Many Australians working around the globe are transferring money from their country of residence to Australia. Whether it’s to pay for the deposit on your new investment property, make regular repayments for your home loan or simply to transfer funds to your Australian offset account, there are many reasons that Australian expats are transferring money back home.

We’re often asked by many of our clients and friends about the rules for Australian expats when it comes to currency transfers. In this week’s article we’re aiming to clarify some of the key issues and myths so that you can make informed decision when it comes to transferring funds back home.

1. Double Taxation Agreements with Your Country of Residence

Many countries all over the globe have a Double Taxation Agreement (DTA) with Australia. This agreement will typically mean that you will only pay tax on your local salary or income in your country of residence, rather than also needing to pay tax in Australia. The Double Taxation Agreement will also typically dictate where to must pay capital gains tax on any investments, excluding Australian property, which remains taxable in Australia.

It's important to ensure that when you’re transferring funds to Australia that you have declared any income as you’re required to and you can substantiate where the funds have come from if you’re asked to.

2. Your Tax Residency

If you are deemed to be an Australian tax resident, which you can discover more about on the ATO website by clicking here, then it is likely that you will need to declare your overseas income to the Australian Tax Office (ATO) and pay the appropriate tax. This applies to anyone living in Australia with assets offshore that should be disclosed to the Australian Tax Office (ATO). If you are not a tax resident of Australia for tax purposes  then you would not need to be declaring your income in your Australian tax return.

If you’re not clear about whether you’re a tax resident of Australia, we would recommend that you speak with a professional financial planner and/or accountant. You can also request an independent ruling from the ATO. The most important factor here is that you don’t simply assume you’re not a tax resident of Australia just because you don’t live there.

3. Size of Your Transfer

A common myth that we often hear from our clients, is that there’s a limit of $10,000 when it comes to FX transfers, and that transfers below this level will go unnoticed by the relevant authorities in Australia. This is completely untrue and the fact is that all amounts can be tracked and will be picked up in Australia. AUSTRAC is the Australian Government agency that monitors these transactions and looks to identify issues of money laundering, tax evasion and any financing of terrorism. If you do make a transfer to Australia from overseas, you do not need to be concerned about the size of the transfer, but rather the purpose of your transfer to ensure that it does not impact your tax residency.

4. Source of Funds

For most Australian expats living and working overseas, a common source of funds sent is simply from their own salary. In most cases, the tax will be paid based on the relevant tax rates in their country of residence. Transfers from savings that have been derived from overseas salaries are unlikely to raise cause for concern as long as you abide by the relevant tax laws, understand the Double Tax Agreements are the funds are derived from legitimate sources.

Ally Home Loans Pty Ltd is your ally in finance for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.

Book an obligation-free, complimentary consultation here today.

Ally Home Loans Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.