Ask Ban Tacs Question
Several years ago I started a business in Dubai in my own name. I visited Dubai each alternate month.
Last year my local partner stole so much money from the business we had to close and I crystallised a loss of about $AUD 400,000
In setting up the business I purchased a house to live in while in Dubai. This has now been sold and we have a profit in joint names ie husband and wife, of about $AUD 180,000.
How can I best get this profit back to Australia?
I have been told that my half comes back tax free as I have a capital loss but that my wife must pay tax on her half of the profit.
Thanks
Dr Brian Symon
Answer
I have made the following assumptions because it seems reasonable from what you have written but please let me know if any of the following points is not correct, as I can be a lot more help to you.
1) You and your wife are and always have been a resident of Australia for tax purposes
2) By own name you mean you personally being in partnership with another person.
3) You have at all times had a home in Australia that you wish to cover with your CGT main residence exemption, ie it was purchased after 19th September 1985
4) Your wife has taxable income from employment where her employer contributes to superannuation for her.
There is no avoiding this gain on the Dubai house being taxed in Australia whether you bring it back into the country or not. Australia would treat it exactly the same as a property you owned here.
I am surprised that your loss on the business is a capital loss I would have thought it would be on revenue account. If so it is not just restricted to being able to offset capital gains but also other income you have in Australia, as the restrictions in offsetting foreign losses have been lifted.
Your wife will of course get the 50% CGT discount so it is only $45000 that will be taxable. She should make sure that she contributes the maximum she can to superannuation by salary sacrificing her wages into super asap before the end of the financial year. Only future earnings can be sacrificed. Her annual limit is $25,000 including any contributions made by her employer (including those compulsory under the guarantee) or $50,000 if she is over 50.
