleaxe, 1st Dec, 2010.

  1. poleaxe

    poleaxe New Member

    Joined:
    16th Oct, 2008
    Posts:
    4
    Location:
    Sydney
    hi Guys,

    I'd like to ask about the CGT implication for overseas investment using US dollar that I bought few months ago.

    I was initially planning to use it for investment and sell it when USD is stronger. However, due to the recent opportunity that I have, I'd like to use that money to buy few construction machineries for my family business overseas (in USD). And, I am planning to transfer the USD that I have in my Australian bank account to my USD account overseas.

    I am not sure with the tax implication of this transaction.

    1. How would the CGT be calculated in my situation?
    2. Are there any other tax implication that I need to consider?

    Regards
    AK
     
  2. tax guy

    tax guy Member

    Joined:
    9th Dec, 2010
    Posts:
    14
    Location:
    Sydnye, NSW
    Ak,

    Its best if you see an accountant or tax specialist to answer this as there is more information that is needed to answer this correctly such as:

    - Who is buying the machinery? eg. the overseas businesses or yourself
    - Will you lend to the o/s business to buy the machinery?
    - Will any money be borrowed for this investment? need to consider tax withholding if money borrowed overseas?
    - Are you an Australian resident for tax purposes?
    - What will you be receiving in exchange for the machinery eg. lease payents, interest, salary etc. Each have different tax implications.

    You would most likely incur a CGT liability on your FX gain from the period which you first bought the USD and the time you purchase the machinery/make a loan to the os entity.