Save time and automate your regular international payments

There are many reasons why ex-pats need to send money abroad on a regular basis, from property maintenance or child support, to less frequent costs like tuition fees. Automatic payments via a Regular Payment Plan mean that all your bills get paid on time, and you can save yourself the time it takes to organise them each month.

Most of us are used to automatic payments – from electricity and phone bills to subscription and membership services – very few people sit down to settle their bills on a monthly basis. Many people are not aware that you can use the same facility for Ainternational payments, and this can be a convenient alternative to checking rates and transferring money each time a payment is due. While this can all be done online relatively quickly, you still need to remember to make the payments and ensure that any currency you convert covers the required costs.

If you opt for a Regular Payment Plan (RPP), you can fix the amount of currency received or debited, or both if youchoose to lock-in the exchange rate. You can fix these payments for up to two years. This means that you can becertain that any required payments will be covered, and if you are receiving a pension payment from the UK you can budget ahead with confidence whatever happens to the exchange rate.

You can set these payments up over the phone or organise them wherever you are by accessing your account online and via the moneycorp app. The Regular Payment Plan offers convenience and great value, and provides an easy way to manage your funds across borders with a full clear statement as a record of all your payments.

Article courtesy of Moneycorp.

Moneycorp is a reference to TTT Moneycorp Pty Limited which is registered in Australia (business number 116612858). Its principal place of business is Level 15
Exchange Tower, 2 The Esplanade, Perth WA 6000, Australia. TTT Moneycorp Pty Limited is authorised to deal in foreign exchange contracts and buy/sell quotes
to retail and wholesale clients as an Authorised Representative (reference number 445555) of Rochford Capital Pty Limited (AFSL License No. 361276).

Landlord tax: an overview of the changes to buy-to-let tax relief

From 6 April 2017, the government made changes to the way landlords are taxed in the UK. These landlord tax changes will be phased in over the next four years and will not be applied at the full rate straight away – allowing landlords to take necessary action over time.

Who will the changes affect?

These changes will only affect landlords in the list below who have a mortgage for their rental property.

* Any UK resident individual who lets a residential property in the UK or overseas

* Any non-UK resident individual that lets a residential property in the UK

* An individual who lets residential property in partnership with others

* Trustees of a trust directly holding UK residential property

NOTE: These tax changes will not apply to landlords of furnished holiday lets and commercial properties.

What do the landlord tax changes mean for me?

Restricted tax relief on mortgage interest payments

The main change being made under the new tax rules, is that landlords will no longer be able to fully claim tax relief on their mortgage interest payments – so this change will only affect landlords who have a mortgage and not those who own their property outright.

However, the majority of buy-to-let landlords have an interest-only mortgage.

Currently, landlords can deduct allowable expenses and mortgage interest payments from their rental income and pay tax on the difference.

But from April 2017, landlords will only be able to claim tax relief at the basic rate of 20% on whichever figure is lower:

* Finance costs – including mortgage interest payments, loan repayments, overdrafts

* Profit from your rental income – calculated as rental income less allowable expenses

* Total income – calculated as anything other than savings and dividend income above the personal allowance after deducting losses and tax relief

NOTE: In most circumstances, the finance costs will be the lowest figure. But it’s important to highlight that it’s not just mortgage interest payments that will be used to calculate tax relief, but the lesser of the three figures above.

See below as to how the landlord tax changes:

The tax relief that landlords of residential properties get for finance costs is being restricted to the basic rate of Income Tax. This is being phased in from 6 April 2017 and will be fully in place from 6 April 2020.

How the tax reduction is worked out;

The reduction is the basic rate value (currently 20%) of the lower of:

* finance costs – costs not deducted from rental income in the tax year (this will be a proportion of finance costs for the transitional years) plus any finance costs brought forward

* property business profits – the profits of the property business in the tax year (after using any brought forward losses)

* adjusted total income – the income (after losses and reliefs, and excluding savings and dividends income) that exceeds your personal allowance

The tax reduction is not able to be used to create a tax refund.

If the basic rate tax reduction is calculated using the ‘property business profits’ or ‘adjusted total income’ then the difference between that figure and ‘finance costs’ is carried forward to calculate the basic rate tax reduction in the following years.

You are still able to deduct some of your finance costs when you work out your taxable property profits during the transitional period. These deductions will be gradually withdrawn and replaced with a basic rate relief tax reduction:

Tax Year Percentage of finance costs deductible from rental income Percentage of basic tax rate reduction
2017/2018 75% 25%

2018/2019

50%

50%

2019/2020

25%

75%

2020/2021

0%

100%

Restricting Finance Cost for Individuals

The changes will restrict relief for finance costs on residential properties to the basic rate of Income Tax. These changes will be introduced gradually from 6 April 2017.

Finance costs includes mortgage interest, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages or loans. No relief is available for capital repayments of a mortgage or loan.

Individuals will no longer be able to deduct all of their finance costs from their property income to arrive at their property profits. They will instead receive a basic rate reduction from their income tax liability for their finance costs.

Individuals will be able to obtain relief as follows:

  • in 2017 to 2018 the deduction from property income (as is currently allowed) will be restricted to 75% of finance costs, with the remaining 25% being available as a basic rate tax reduction
  • in 2018 to 2019, 50% finance costs deduction and 50% given as a basic rate tax reduction
  • in 2019 to 2020, 25% finance costs deduction and 75% given as a basic rate tax reduction
  • from 2020 to 2021 all financing costs incurred by a landlord will be given as a basic rate tax reduction

Please contact us at GM Tax should you wish to discuss how this changes may impact on you.

Capital gains tax changes for foreign residents

21 July 2017 | Exposure Draft

As part of the 2017-18 Budget, the Government announced that it would be making capital gains tax (CGT) changes for foreign residents.

Main residence exemption

From 9 May 2017 the Government will remove the entitlement to the CGT main residence exemption for foreign residents that have dwellings that qualify as their main residence. Therefore any such capital gain or loss arising upon disposal of a foreign resident’s main residence will need to be recognised.

Principal asset test

From 9 May 2017 the Government will modify the foreign resident CGT regime to clarify that, for the purpose of determining whether an entity’s underlying value is principally derived from taxable Australian real property, the principal asset test will apply on an associate inclusive basis.

We urge you to seek professional advice when deciding to sell your property as a non resident.

Witholding tax on disposals made by non residents

New rules for foreign resident capital gains withholding (FRCGW) apply to vendors disposing of certain taxable property under contracts entered into from 1 July 2017. The changes will apply to real property disposals where the contract price is $750,000 and above (previously $2 million) and the FRCGW withholding tax rate will be 12.5% (previously 10%) unless a clearance certificate is obtained from the ATO. The existing threshold and rate will apply for any contracts that are entered into from 1 July 2016 and before 1 July 2017, even if they are not due to settle until after 1 July 2017.

Where a withholding obligation exists, the purchaser must withhold the relevant amount at settlement and pay it to the ATO without delay as a general interest charge may apply to late payments. The purchaser is required to complete an online Purchaser Payment Notification form at which time the purchaser will receive a payment reference number, and a payment slip allowing payment to be made.

The penalty for failing to withhold is equal to the amount that was required to be withheld. An administrative penalty may also be imposed.