Tax On Transferring Money To Australia From Overseas
There are a number of urban aussie expat myths on whether there is tax on transferring money to Australia from overseas so in today’s post we wanted to outline some of the key points and set the record straight.
There are a large number of factors that determine whether or not you will need to pay tax on currency transfers from overseas to Australia. Some of the key ones include:
- Source of the funds
- Jurisdictional tax laws at both the source and destination of funds
- Size of the currency transfer
- Tax residency status
In the majority of cases the reason for the transfer of funds back to Australia will be for legitimate reasons (e.g. paying for boarding schools fees, plugging a cash flow gap if you own an investment property etc) however lets look at some of the factors in more detail.
Source of the Funds
You are able to transfer your own existing assets to yourself around the world as long as you have met the relevant jurisdictional tax requirements that we will go into in the next section. In the majority of cases the funds that you would like to transfer back to Australia is from your employment overseas. As long as the intention of the transfer is not to evade tax, and you abide by the local laws (and you can substantiate this), then the relevant tax treaties between the countries around the world will provide you with the protection around double taxation.
Jurisdictional tax laws
Australian expats live in many different countries and in each of those countries there are different tax laws. It is always recommended that you review the tax laws in your jurisdiction to ensure that any tax that may be applicable has been paid (capitals gains tax, inheritance tax, gift tax etc). For example if you owned a property or share portfolio overseas and sold that asset for a capital gain ensure that before you transfer those funds to Australia that you have paid the applicable tax. Once taxes have been paid in the location of the assets you may not have to pay tax again when you repatriate those funds. Australia has a number of Double Taxation Agreements in place with many jurisdictions and these are in place to protect you from paying tax on the money twice.
Size of the Currency Transfer
Aussie expats believe that if you transfer funds in amounts that are less than AUD$10,000 you won’t raise any issues which is incorrect. In actual fact if you make multiple transfers below the AUD$10,000 reporting limit to try and fly under the radar then more than likely this will raise a red flag to the regulators because it will appear that you are trying to avoid the regulated entities reporting requirements.
In Australia, AUSTRAC is the government agency that is regulated to overseas the billions of dollars that get moved between Australian and overseas every year. As well as looking out for terrorism financing and money laundering one of their key roles is monitoring transfers that may involve tax evasion.
AUSTRAC oversees the compliance of more than 14,000 Australian businesses (of which Atlas Wealth Management is one) in 70 designated services in five key areas:
- Financial services
- Bullion dealers
- Remittance service providers
- Cash dealers
Tax Residency Status
Your tax residency status plays one of the biggest parts in determining whether your foreign currency transfer runs the risk of attracting any tax. As an example, if you are classified as a resident for tax purposes in Australia and you earn a salary overseas then this needs to be declared in your Australian annual tax return to ensure that you pay the appropriate tax. For the same reason, if you are a Australian resident for tax purposes and you have assets overseas that haven’t been declared to the Australian government, and you repatriate those funds to Australia, then more than likely this will be seen to be hiding assets to avoid tax and you can expect an investigation.
For those Australian expats who live overseas, qualify as a non-resident for tax purposes and abide by the local tax laws, then in the majority of cases you can rest easy. There maybe times that a transfer may attract an enquiry from an Australian regulatory body but as long as you can substantiate the intent of the transfer, show that you are abiding by the relevant laws and most importantly not be seen to be avoiding or evading any tax obligations, then Australia is a great place to accumulate your wealth for when you are returning to Australia after living overseas.
I hope this post went some way to providing you some clarity on the topic of taxation on transferring money from overseas to Australia. As always when it comes to tax and any sort of financial advice we always recommend you speak to a licensed professional.
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The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your Atlas Wealth Management Authorised Representative before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Atlas Wealth Management nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.