Whether you need to pay tax on money you transfer to Australia depends on your residency status, the source of the money and the Australian Taxation Office rules.
Here we cover the most common situations where overseas money transfers are made to Australia:
Moving to Australia for the First Time
Income Earned from Overseas Sources
Inheriting Money from Overseas
Monetary Gift from Overseas
If you are moving to Australia for the first time, any sum of money that you bring into the country will not be taxable, according to the ATO. Once you become a resident of Australia, you may be taxed on money you transfer into your Australian account.
When bringing cash A$10,000 and above, it must be declared at customs. Bearer negotiable instruments like Traveller’s cheques, money orders, promissory notes, postal order, personal cheques must also be declared when asked, regardless of their value.
If you are resident of Australia, you will be taxed on income earned overseas. This includes business income, international investment income, overseas employment income, foreign pension and annuities, or capital gains on overseas assets.
Also, bear in mind that certain countries may require you to pay tax in two countries. Australia has double tax agreements with more than 40 nations. This ensures that taxation is imposed only once, regardless of the amount of income. Find out if you are affected by the tax treaty.
Example: Peter has emigrated from Malaysia to Australia permanently. He has a bank account in Malaysia which continues to receive monthly income from renting out his house.
Peter continues to pay his taxes in Malaysia, but he also has to declare his offshore bank account and rental property when he files his tax return in Australia.
With the double taxation agreement between Australia and Malaysia, Peter can claim a tax deduction on the tax he had paid for in Malaysia. He will receive a tax refund when the tax return is processed.
It's important to declare your foreign income in your tax return to avoid any legal implications. Our suggestion is to find the right tax consultant who can help you figure out the amount of tax you will have to pay on your foreign income.
Transferring an inheritance from overseas is generally not taxable. If you are the executor of an estate or will, you become responsible for the deceased individual’s tax affair.
Should you put the inherited money towards an investment, then any earnings will be taxable.
For more information, read "Receiving Inheritance Money from Abroad"
Money transferred from international sources such as a telegraphic transfer as a gift is not taxed in Australia. Since a gift is a one-time occurrence it is not taxed. However, the ATO says that not all payments made by your donors are gifts.
It is advised that you check the rules that apply to any money you receive from foreign sources into your Australian bank account. The taxation responsibilities you need to be aware of are clearly outlined on the Australian Taxation Office (ATO) website. If you need more assistance, call the ATO or talk to an accountant.
When transferring money between countries, you could end up losing thousands of dollars through a bank. It's crucial to avoid poor exchange rates, high fees and commission charges. Here are the best ways to getting the best exchange rates.
Minimum transfer $250. Please note that the receiving bank or intermediary bank may charge fees on transactions.
Traveling to another country? Our experts share exchange currency tips to help you get a better exchange rate and lower fees.
This article explores the cheapest ways to transfer money back to Australia based on the amount you want to send.
General advice: The information on this site is of a general nature only. It does not take your specific needs or circumstances into consideration. You should look at your own personal situation and requirements before making any financial decisions.