This week’s Mailbox Monday post is a question that I’m sure a lot of 457 visa holders have asked, especially since we often transfer large sums of money to Australia from overseas.
I have a 457 visa, sponsored by my employer. I’m planning on moving to Sydney this coming summer. I’ve been trying to gather any information that could help me with my move and your Sydney guide has been marvelous.
But my questions are related to Australian taxes and transferring money.
When I first enter Australia and if I bring some money with me, will it be taxed?
And when I settle in Sydney, and have a bank account, if I transfer money to that account will it be taxed?
Those are both really good questions.
The first is easy to answer and on the Australian Customs website.
“There is no limit to the amount of currency you can bring in or out of Australia. However, you must declare amounts of A$10,000 or more in Australian currency or foreign equivalent. You must disclose any promissory notes, travellers’ cheques, personal cheques, money orders, postal orders or other bearer negotiable instruments, regardless of value, if requested by a Customs and Border Protection officer or police officer.”
Updated: March 16, 2016
You will not be taxed at the time of transferring the money but will be taxed on the interest earned once in your bank account in Australia.
If you transfer money into your bank account later from your savings back home then that also will not be taxed but if that money is income earned back home and you qualify at tax time as a resident you will have to declare it on your Australian Tax return. This goes for income from rental properties back home too as that is foreign income earned according to the Australian Tax Office (ATO).
I have a guest post from David McKeegan, co-founder of Greenback Expat Tax Services, that goes into more detail on qualifying as a resident for tax purposes and when you need to claim foreign income earned.
In Australia, your Tax File Number is linked to your bank account which means the Australian Tax Office has records of all your bank activities.
I would suggest opening your Australian Bank account before for you leave for Australia.
This way you can have your money transferred and waiting for you when you arrive. This will help out as far as time goes so that you are not waiting for funds to appear in your account and can jump on an apartment asap. Waiting for an international transfer to clear can take time and the real estate market in Sydney is very competitive. The wait period may cost you the perfect flat here in Sydney.
The other advantage is not having to carry your life’s savings with you when you travel to Australia. That way you don’t even have to worry about customs when you arrive.
Even so, you just have to let customs know that you have more than $10,000AUD with you.
Opening an Australian Bank Account is super easy, you can do it all online in about 10 minutes. And you can open your account 12 months before you move. I don’t think anyone really plans that far ahead but nice to know.
Once you have your account details, you’re ready to transfer funds. All you need is your account number, bank address, a branch number and the bank SWIFT code.
Most banks will try and sell you on using them for your money transfers, telling you how easy it is to do.
Don’t fall for it!!
Transferring money from your bank account at home to your bank account in Australia is one of the biggest mistakes people move make. They make it sound so easy that it is hard to resist.
The same goes for international bill pay. Don’t even consider that.
Instead, I always suggest using a forex company. My two favourites are OFX and Torfx, both offer good rates. OFX offers free transfers for LIFE for SMG readers. You can find out more about that offer and my referral link here.
OFX is an Australian based company, but don’t worry, you can open an account with them and transfer money from anywhere in the world.
These are not your only options as far as transferring money to Australia.
Many people really like Transferwise and, if you’re located in Europe, CurrencyFair. Both of these are good options for transferring money quickly but, if you are transferring a large sum, then go with a forex company.
Why? Because you can lock in your rate and, if you choose not to lock in a rate of exchange, they can offer you a better rate of exchange.
Transferwise is great of transferring money quickly and in smaller sums. CurrencyFair’s exchange marketplace is a fantastic idea but again best for smaller sums.
CurrencyFair is offering SMG readers a free first transfer. Just click any of the links on this post to redeem that offer. There is no code and the free transfer will not happen until you make you first transfer with them.
If you are transferring over a large sum, over $5000 then go with one of the forex companies.
If you forget a payment back home that’s due, this happens to me more often than I would like to admit, then Transferwise or CurrencyFair are a better option.
Ok, so I’ve added in a lot of extra info. Just to sum things up.
1. Tax not on savings transferred but on income earned back home if you are classified as an Australian resident for tax purposes.
2. Claim $10,000AUD or more.
3. Open bank account before moving to Australia.
4. Transfer large sums with forex company. For small sums and for quicker transfers, use Transferwise or CurrencyFair if located in Europe.
Good luck with your move and let me know if you have any other questions.
All the best,
PS Yes, SMG is an affiliate of Torfx, Ozforex, Transferwise and CurrencyFair. I have used each one. This is why I recommend each of them to my readers. It’s nice to check out different options and shop around. This is one reason I’m not an exclusive partner to any single one as I switch between each of them myself, depending on what the situation is.
What is Mailbox Mondays?
Every Monday I pick a question from you along with my reply straight out of my inbox to share with everyone here on Sydney Moving Guide.
I don’t promise to have all the answers but I will do my best to point you in the right direction or help you with your research as I know there is a lot of noise out there on the interwebs and good resources are hard to find.
The aim of Mailbox Mondays is to start conversations on topics you want to know about. So please leave a comment, or ask a question, or share more info from your experience, moving to and living in Australia, in the comment section below.