TAX INFORMATION

[FAQ]

Disclaimer-The information obtained from the interview in between Michael Hung & Taxation Office on Vietnamese television C31 Australia. Therefore we however, cannot guarantee that every document will appear in the correct tax year, should check the content of all documents returned by this web site in response to your query and seek independent advice before embarking on a transaction.

Investments

What happens if you live in Australia and you have investments overseas?

Generally, Australian residents pay income tax on their income no matter what part of the world it comes from. So, if you earn income from an overseas investment, you still have to include this in your Australian income tax return.If you've already paid tax in that country, you may be entitled to a credit in your tax return. Special rules may also apply if you borrowed money to invest overseas.

Are there tests that determine whether or not you're an Australian resident?

Yes. Generally, you'll be considered an Australian resident for tax purposes if you've always lived in Australia or you've come to Australia to live. You'll also be considered an Australian resident if you've been here for more than half of the financial year - unless your usual home is overseas and you don't intend living in Australia. However, overseas students whose course of study is longer than 6 months, will usually be taken to be an Australian resident.If you spend a lot of time overseas, you may need to check on your resident status by calling the Tax Office.

Do you have to quote your tax file number when making an investment?

Well, you don't have to, but if you don't, the investment institution may have to withhold 48.5% from any payment they make to you, such as interest. However, you can claim any amounts withheld as a tax credit when you lodge your income tax return.I should point out that you may be eligible for some tax deductions in relation to your investments - check with the Tax Office or your tax adviser about what you can claim. These deductions would reduce your taxable income and therefore the amount of tax you have to pay.

If viewers have bought shares or acquired them through demutualisation, such as NRMA, what are the important things they should know?

Well, you must declare any income, such as share dividends, in your tax return.If you sell your shares you may have to pay capital gains tax. However, if you have had the shares for over 12 months, any capital gain is effectively reduced by half.

Talking about capital gains tax - can you explain to our viewers how this works?

Capital gains tax is the tax you pay on any capital gain you make, for instance, from the sale of an asset such as shares or a rental property. As a general rule, capital gains tax only applies to assets you purchased after 20 September 1985.You include any income you make from your capital gains in your tax return, and if you've made a capital loss on the sale of any assets, you can offset these against the capital gains.

Could you give our viewers some examples of other assets that attract capital gains tax and assets that are exempt?

Certainly. As we've already mentioned, shares and rental property are considered to be capital gains tax assets. Others include land, units in a unit trust, collectables, such as jewellery and artworks and personal use assets such as boats.

Capital gains tax generally doesn't apply to any capital gain or capital loss resulting from the sale of your main residence or home, or to the sale of cars, motorcycles or similar vehicles. You can also disregard the sale of collectables, such as jewellery, that you acquired for $500 or less and personal use assets you acquired for $10,000 or less.

You mentioned the sale of your home - if you own two or more residences, the capital gains tax exemption is only available for your main residence. I know there are some issues for our viewers around running a business from their home - could you please explain this?

Certainly. It's important for viewers to remember that if they want the full capital gains tax exemption, they must have used the dwelling solely as their residence and can't have used itto produce any assessable income such as running a business from home. Also, any land on which the dwelling is situated must be two hectares or less.

Are there special rules about keeping capital gains tax records?

Generally, you must keep all records relating to assets for five years from when you sell the asset, not from when you acquired it. This means that if you bought shares in 1990 and sold them in December 2001, you need to keep the original purchase information until December 2006.

Some of our viewers may have investments in managed funds such as property trusts, share trusts, equity trusts and growth trusts. What should viewers remember about this type of investment?

Your managed fund will provide you with a statement outlining taxation information relevant to your tax return Managed funds. will generally have provided this to you by 31 August 2002. If your managed fund has used the standard distribution statement format, the income and capital gains amounts to be shown in your return will be clearly identified together with the tax return labels where the amounts should be shown.

In any event, the fund manager should be providing you with sufficient information so that all assessable income amounts are identified and included in your income tax return. Certain amounts you have received from the managed fund are not assessable. These should also be clearly identified by the fund manager in the statement they provide to you.

Some of our viewers may have invested in precious metals, such as gold and diamonds. Can you clarify the tax implications of owning precious metals?

As for all assets, unless viewers trade in precious metals, the only tax they should have to pay when they sell or otherwise dispose of precious metals is capital gains tax.

Finally, it's now October and we're coming up to another important date for tax.

If viewers prepare their own tax return, or use our internet e-tax facility, they must lodge their 2002 tax return by the end of this month. You have longer if you lodge your tax return through an accountant or tax agent, but contact them to check their schedule.Remember to keep all the details - for the next five years - of the income you've earned and the expenses you've claimed in your tax return.

We've covered a lot today - what would you say are the most important messages for our viewers?

• You need to keep records relating to your income tax return for five years from the date you lodge your tax return.
• Generally, you can't claim the cost of any shares you may have purchased, unless you're a share trader.
• Remember to declare any dividends you receive as income.· If you've bought and sold any assets, you may have to pay capital gains tax.
• You need to keep good records of any assets you've bought or sold so you can correctly work out the amount of capital gain or capital loss you've made.
• You must keep these records for five years after you've sold or otherwise disposed of an asset, which is slightly different from the record keeping requirement for income tax.
• If you prepare your tax return yourself, it's due by 31 October
  

So, what if our viewers need some more information about what we've discussed today.

There's a range of tax information in Vietnamese on our website at www.ato.gov.au - just click on the Other Languages icon.If you have any questions about your tax obligations, phone 13 28 61. If you don't speak English, you can phone the Translating and Interpreting Service on 13 14 50 for help with your call.