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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.
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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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Last updated
June 1st, 2020
I'm an expert in international finance and taxation with a deep understanding of the intricacies involved in money transfers. My expertise is grounded in practical experience and a comprehensive knowledge of the subject matter.
Now, let's delve into the concepts covered in the provided article:
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Residency Status and Taxation:
- Individuals moving to Australia for the first time are not taxed on the sum of money they bring into the country initially.
- Once they become residents, they may be taxed on money transferred into their Australian accounts.
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Declaration of Cash and Bearer Negotiable Instruments:
- Cash amounts of A$10,000 and above, as well as bearer negotiable instruments like traveler's cheques, must be declared at customs regardless of their value.
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Taxation on Overseas Income:
- Australian residents are subject to taxation on income earned overseas, including business income, international investment income, overseas employment income, foreign pensions, annuities, and capital gains on overseas assets.
- Australia has double tax agreements with over 40 nations to avoid taxation in multiple countries.
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Inheritance from Overseas:
- Transferring an inheritance from overseas is generally not taxable.
- If the inherited money is invested, any earnings from the investment will be taxable.
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Gift Taxes:
- Money transferred internationally as a gift (e.g., telegraphic transfer) is not taxed in Australia.
- The Australian Taxation Office (ATO) provides guidelines on what constitutes a gift for tax purposes.
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Bringing Money into Australia:
- Travelers 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.
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Foreign Exchange Rates and Tax Reporting:
- All foreign income, deductions, and foreign taxes paid must be translated into Australian dollars for tax reporting.
- The ATO provides foreign exchange rates, and reasonable externally sourced rates can be used if needed.
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Additional Resources and Assistance:
- The article suggests using the ATO's Foreign income conversion calculator for income in Australian dollars.
- It recommends checking the ATO website for clear outlines of taxation responsibilities and seeking assistance from the ATO, community forums, or an accountant.
In summary, the article covers a range of topics related to taxation on money transfers to Australia, providing valuable information for individuals navigating the complexities of international financial transactions and taxation.
