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Sending money to Australia
Transferring money to Australia can incur taxation depending on the amount sent and the transfer reason. The Australian Taxation Office (ATO) is the regulatory body responsible for collecting taxes on behalf of the country. The business of monitoring money transfers to Australia falls to the Australian Transaction Reports and Analysis Centre (AUSTRAC), the regulatory body to contact when declaring transfers sent to the country.
To help our readers better understand the tax obligations associated with this country, we will be running through scenarios where you may have to pay taxes or not, as well as instances when you may need to report transfers to AUSTRAC.
Tax implications of sending money to Australia
The ATO regulates money transfers to Australia and may demand tax payment for receiving money from overseas recipients, depending on the reason for the transfer and the amount sent. Here we will specify the implications of a transaction, to prepare you for the potential costs associated with this transfer corridor.
When you need to pay taxes
Listed below are a number of scenarios where you may be asked to pay tax on your money transfer:
Personal income: Money sent to you as payment from overseas, for work conducted, is taxable. This includes part time or full time work, as well as freelancing
Business: Income generated from your business is taxable, regardless of where in the world the company is operating
Pension or superannuation: Money received as part of a pension plan will need to be declared on your next tax return
Real estate: If you own property abroad which is generating rental income you will need to pay taxes on any profits made
Examples of tax-free money transfers
Certain types of money transfers are exempt from taxation, according to Australian law, ad listed below are the most notable:
Moving to Australia: If you are moving to Australia funds that you bring with you are not taxable, but must be declared
Inheritance: Receiving inheritance from abroad is not taxable in Australia, depending how the money is used. For example, if you decide to invest the inheritance money, then it might be liable for taxation
One-time gift: In many cases, a monetary gift will not qualify as a taxable transaction, but this will depend on the reason for the transfer. For instance, if the money is related to business activity or employment, then taxation may well apply
The examples above are generalized instances that require further breakdown. The best way to know if you need to pay taxes is by consulting a tax specialist who can explain the specifications of Australian tax law and outline the amount you might have to pay.
When to report money transfers to Australia
We understand that you might be having trouble figuring out when you need to report money transfers made to Australia. This section provides an overview of the reasons why you might have to declare international transactions.
Regardless of your citizenship, you must declare the receipt of any amount exceeding $10,000 AUD ($6,987 USD). Any foreign money transfers made to Australia must be reported within 10 days as part of an International funds transfer instruction (IFTI-E) report.
This type of report will be submitted to the regulatory body AUSTRAC who is the government agency responsible for combatting terrorism and money laundering in Australia.
One of the benefits of using a money transfer company is the fact some providers automatically file a report on your behalf as is expected by the Australian government. Each money transfer company will employ its own international remittance threshold when it comes to filing a report.
Australian laws require the following details to be included in an international money transfer report:
Full name and contact information of both sender and receiver
Recipient bank details including SWIFT code and account number
Total transfer amount and currency used
For business transfers, details such as company name, type of business and Australian Business Number (ABN) should be included
Summary
To conclude, there are several instances where you have to pay taxes when sending money to Australia. Understanding the circumstances when taxation may apply is a crucial part of upholding the relevant laws and regulations applicable to your transfer. We encourage our readers to continue learning about the terms and conditions of different international money transfers by reviewing our other Sending Money; consider reading our tips for How to Avoid Bank Charges for International Transfers and The Safest Ways to Send Money Online.
