We explain the tax implications of transferring money to Australia and why professional advice is so important.
Australian tax law is a complex web of rules and reporting requirements that is constantly being tweaked and reshaped by the federal parliament.
This makes it challenging to keep abreast of the ins and outs that keep you on the right side of the Australian Tax Office (ATO). The complexity only increases when you’re an Australian resident who receives income from overseas.
Is money from overseas taxable?
Moving your money into Australia is easy enough, but it can be a challenge to know precisely what payments you need to declare.
Keep in mind that every transfer of money into and out of Australia is monitored by AUSTRAC, the federal agency responsible for combatting international money-laundering and other abuses of our financial system.
AUSTRAC passes all the data it collects onto the ATO, even if it’s not suspect, and the ATO then follows up with the taxpayer in respect of that overseas income.
For these reasons, it’s important to obtain professional advice on your tax affairs. Advice from an experienced professional will ensure you don’t inadvertently fall foul of the law.
To figure out whether money from overseas will be taxable in Australia, you’ll need to consider its source. It’s likely that you’ll need to report an international money transfer derived from:
- Income from an overseas business
- Income from an overseas property
- Salary or wage from an overseas job
- Foreign investment income (e.g.interest and/or dividends received)
- An overseas pension or superannuation
Income tax treaties
Also bear in mind that Australia has signed income tax treaties with 46 foreign nations. These agreements provide Australian tax credits on overseas income for which taxes have already been paid in one of those tax treaty nations. This means that if you’ve already paid income tax in one of these countries, you won’t be doubly taxed when you transfer that money into Australia.
Are there are any other exceptions?
The following sources are unlikely to have any tax implications and may not be required to be declared as income.
- Windfalls (e.g.lottery win)
- An initial amount of money transferred when you first moved to Australia (e.g.if you sold your house in the UK before immigrating to Australia and then moved the proceeds from the sale to Australia to help buy your new home)
What records are required?
It’s essential that you keep full and accurate records of all overseas transactions so you can answer any questions the ATO may ask. These records include copies of relevant bank statements from the country where you’ve transacted so you can provide documentary evidence about the source of your funds.
If you receive a monetary gift from overseas, retain letters, cards, notes or any other form of documentation that will demonstrate to the ATO that the sum in question is indeed a gift. You should also retain paperwork that attests to the original source of gifted funds.
How can I transfer money to Australia?
The most common method of transferring funds is through a money transfer to your Australian bank. But you would do well to shop around because fees and exchange rates can differ among money transfer providers.
It’s also best to choose a reputable money transfer provider that is regulated and authorised by the Australian Securities and Investment Commission and has an Australian Financial Services Licence number.