Will You Be Taxed on Money You Transfer to Australia?
Whether you are charged for Australian tax on money transfers 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
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 Australian Tax Office (ATO). However, 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 orders, personal cheques must also be declared when asked, regardless of their value.
Income earned from overseas sources
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.
To help work out your income in Australian dollars, the ATO has a Foreign income conversion calculator.
Inheriting money from overseas
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 affairs.
Should you put the inherited money towards an investment, then any earnings will be taxable.
Gift taxes in Australia
Money transferred from international sources such as a telegraphic transfer for 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 use their chatbot, ask questions in the ATO community forum, or talk to an accountant.
Bringing money into Australia
According to AUSTRAC, 'travellers can carry an unlimited amount of cash into and out of Australia. Amounts of $10,000 or more Australian dollars, or foreign currency equivalent must be declared.'
If you are bringing money in via a bank transfer, this declaration will most likely be done by the bank or money transfer company you use. To make sure you avoid any hidden fees, make sure you compare exchange rates and fees before making the transfer.
ATO foreign exchange rates
According to the ATO, 'all foreign income, deductions and foreign tax paid must be translated (converted) to Australian dollars before including it in your return.'
The ATO themselves provide foreign exchange rates, however, they also state that 'if you require a foreign exchange rate for a currency not listed in the schedule, you may use any reasonable externally sourced exchange rate for that currency.'
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