Sunday, September 24, 2017

Interactive Brokers Australia

Interactive Brokers have set up a subsidiary in Australia and are requiring all clients resident in Australia to move their account to the new broker. The only declared difference is that they won't hold cash in currencies apart from AUD and USD. A few years ago they told Australian clients that they couldn't borrow on margin any more. Maybe that was fixed in the meantime. In any case, the website indicates that you can borrow on margin. Formally, it doesn't change the obligation to pay US estate tax on US assets. These start at an estate of only USD60k for non-US citizens. But it would probably make it easier to avoid. I still have a US retirement account, which is a bit over the USD 60k limit and a US mutual fund worth USD 14k. I also have a bank account, but that isn't included in the estate tax liable assets. It seems though that the US-Australia estate tax treaty means that my estate wouldn't be required to pay US estate taxes.*

* This wasn't the case for my mother who lives in a country that doesn't have an estate tax treaty with the US.


2 comments:

Anonymous said...

one way round this issue (if you want and want a margin account) is to set up a company and open the account in its name. The consumer credit code doesn't apply to an Australian company, so IB are more than happy to give you as much margin as you want. I have both a company account and an individual account.

Financial Independence said...

If the US will actively pursue the estate tax liable assets from foreigners it has a short term gain, long term loss.
People simply would not be bothered (unless you has millions) to deal with it.

But I see voices of protectionism in western europe where banks and investment company are curbing exposure to the US markets, keeping more money in EU markets under various reasons.