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TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have a question -uk tax on Australian gains The client

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I have a question -uk tax on Australian gains

The client wants to sell shares in Australia and will pay capital gains tax which will be reported on his Austrlian tax return year ended 30 June 2014.

will be entitled to tax credit for Australian tax in UK for the tax year 2013/14
He wants to sell them before 5 April 2014.
Should he wait to sell after 5 April 2014 to use the australian tax credit.


You might refer to the notes in the HMRC manual INTM169090, INTM169100, INTM169110, INTM169120, INTM169130, INTM169140 and INTM169150 starting here, the SA106 Foreign Pages here (page F6), the SA106 Foreign Pages notes here (page 17) and the HMRC helpsheet HS261 here. Please note that the foreign pages and foreign pages notes links I have given you are for the 2012/13 tax year and the 2013/14 pages and notes may be different.


If the shares are sold by 5 April 2014, any gain will be chargeable to UK CGT for 2013/14 (subject to any claim for the remittance basis of assessment to apply if your client is non-UK domiciled) and credit may be claimed for tax paid in Australia on the same gain, notwithstanding the fact that the Australian tax may not actually be paid within the UK tax year 2013/14. See INTM161950 here for confirmation. The foreign tax credit may not exceed the UK liability on the same gain, albeit that the calculation of the gain for UK and Australian tax purposes may be different.


Your client's situation may be straightforward or complex. That will depend on whether he has other gains for 2013/14. The INTM notes which I gave you a link to above and the HS261 helpsheet contain examples and advice on the order of offset of losses so that your client gets as much foreign tax credit as possible.


I hope this helps but let me know if you have any further questions.

Customer: replied 3 years ago.

So per your advice we can set off the Australian tax which is going to be 30%.

Even if the tax paid after 30 June 2014.


That's correct.

Any foreign tax credit relief will be limited to the amount of UK CGT paid on the Australian gain. The best that you can hope for is that the Australian tax covers the UK CGT liability on the Australian gain completely.
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Customer: replied 3 years ago.

Hello tony


Just one question if the shares are sold in two parts one in 2013/14 and other in 2014/15.


Will he still be entitled for Australian tax credit for the year 2014/15

Yes, he will. See INTM69150 here.
Customer: replied 3 years ago.

Am I required to pay you - it was just my client wanted to know if he can sale the shares over two UK tax years.


It was a follow up question on the same topic.
Customer: replied 3 years ago.

have you been paid