Negative Gearing Abroad
- Thread starter Emily_Zac
- Start date
NG in UK
Yes you can,...... however, my understanding is it would be very tricky!
The income and expenditure would be dealt with in the UK with the net loss then transferrable over to OZ tax system....
As long as the relevant authorities have a DTA (double tax agreement) then your profit/loss would not be dealt individually again in oz....Although, you would be able to reduce the net loss from your australian taxable income!
Any other comments if this is right...
Yes you can,...... however, my understanding is it would be very tricky!
The income and expenditure would be dealt with in the UK with the net loss then transferrable over to OZ tax system....
As long as the relevant authorities have a DTA (double tax agreement) then your profit/loss would not be dealt individually again in oz....Although, you would be able to reduce the net loss from your australian taxable income!
Any other comments if this is right...
Ummmmmm ......
Don't think that applies any more.
Bit busy to find out more, but quarantining foreign losses by type and carrying forward has gone.
Usually you now set off foreign losses against Australian source income, any excess foreign losses are lost (if you pardon the pun).
Give the ATO a ring and let us know.
Cheers,
Rob
Don't think that applies any more.
Bit busy to find out more, but quarantining foreign losses by type and carrying forward has gone.
Usually you now set off foreign losses against Australian source income, any excess foreign losses are lost (if you pardon the pun).
Give the ATO a ring and let us know.
Cheers,
Rob
I just read the link and thought that it said you can negative gear (to a certain degree).
The interest and borrowing costs come under "other deductions".
The other types of expenses/income are passive income. If a loss was produced here then this would be carried over in future years.
Did I read that wrong??
Dave
The interest and borrowing costs come under "other deductions".
The other types of expenses/income are passive income. If a loss was produced here then this would be carried over in future years.
Did I read that wrong??
Dave
So the net losses are deductible only against the passive income in subsequent years according to above ATO article.... But the part about other deductions may leave a way to deduct certain amounts from your OZ tax.inc. is a bit confusing?
You don’t deduct the cost of debt (such as interest and borrowing costs) against modified passive income (such as rent, royalties and dividends) for the purposes of this calculation unless they are related to the income earned through a permanent establishment in an overseas country. If you have incurred debt deductions in earning your foreign income under any of the four categories and the deductions are not attributable to an overseas permanent establishment, you may claim them as ‘Other deductions’
Above statement is not clear because all deductions would relate to your PE overseas I would have thought... Further comments to clear this up or have you heard back from the ATO?
You don’t deduct the cost of debt (such as interest and borrowing costs) against modified passive income (such as rent, royalties and dividends) for the purposes of this calculation unless they are related to the income earned through a permanent establishment in an overseas country. If you have incurred debt deductions in earning your foreign income under any of the four categories and the deductions are not attributable to an overseas permanent establishment, you may claim them as ‘Other deductions’
Above statement is not clear because all deductions would relate to your PE overseas I would have thought... Further comments to clear this up or have you heard back from the ATO?
I've been talking with my accountant about this and I believe that the rules have recently changed.
My understanding is that you declare the rent as income and you can claim expenses (not including mortgage interest) against the rent received. If you go negative on rent vs non-interest expenses this this can only be claimed against future overseas income.
The interest on the mortgage is treated separately and becomes classified as an "other deduction". So you do get to deduct all expenses but it's broken up a little differently.
The thing I'm still working out is whether the depreciation is charged to the overseas rate or the Australian rate. I assume it will be the Aussie rate but waiting on confirmation of this.
EC
My understanding is that you declare the rent as income and you can claim expenses (not including mortgage interest) against the rent received. If you go negative on rent vs non-interest expenses this this can only be claimed against future overseas income.
The interest on the mortgage is treated separately and becomes classified as an "other deduction". So you do get to deduct all expenses but it's broken up a little differently.
The thing I'm still working out is whether the depreciation is charged to the overseas rate or the Australian rate. I assume it will be the Aussie rate but waiting on confirmation of this.
EC
Just a *quick* look at the legislation shows I was partialliy wrong. Don't rely on this, but the major changes seem to be:
1) There is no distinction between foreign and domestic losses.
2) Unused foreign tax credits are lost.
As regards depreciation, calculate using your domestic laws - this can give rise to timing differences which may result in lost foreign tax credits.
Cheers,
Rob
1) There is no distinction between foreign and domestic losses.
2) Unused foreign tax credits are lost.
As regards depreciation, calculate using your domestic laws - this can give rise to timing differences which may result in lost foreign tax credits.
Cheers,
Rob
