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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15977
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My Wife and I recently sold our business (previously run as

Customer Question

My Wife and I recently sold our business (previously run as a partnership) to a limited company we own. We paid capital gains tax on the amount of the sale (the sale was approx. £300k). No money changed hands though so we essentially paid the tax and our company is loaning £300k from us as individuals. The plan was that the company would gradually repay this loan to us rather than pay us wages.
My question is, what happens if we emigrate from the UK to Australia before the £300k is paid off? The business is fairly autonomous, could we leave it running in the UK and continue to receive loan repayments from it? Since we have already paid tax on those loan repayments in advance (the capital gains tax) would we have to pay any Australian tax on them too? Or is there a double tax treaty or something that would prevent that?
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.

There is nothing to stop you running your UK from Australia and drawing down on the monies owed to you by the company. As you will see here, Australia has similar tax rules for loans to directors or participators as the UK.

So long as you can prove if asked that the sums you are drawing from the company are loan repayments you will have no Australian tax to pay on those loan repayments. It would be the same if the money was sitting in a UK bank account in your name. The gain was made before your potential arrival in Australia and so is beyond the reach of the Australian tax system as it would be so far as the UK tax system is concerned if you were an Australian coming to live in the UK. All you have done is loaned the company the proceeds of the diposal of your business which you will draw as and when fund become available.

I'm not an expert on the Australian tax system and you would be well advised to seek out advice from an expert on your situation and that of the UK company since it would be controlled by directors/shareholders resident in Australia.

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