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Money matters: Safe as two houses
Graham Macdonald
MBMG International Ltd.
For those of us who chose to move abroad deciding what
to do about the property that you leave behind (or that you subsequently
purchase back home) isn’t just a matter of deciding whether you’d
rather sell or rent it out. There are various tax implications, both in
your home country and the country you move to.
If we take the UK as an example, there is an exemption
from UK capital gains tax in respect of gains arising on the sale of your
principal private residence (PPR). Usually the PPR is easily determined as
it is the property in which you are actually living, but matters become
complicated when you have a second home (perhaps because you have been
sent to work overseas).
Although PPR relief is generally only available for
properties in which you are living, the law allows for certain periods of
‘qualifying’ absence to be taken into consideration. An overseas
secondment can often last several years and so this relief can become very
valuable. Unfortunately, it is easy to lose the relief, so care must be
taken to ensure that his does not happen.
How do I make sure I
keep my PPR relief?
The most common method of losing the relief is the
acquisition of another home in the country where you have gone to work.
This is because, if you have a second home (even one that is rented), you
need to make an ‘election’ that tells the Inland Revenue which
property you want to be treated as your PPR. Subject to special conditions
that apply if your home is rented out while you are away, a PPR election
can usually be made up to two years after the acquisition of the second
property.
However, if you are late making an election because you
were not aware of the rules, there are special concessions available which
can sometimes enable you to make a late election.
Failure to make the election will usually cause the
Inland Revenue to decide which home they feel qualifies for the PPR and
this might be the rented property if you have been spending more time
there than in your UK property, even though you would never want to claim
PPR relief in respect of a rented home. Of course, if you own the overseas
property, you might actually want that one to qualify for PPR relief if
you are likely to be paying UK capital gains tax on its disposal.
How do I decide which
property to elect for PPR?
Consider whether you will be entitled to any other
capital gains tax relief’s such as letting relief when deciding which
property to elect. Although exemptions for non-residents are now fairly
limited for UK capital gains tax, you should calculate the potential tax
savings that take into account your personal circumstances before deciding
on the form that an election will take.
Many other countries, including the US and the Republic
of Ireland, also offer an equivalent relief, although their rules are
different. It is important to remember that each country will treat itself
as an independent entity, meaning that an election valid for one country
will not be acceptable elsewhere. Of course, this can be used to your
advantage to maximise the relief available from capital gains in all the
countries with which you have a connection. Again, estimated computations
can be very helpful.
However, the fact that all countries operate different
rules with respect to the sale of a residential property can create an
unexpected tax liability. Sometimes the country where you are living will
tax the gain arising on the sale of property in your home country, even if
your home country treats it as tax exempt. It is important to take advice
relating to both countries before you decide to make the sale.
What if I decide to rent
out my property?
The tax issues relating to residential property are not
limited to capital gains. Many expatriates retaining their property in
their home country choose to make it available for rental, if for no other
reason than to cover their ongoing mortgage payments.
Rents are usually taxable and many countries insist
that taxes are withheld at source if the landlord is not resident. For
example, in the UK, landlords who are not resident must receive the rents
after the deduction of basic rate tax, unless specific forms have been
completed to obtain Inland Revenue approval to receive them gross.
Completion of the forms does not eliminate the UK tax charge as the
landlord continues to be liable to pay income tax in the usual way and may
even have to start making half-yearly payments on account.
The ATO have recently decided that GST on
property-related services is reclaimable for expatriates, but you have to
make a claim for this.
Withholding taxes is not the only problem to consider.
For example, as a non-resident, you might not be able to claim all your
expenses or you might need to make a special election to do so. It is
important to get advice at the outset because mistakes can often be very
difficult to rectify.
You may also have an income tax liability on the rents
in your country of residence. Sometimes double taxation agreements can
provide some protection, but you will need to check the relevant
agreement. Normally, but not always, you will end up paying the higher of
the two tax bills.
What other tax issues do
I need to consider?
We have only covered the two most common sources of tax
bills on homes left behind in this article, but of course there are other
tax consequences. If you are fortunate enough to have been able to claim
mortgage interest relief on your home, you might find it is no longer
available once you go overseas. Most countries levy municipal taxes simply
because of ownership. Sometimes having a home somewhere (for example, in
some US states like New York) can create tax liabilities on other sources
of income because your property deems you tax-resident there. Finally,
there may also be indirect taxes, such as the UK’s stamp duty that is
levied on transactions.
The importance of taking advice relating both to the country that
you’ve left as well as the one that you’ve moved to cannot be stressed
too highly - mistakes are often discovered when the tax bill has arrived
on the doormat, by which time it is usually too late to do anything about
it.
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The above data and research was compiled from sources believed to be
reliable. However, neither MBMG International Ltd nor its officers can accept
any liability for any errors or omissions in the above article nor bear any
responsibility for any losses achieved as a result of any actions taken or not
taken as a consequence of reading the above article. For more information please
contact Graham Macdonald on [email protected]
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Snap Shots: Using technology to get better pictures
by Harry Flashman
Anyone who reads this column regularly knows that I am
a great believer in manual cameras. In other words, you, the photographer
take charge and the final result is all your own work, not the work of
Messrs. Canon, Nikon, Sony, Olympus or whomever.
However, I am also a realist, and there are times when
using today’s technology can help you take better photographs. Improving
your photography is not really all that difficult, and you don’t even
need to go to school. There are many world class famous photographers who
never had a lesson in their lives. But they did read, and they did
experiment, and they did learn from their own work.
Learning how to take better photographs is really not
all that difficult. There are only two main variables, and after you
understand them and what they do to your photograph it becomes very
simple.
The first thing to remember is that the correct
exposure is merely a function of how large is the opening of the lens and
how much time the shutter is left open to let the light strike the film.
That’s almost it – that is photography in a nutshell. No gimmicks or
fancy numbers – a straight out relationship – how open and for how
long – this is known as the “Exposure”.
Now I will presume, for the sake of this exercise, that
you have an SLR and use it in the automatic, or “Programme” mode.
Let’s go straight to the “mode” menu and look up “A” or
“Aperture Priority”. In this mode it means that you can choose the
aperture yourself, and the camera will work out the shutter speed that
corresponds to the correct exposure. In other words, you can set the lens
opening at its smallest size and the camera will work out the appropriate
shutter speed. Or the reverse – you can select the largest aperture and
again the camera will work out the correct shutter speed to produce a
correctly exposed print.
So let’s play with this facility to give you some
better pictures. Select “A” and then look at the lens barrel and you
will see the Aperture numbers, generally between 2.8 and 22. To give you a
subject with sharp focus in the foreground and a gently blurred
background, you need to select an aperture around f2.8 to f4. Hey! It was
that simple. To get those “professional” portrait shots, with the
model’s face clear and the background all wishy washy, just use the A
mode and select an Aperture around f4 to f2.8.
Now, if on the other hand you want everything to be
nice and sharp, all the way from the front to the back, like in a
landscape picture, then again select A and set the lens barrel aperture on
f16 to f22. The camera will again do the rest for you, so don’t worry
about the shutter speed. Again – it’s that easy!
Flushed with creative success, let’s carry on. The
next mode to try is the “S” setting. In this one, you set the shutter
speed and the camera automatically selects the correct aperture to suit.
Take a look at the shutter speed dial or indicator and you will see a
series of numbers that represent fractions of a second.
First, let’s look at how to “stop the action” by
using a fast shutter speed, and it doesn’t need 1/4000th either. For
most action shots, select S and set the shutter speed on around 1/500th to
1/1000th and you will get a shot where you have stopped the runner in mid
stride, or the car half way through the corner or the person bungee
jumping. Yes, it’s that easy.
So this week you have learned that to get a good
portrait shot use the A mode and set the aperture on f4 to f2.8 and forget
about the rest of the technical stuff. Just compose a nice photograph and
go from there. (Do remember to walk in close!) To get a great landscape
shot, again use the A mode and set the aperture at f16 to f22.
Finally, to stop the action, choose the S mode and
around 1/500th of a second and you won’t get blurry action shots ever
again.
Certainly there are other aspects to good photography, but master the A
and S modes and you will produce better snapshots – and it is not that
difficult.
Modern Medicine: This red one is my party nose!
by Dr. Iain Corness, ConsultantIn
today’s ‘striving to be perfect’ world, cosmetic surgery is often
thought to be the answer for personal problems. In fact, rhinoplasty (nasal
remodelling) is one of the commonest cosmetic surgery procedures in
Thailand, since Thai ladies all seem to want the foreign larger style nose.
Rhinoplasty can reduce or increase the size of your nose,
change the shape of the tip or the bridge, narrow the span of the nostrils,
or change the angle between your nose and your upper lip. It may also
correct a birth defect or injury, or help relieve some breathing problems.
One of the biggest problems facing cosmetic surgeons is
not the surgical techniques, but the patient with unreal expectations of
what the procedure is going to do for them. The person with a poor
self-image may decide that the reason they are not the most popular person
in the group is because of the shape of their nose. Unfortunately for this
group of people, nasal remodelling will not change their personality, they
will still not be the most popular person, and the rhinoplasty will have
“failed”.
The best candidates for rhinoplasty are people who are
looking for improvement, not perfection, in the way they look. If you’re
physically healthy, psychologically stable, and realistic in your
expectations, you may be a good candidate.
Age is also an important consideration. Young teenagers,
the group which is most taken up with its own appearance, are not ideal
candidates for rhinoplasty, or most cosmetic surgery for that matter. There
are growth spurts which change the features, and psychologically teenagers
are not really mature enough to make decisions which will affect their
appearance for the rest of their lives.
One other factor that must always be taken into
consideration when contemplating cosmetic surgery is that in medicine there
are no 100 percent guarantees. All surgery and anaesthesia carries risks. In
the situation of rhinoplasty, that risk is very low, but there is still that
little uncertainty that nobody can deny. There is always a possibility of
complications, including infection, nosebleed, or a reaction to the
anaesthesia. After surgery, small burst blood vessels may appear as tiny red
spots on the skin’s surface; these are usually minor but may be permanent.
As for scarring, when rhinoplasty is performed from inside the nose, there
is no visible scarring at all; but when an “open” technique is used, or
when the procedure calls for the narrowing of flared nostrils, the small
scars on the base of the nose are usually not visible, but again, no
guarantees.
In about 10 percent of cases, a second procedure may even
be required to correct a minor deformity. Again, such cases are
unpredictable and happen irrespective of the skill of your surgeon. Living,
breathing human beings are all different, never forget that.
So let us assume that you have understood all the
pitfalls, have a realistic attitude, and still want that nose remodelled.
The next step is to indicate to the surgeon just what you are aiming for.
This is when you bring in your 100 photos of Tata Young! But once again, it
is not all that simple. The surgeon has to look at what you currently have
and see if your bone structure can support the nose of your choice.
Remember too, that the vast majority of cosmetic
procedures are not covered by the usual health insurance policies. Another
point to remember is that after the operation you will have a swollen,
bruised face, which takes a few days to settle. Take some holidays to allow
this to settle.
Finally, be sure that your surgeon really is a Board
Certified Cosmetic Surgeon. All doctors have skills in basic surgery, but
this is not basic. This is surgery that changes the way the world sees you.
Pick the best!
Learn to Live to Learn: Good as Gold
with Andrew Watson
A Big Friendly Giant if ever there was one. As loving
and caring as can be. In fact, good as gold. That’s Julian Milward,
aka Jules, a six foot five Kiwi mountain of a Primary Specialist at
Vientiane International School in Laos. For anybody who has never been
to Vientiane or to Laos, allow me to encourage you to go. It’s easy to
get there, the people are warm and welcoming and there’s an almost
nostalgic level of bureaucracy apparent, which would keep chartered
accountants like David Moriarty (see last week’s column) happy for
hours.  Julian
Milward, “Good as Gold”
I’m not patronising when I write that I feel that I
can genuinely enjoy a rush hour consisting of a few bicycles and
song-thaews. It’s been a long time since I was in the “Eastern
bloc” (1989 in Berlin as the wall was falling, actually) and as a
Kibbutznik, I was by no means discouraged in walking amongst its remains
again. There was something reassuring about the pace of life, without
the hurry, the rush of people running everywhere at such as speed (until
they find, there’s no need). One day, I stood in a line for half an
hour in order to acquire a ticket which entitled me to stand in another,
longer line. It was a kind of linear graduation, which brings out the
Buddhist in me. I was happy to be there and so was Jules.
JM: Happy to be here too. Good as Gold. Why
education for me? Well, you pose an interesting question. I was in a job
with a career path and a future but decided I wanted a career which had
a moral as well as a financial base.
AW: What’s a quality teacher?
JM: I think a quality teacher needs strong
communication skills, dedication, vision, a love of working with
children and I guess a commitment to improving the profession. Not
necessarily in that order.
AW: How important is professional development?
(‘PD’ - an area of Jules’s expertise and responsibility) Some
schools don’t acknowledge it at all.
JM: Mate, it’s crucial, essential, but
it’s also vital that it’s done properly. The ultimate outcome should
always involve increased or improved learning outcomes for the children.
Of course, PD also models lifelong learning to the school community,
which is an important by-product.
AW: What’s the impact of providing PD for
teachers, on teachers?
JM: I hope that the long term impact is a
benefit for the children, but there are a whole lot of benefits for
teachers and here are just a few. Firstly, they develop an improved
knowledge base. Secondly, they have the opportunity to develop
communication skills. Thirdly, a greater sense of collegiality is
encouraged. You see, it’s not just in their school but other
schools in the region who can benefit. Then there’s increased
self-confidence, personal satisfaction and a more aware sense of their
place in the profession. I could go into more detail, but I won’t.
Good as Gold.
AW: Do you think ‘networking’ is a good
thing?
JM: Vital. I can only see benefits coming out
of effective networking. Part of the uniqueness of international schools
is that you don’t often have a group of other international schools to
work with, so if you have opportunities to network you really have to
grab that opportunity with both hands and use the time as effectively as
possible.
AW: You’re into your fourth year here now,
Jules. What are you looking to do next?
JM: It’ll be a move. Hopefully into
Thailand, hopefully into another management position. Hopefully
maintaining some contact time with the kids because ultimately, that’s
why I got into education in the first place. When you see a child take a
risk and move forward with their learning, you realise just how vital
the role of the teacher is in the life of the child. It’s an
incredibly humbling feeling.
AW: There was another bomb in Bali a few weeks
ago. What can education do?
JM: History tells us consistently that
education is the single most important factor in the development and
progress of cultures and societies. There is a need to transcend
religious boundaries and the spiritual, to a point where tolerance and
understanding become the foundation stones for establishing a lasting
peace.
From a big man in the most heavily bombed country in
history, a still small voice of calm. Good as Gold.
[email protected]
Next week: Postcard from Bangalore
 Heart to Heart with Hillary
Dear Hillary
I just read your column and your answer to “Another Lonely Old
Fool”. May I congratulate you on your answer. Sensitive and
compassionate. Sometimes we forget that there are genuine people in the
world who do get bum deals. I hope the old fella remembers that he acted
with dignity and honour at a time of extreme pressure. I congratulate
him and hope that luck changes his way soon.
Bald Eagle
Australia
Dear Hillary,
Wasn’t that a sad letter you received from that “Lonely Old Man”,
and what a nice reply you gave. But I hope he will have some good
memories, even if everything seems bad at the moment.
I’m like him, an “Old Guy” and have met a young lady, she works
very hard every day in a market in Chiangmai to support her little
daughter and sick Mum (the husband butterflied years ago). I was
fortunate enough to be allowed to lodge with the family for three of the
twelve months I was in Chiangmai. We both love Thailand, and hopefully
one day I can be a permanent fixture in Chiangmai.
Marriage is not on the agenda, and I don’t think it ever will be, but
if I can support her, her daughter and Mum in the future that would make
me feel so good.
They say there’s no fool like an old fool, and a fool and his money
are soon parted. But you can’t take it with you, can you? And if you
can help somebody along the way, why not?
I’m stuck in Australia right now, but as soon as I get back to your
lovely country and the best people in the world, for sure I will bring
you some Belgium chocolates. Unlike Mr Singha I will keep my promise.
Thanks again for a great column Hillary.
Derrick
Dear Bald Eagle and Derrick,
Your letters show that Aussie males are not all the unfeeling men that
Australian women might make you out to be. Underneath that rough and
gruff exterior there lies a heart of chocolate, it seems. Thank you for
reminding me about that shameless Mister Singha person. I must remember
to make another voodoo doll of him and stab it with my poison pen. Jokes
aside, like you I hope the previous letter writer remembers that he has
done some good for people, and deserves some good luck to come his way
too.
Dear Hillary,
I am Thai woman. I heard many stories from foreigner problems about
Pattaya bar women. For me I had the problems with my ex- and present
foreigner boyfriend that they asked me to be the super woman, that I
have to work, take care of the house and take care of him, I have to do
many ways to make him happy but it seems like my boyfriend doesn’t
happy enough, even he doesn’t want to give me money for supported my
family.
I have a good education and work as real estate business job. Last 5
years I couldn’t spoke English like most students in Thailand had but
now I can speak pretty good English because I have foreigner boyfriend
and I tried so hard to learn how to speak and to write good English.
Anyway it’s not all the point I would like to say that I just really
want to let some selfish foreigner know that what he expects from the
girls to be perfect woman give him a super sex, honest, good job, sexy,
slim, brown skin, long black hair and good heart? The same time some
foreigner cheat be hide her back.
Oh well, he should to know that no one perfect or he wants the perfect
woman, so he should to go look at another planets (but I am not promise
that he will find the super and perfect woman there). So all the
foreigners may have to change their opinion about women!??? The women
can be a good woman and good heart, even they are just a bar women or
the good job girls if foreigner treat them the right way.
However I do understand some foreigner’s feeling about their Pattaya
girl experiences because some of them like a bitch like some of
foreigner too.
Miss not Perfect
Dear Miss not Perfect,
You may not be perfect, as you say, but none of us are. Your letter
hinges on the opening paragraph, “asked me to be the super woman, that
I have to work, take care of the house and take care of him, I have to
do many ways to make him happy but it seems like my boyfriend doesn’t
happy enough, even he doesn’t want to give me money for supported my
family.” In that sentence, you show that your relationships have been
based on your financial needs, rather than true emotional equality and
sharing of a communal life. He expects a slave to keep him fed and warm,
clean and tucked up at night, while you expect money to support your
family in return for the slavery. This is not the basis of a lasting
relationship between women and men. Love should be given for love. Money
does not come into it. In a true loving relationship, family finances
are worked out between the two people concerned, including what becomes
joint commitments such as rent, food, car expenses, living expenses, and
family support.
Psychological Perspectives: Belief bias: We’re not as logical
and clear-headed as we might think!
by Michael Catalanello,
Ph.D.
“How fortunate for governments that
the people they administer don’t think.” Adolph Hitler
The human brain is an amazingly powerful tool. It
provides us the capability of performing complex mental feats that even the
most advanced computers cannot approximate.
Despite the elegance and sophistication of our brains,
we are, nevertheless, subject to exhibiting bias and gross errors in our
thinking and decision making processes. Furthermore, our biases are
generally predictable from our beliefs, and usually well concealed from our
awareness. If I am correct, you might be viewing this article with
skepticism.
But putting aside our possible disagreement about your
biases, here’s an argument from logic. See if you agree that it is sound:
Does the conclusion follow logically from the premises?
Premise 1: Democrats support free speech.
Premise 2: Dictators are not democrats.
Conclusion: Dictators do not support free speech.
What about this one?
Premise 1: Robins have feathers.
Premise 2: Chickens are not robins.
Conclusion: Chickens do not have feathers.
In the language of logic, both arguments have the same
form, and both are equally not valid: The premises, even if we
assume them to be true, can not guarantee the truth of the
conclusions.
If you had more difficulty spotting the faulty reasoning
in the first argument than the second, you are experiencing “belief
bias.” According to this notion, our pre-existing beliefs tend
to distort our ability to reason clearly. As a result, we are prepared to
accept conclusions that seem consistent with our belief systems, without
serious consideration of their meaning or merit.
The reverse is also true: We are reluctant to accept
conclusions that seem contrary to our belief systems, despite the logic or
reasonableness of those conclusions.
In a free society, we expect the media to provide us
with fair and unbiased reporting of the events of our world. Many, however,
complain that the media exhibit bias in the way that they cover various
issues and personalities in the news. Consider, for example, news coverage
of conflicts around the world, such as the Israeli-Palestinian conflict,
activities of the United Nations, or the war in Iraq. Or perhaps on a more
local level, consider the way the media reports on the activities of the
prime minister, or the current violence in the southern provinces.
Do you believe that the media are biased in their
reporting about the prime minister? If you do, whether you believe they are
biased for or against him, probably depends upon your
attitude toward the prime minister. If you like him and think he is a good
leader, you probably believe the media are biased against him.
If, on the other hand, you believe the prime minister is
a corrupt leader, you probably believe that the media are far too easy on
him than he deserves. Thus, in this example, your judgment about the
performance of the media is biased by your existing beliefs about the prime
minister.
Psychologists demonstrated this principle in a study in
which they recruited groups of pro-Israeli, pro-Arab, and politically
neutral students from Stanford University to view TV news coverage of the
massacre of civilians in Beirut. Subjects were asked to rate the fairness
and objectivity of the reporting.
Students who were pro-Arab viewed the coverage as biased
in favor of Israel. Pro-Israeli students, viewing the same programs, judged
that they were biased against Israel. The groups also differed in their
perceptions and recollections about the program content, each recalling
more negative references to their respective side than positive ones.
We can see examples of belief bias operating in routine
occurrences, such as sports fans’ “booing” a perceived unfair
decision by a referee, and complaints by politicians of systematic media
bias against them. It is worth noting that political commentary about
people and events is often deliberately slanted; a strategy for gaining
advantage. The “spin doctors” that appear following political debates
come to mind. This tactic is not to be confused with belief bias.
Recognizing belief bias in others can be a step toward greater
understanding. Recognizing it in oneself is likely to be more difficult.
Awareness of own susceptibility to this source of error in logic can be
both a humbling and enlightening experience.
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Dr. Catalanello is a licensed psychologist in his home State of Louisiana, USA, and a member of the Faculty of Liberal Arts at Asian University,
Chonburi. You may address questions and comments to him at [email protected], or post on his weblog at
http://asianupsych.blogspot.com
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