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bigduckontax
bigduckontax, Accountant
Category: Tax
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I had an investment in Australia in Agribusiness which

Customer Question

Hi.
I had an investment in Australia in Agribusiness which I believe is exempt in the UK. After cost of investment, including insurance for the trees which were grown on leased land, I more or less broke even. Do I need to include in my return? and if so - do I include as foreign income or under the Cap Gains section.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Assuming that you are resident in the UK then you are liable to taxation on your world wide income. You should have declared the net income (insurance is an allowable deduction) on your annual self assessment tax return. However any tax paid to the Australian authorities would, under the Double Taxation Treaty between the UK and Oz, be allowed as a tax credit against any UK liability from the same income stream.
Furthermore, you would be liable to Capital Gains Tax (CGT) on any gain made on the sale calculated on the difference between the acquisition and the net sale price. Acquisition price is the cost of the land plus purchase costs plus any improvements. The net sale price is the selling price less cost of sale. You have an Annual Exempt Amount of 11.1K to offset this gain. CGT is levied at 18% or 28% or a combination of the two rates depending on your income including the gain in the year of sale. However, if you operated the land commercially you are entitled to Entrepreneur's Relief which limits the tax rate to 10% flat rate. I am aware that Australia does not have CGT, such gains are aggregated with other income, however the tax credits mentioned before still apply.
You have to make declarations under both foreign income and capital gains on your annual self assessment tax return.
If you reinvest your gain within the specified period in a similar venture you may be able to use Roll Over Relief which defers the CGT until the ultimate disposal of the new business.
I do hope that I have shed some light on your position for you.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.