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Investments & International Taxes

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  1. #11

    The CRS/OECD only means that banks are obligated to pass on certain information. They only need to pass on your full name, citizenship, any tax file number information and account balance. They do not pass on individual transactions and the origin of these transactions. Perhaps if overseas authorities sense something fishy they may be permitted to ask a bank for further information but I'm not sure about this and this would be up to the discretion of the bank anyways as specific information is not covered by the CRS/OECD.

    I also believe a foreigners bank account balance is only recorded and passed on at certain intervals which i understand to be a year. In a practical sense however tax authorities just operate automatically. A computer just takes a person on their word when a tax return is received and its only when red flags are raised that a human comes in and investigates a persons individual tax return.

    In the case of overseas accounts a red flag would only really be when a large amount of money is reported in their account that cannot be accounted for within the bounds of their reported salary. Im uncertain if what you are saying is that your Singaporean friend doesnt even report their salary however. If this is the case then I would say he is definitly walking a tight rope. Perhaps it is just small money so no red flags are waved. Certainly this seems to be the case so far. I agree with traineeinvestor however that these systems will evolve and become more sophisticated over time. He may get caught out in the future.


  2. #12

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    Quote Originally Posted by Mystery87:
    I am in a similar situation. The no-capital gains tax in HK is very enticing and is the main reason I want to invest in stocks from here. Logistically its just as easy for me to send the money back to my Aus bank account and invest in stocks from there but one day when I sell my stocks I will be liable to pay a very large tax bill.

    If you do everything "above board" my understanding is you only pay capital gains tax from earnings made from the moment you move to Australia. Any capital gains you made beforehand is not subject to Aus tax even if you sell after you move there.

    Even still, depending on your investments if you hold them for a long time after moving there and sell while your there then it may end up being a large tax bill. Are you an Aus citizen? Do you plan on living there forever? If not you could just hold all your assests until you move out of Australia and then sell them.

    I've looked into the OECD which was something i was worried about in regards to reporting tax from overseas and the way it works is that when you open a bank account the bank is obligated to find out your citizenship (this is one of the reasons you need to supply your passport when opening bank accounts) and if you are a foreigner the bank will automatically pass your bank balances onto your country of citizenship. In this way you cant hide money in overseas accounts.

    If your wife is Japanese then presumably she would have used her Japanese passport when opening an account here and therefore any transferred assests should be safe from Aus taxes. Not sure on the tax situation in Japan though. Would you not have to be careful that you have tax obligations in japan if you transfer to her? My wife and I plan on moving back to Aus one day so I have thought extensively about my tax obligations in Aus for my HK assests which plan to sell after we move back. She is a HK citizen only so I came to the same conclusion you did and we opened an account in her name only which is the account i buy my stocks from. This ensures that any profits that land in this account are "hidden" from Aus authorities.

    Of course there is the issue then of how to transfer the money from HK to Aus accounts but this is an issue for another day.
    Thanks, I am very much on the same wavelength and in a similar situation to you. Wondering whether to keep or sell my HK assets, what to transfer to my Japanese wife's name, etc. Just fyi, putting your HK assets in your HK wifes names might hide them from the Aussie tax office, but legally if your wife lives in Aus with you then she should be Aus tax resident too and declare all her HK assets to Aus tax office and still needs to pay Aus tax. But if your wife doesnt work in Aus and has zero income, and you do with high income, then still better to put the HK assets in her name rather than yours because she can use the $18k per year tax free threshold to pay overall less tax. If your on a high salary paying 45% income tax, you also pay 45% on your HK dividends, capital gains, etc. But your wife will be paying 0% on first $18k and then still much less after this.

    Then there is also the idea of playing dumb and not declaring anything in HK at all. Maybe they will never know, if they do I wonder what the penalties would be and if it's worth being lazy and playing dumb.

    As far as I know, for normal Australians buying shares etc in Australia is all linked to your tax number and every time you buy and sell they automatically know the capital gains, everytime you get a dividend they automatically know whether its fully franked (tax free) or not and how much tax you owe. So it's impossible to escape. But if I just keep my HK investments on the side I wonder if they'll ever know.

  3. #13

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    Original Post Deleted
    This is certainly tempting. I'm not sure there is really no penalty.

  4. #14
    Original Post Deleted
    I cant comment on the above. I don't know the exact penalties. If he is a citizen of Australia then surely he would be subject to the same laws and punishment regardless if he is living overseas.

  5. #15
    Quote Originally Posted by bdw:
    Just fyi, putting your HK assets in your HK wifes names might hide them from the Aussie tax office, but legally if your wife lives in Aus with you then she should be Aus tax resident too and declare all her HK assets to Aus tax office and still needs to pay Aus tax.
    Quote Originally Posted by bdw:
    Then there is also the idea of playing dumb and not declaring anything in HK at all. Maybe they will never know, if they do I wonder what the penalties would be and if it's worth being lazy and playing dumb.
    Haha now we have entered the legality and ethics of the issue. Of course you are correct that she is legally obligated to declare any overseas assets. This i guess is up to the individual and whether they want to take the risk. Personally me and my wife are ok with this risk as there is no real way for Aus authorities to find out. I referred to it briefly before where i stated that we are still left with this issue of getting the money back to australian accounts and this is really the area where the risks lie. Hypothetically if we do not declare profits overseas in her account and we start to transfer money back to Australia then this may raise the suspicion of authorities and they can ask where this money is coming from. This is not something I have figured out yet though. I may end up sucking it up and just paying the tax but for now we are using her account to keep our options open.

    Quote Originally Posted by bdw:
    As far as I know, for normal Australians buying shares etc in Australia is all linked to your tax number and every time you buy and sell they automatically know the capital gains, everytime you get a dividend they automatically know whether its fully franked (tax free) or not and how much tax you owe. So it's impossible to escape. But if I just keep my HK investments on the side I wonder if they'll ever know.
    This is correct. If you are not an Aus citizen then you wont have used an Australian passport to open any accounts and therefore none of your bank accounts and assets will be linked to Australia so there is no way for them to know about it. I think its safe for you to not declare it. It will only become an issue for you if you try to move them to an Australian bank account.

  6. #16

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    Suggest we start a separate thread on international tax reporting @shri?


  7. #17
    Original Post Deleted
    Sorry I had it the wrong way around. I thought he was an Australian citizen living and working in Singapore.

    In this case I think it is much less risky. He will definitely be a tax-resident of Australia and obviously is paying taxes for money earned there. Similar to what I have mentioned above i think his Singaporean assests will be "hidden" from Aus authorities so there is no real way from them to find out as Singapore banks will not report his details to Australia. Singapore banks probably dont even know he is in Australia. I think he will likely get away with this as he has done so far. He needs to be careful if he wants to move his assets to Australia as this may trigger a red flag with Aus authorities who will want to know where the money came from.

  8. #18

    Also, be aware there is inheritance tax in the US for non-residents. Amounts above Usd60,000 are subject to a 40pct US inheritance tax on your passing. For that reason, I believe its better to buy US ETFs either via HK exchange or the London exchange. Neither of these jurisdictions have dividend WHT or inheritance tax for non-US residents. However, the ETFs via these exchanges are much narrower than what you will be able to buy in the US

    Also you cannot avoid the US if you want to buy individual US stocks (as opposed to ETFs)....


  9. #19

    Yes indeed.

    There is a very good publication by EY on ETF taxation. https://www.ey.com/Publication/vwLUA...-hong-kong.pdf

    jrkob, traineeinvestor and bdw like this.

  10. #20

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    Original Post Deleted
    Thanks! Yeah Japanese law another can of worms I have to consider. We have both been in HK for 12 years, both HKPR. So hopefully can avoid this. But on second thought, she might not have given up her residency at the local Shinjuku-ku ward office until recently even though resident in HK so this might still be something that catches me out