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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

    16th Oct, 2008
    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?

  2. tax guy

    tax guy Member

    9th Dec, 2010
    Sydnye, NSW

    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.