This is a common question asked by Singaporean migrants as you may have heard stories of a friend’s friend being audited by ATO after transferring funds from Singapore to Australia.
Transfers of Funds are Monitored
In our other blog post ‘Moving Funds to Australia‘, we touched on the fact that large transfers of funds into Australia are monitored by a regulatory body known as AUSTRAC (Australian Transaction Reports and Analysis Centre), which collects data on all cash transfers that exceed $10,000.
However, not all transfers are audited. Anecdotal evidence also indicates that the ATO doesn’t always act immediately. It may be several years before ATO contacts you with a long list of transfers that you have made over the years.
Taxable Transfers of Funds
If you are an Austalian tax resident, the transfers of funds that arose from the following sources are taxable:
- Overseas business income
- International investment income including share dividends, interest income, rental income, etc.
- Overseas employment income
- Foreign pension and annuities
- Capital gains on overseas assets
Non-Taxable Transfers of Funds
Not all funds that are transferred to Australia are taxable. Here’s a short list of funds that will not be taxed. However, you will have to provide proof of the nature of these funds in the event of a tax audit.
Gifts: Money given as a gift from a family member for personal reasons and the gift isn’t connected to any income-producing activities by you, is not assessable income and not required to be reported in your tax return.
Inheritance: There are no inheritance or estate taxes in Australia. Therefore, cash inheritance is not taxed. However, if you inherit property or capital assets, capital gains taxes may apply if the property is sold after a certain period.
Savings: If you transfer savings from your overseas bank acocunt into Australia, it is not taxed.
Disclaimer: This basic article on taxes was written by ‘Life in Melbourne’ in consultation with a registered tax agent. We suggest that you seek the advice & services of a tax agent instead of relying solely on any material you may find online, including this article.