Tax problems when you transfer money to and from Australia
When you transfer money to and from Australia, you need to understand and deal with the relevant tax issues.
Before you transfer any money from overseas to Australia or from Australia to another country, you should get legal advice from King Lawyers on the tax implications of that transfer and any problems that may arise with the Australian Taxation Office (ATO).
Tax issues when you transfer money from overseas to Australia
If you transfer money from overseas to Australia, you may be audited by the ATO in relation to the tax implications of the relevant transactions.
If the ATO considers that the money you have transferred to Australia is taxable, then the tax that you will have to pay to the ATO can be up to about 50% of the amounts transferred. In addition to that, if you have failed to correctly report that amount to the ATO by the required deadline, the ATO is likely to impose additional penalties and interest charges on top of the tax shortfall.
Therefore, if you fail to get advice and deal with this issue properly, you may end up losing most or all of the money transferred from overseas to Australia to the ATO by way of tax, penalty and interest charges.
Do you have to pay tax on money transferred from overseas to Australia?
In some cases, the answer is yes. To answer this question correctly, it is necessary to consider all the relevant facts and circumstances. In particular, it is important to consider the following issues:
- What is the source of the money being transferred to Australia?
- Did you pay any foreign tax on the money transferred to Australia?
- How is the money being transferred to Australia?
- Does the money need to be declared at the time of transfer to Australia?
- What is the value of the transfer in Australian dollars?
- Are you an Australian resident for the tax purposes?
- What is the tax that may need to be paid in Australia on the money transferred from overseas?
- What are the penalties for failing to declare the amount being transferred to Australia correctly?
- What are the penalties for failing to pay the correct tax on the amount being transferred to Australia from overseas?
The tax laws in Australia are fairly complex and getting legal advice from an expert tax lawyer in Australia in always a good idea.
Tax issues when you transfer money from Australia to another country
If you transfer money from Australia to another country, you may be audited by the ATO in relation to the tax implications of the relevant transactions.
It is usually best to get legal advice before you transfer any money from Australia to overseas.
Reporting of all money transfers to and from Australia to AUSTRAC
Australian Transaction Reports and Analysis Centre (AUSTRAC) is an Australian government agency that monitors financial transactions to identify money laundering, organised crime, tax evasion, welfare fraud and terrorism.
All transfers of money or property to Australia from overseas or from Australia to another country must be reported to AUSTRAC within 10 days.
The “reporting entities” that must report to AUSTRAC include:
- banks and other financial institutions
- insurance companies
- securities dealers and stockbrokers
- bullion dealers
All money transfers to and from Australia must be done through a registered money transfer business
Businesses that transfer money to and from Australia are known as remittance service providers or money transfer businesses.
All money transfer businesses in Australia must be registered with AUSTRAC and comply with obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
Before you use any such businesses, you should check and confirm that the money transfer business is registered with AUSTRAC.
A registered money transfer business will ask you to show identification documents when you transfer money. If you are not asked for these documents, the business is probably not registered with AUSTRAC and operating illegally.
In Australia, there are heavy penalties for money transfer businesses that fail to register with AUSTRAC, including fines of up to $420,000, seven years’ jail, or both.
Travelling to and from Australia with money
Travellers can carry an unlimited amount of money into and out of Australia. However, you must declare cash in Australian and foreign currency if the combined value is $10,000 (AUD) or more.
Do you need legal advice from an experienced tax lawyer on the tax implications of your money transfers to and from Australia?
This content of this article is offered as general information only and should not be relied on as specific legal advice on the tax implications that may arise under the Australian tax laws for money transfers to and from Australia. It would be best for you to get advice before you transfer money to or from Australia.
To get legal advice from King Lawyers on your specific circumstances, please contact us to arrange an initial consultation with our expert tax lawyers.