Tax on money transfers to Australia: what you need to know

While international money transfers (IMTs) to Australia aren't directly taxed, the Australian Taxation Office (ATO) and the Australian Transaction Reports and Analysis Centre (AUSTRAC) keep a close eye on these transactions to ensure any undeclared income is reported.

Money transferred from overseas doesn’t directly incur taxes. However, it can attract attention from the ATO and AUSTRAC, who may want to know if the funds are linked to taxable income, such as earnings from foreign investments, business activities, or employment.

It’s not the transfer itself that triggers a tax event, but rather the origin of the money — how you earned it and whether it’s been declared in Australia. That’s why it’s crucial to understand your tax obligations related to overseas income, even if you don’t plan to transfer the money straight away.

If you're an Australian resident, you must report any overseas income on your Australian tax return, even if the money never leaves its country of origin. Here are the key types of income that need to be declared:

• Overseas business income. Profits from any business activities outside Australia.
• Income from overseas property. Rental income or profits from the sale of property located outside Australia are taxable.
• Wages or salary from overseas employment. Earnings from jobs abroad must be included on your tax return.
• Foreign investment income. This includes interest from overseas bank accounts or dividends from international investments.
• Overseas pensions or superannuation. Any pensions or super payments from outside Australia must also be declared.

Be sure to report your income in the correct tax year, whether or not you use the money in Australia. Good record-keeping can help to stay compliant. If you're unsure, it may be worth seeking advice from a tax professional.

Generally, some transfers into Australia are exempt from tax. Here’s what you wouldn't necessarily need to report or pay tax on:

• Gifts and inheritances. Money received as a gift or inheritance from overseas is typically not taxed.
• Personal assets. Funds from the sale of personal assets, such as a home sold before you moved to Australia, aren’t taxed when transferred.
• Windfalls. Lottery winnings, prize money, and similar one-off gains from overseas are usually not taxable.
• Scholarships. Foreign scholarships used for educational purposes are generally exempt from tax.
• Taxed income. If you’ve already paid tax on the income overseas, it may not be taxed again in Australia, depending on the relevant tax treaty between Australia and the country in question. 

Always check with a tax expert if you're unsure about your specific situation.

Failing to declare taxable income on your Australian tax return can lead to severe consequences. The ATO can impose fines, interest charges, or even criminal charges for tax evasion, which can include up to 10 years in jail for serious cases. Avoid the risk — always report your taxable overseas income on time.

Digital currencies (like Bitcoin or Ethereum) are treated as assets by the ATO. If you’re transferring cryptocurrency to Australia, the capital gains tax (CGT) may apply if you sell or dispose of crypto assets. Make sure you report any gains or losses from cryptocurrency transactions, whether they’re transferred to Australia or not.

To make sure you're on top of your IMT tax obligations, follow these simple steps:  

1. Keep your receipts 

Record all overseas transactions, including the purchase or sale of assets (like property) abroad. Even if you believe a transfer is non-taxable, keep detailed records in case the ATO asks for proof.

2. Get expert advice

Tax rules around international money transfers can be complex, so if you're unsure, it’s wise to consult a tax professional. Getting advice before making a large transfer can save you from headaches later.

3. Choose a reputable IMT provider

Make sure your money transfer provider is regulated by the Australian Securities and Investments Commission (ASIC) and holds an Australian Financial Services Licence (AFSL). You can often find their licence number on their website, usually in the footer. 

This ensures they comply with AUSTRAC regulations and adhere to reporting requirements for suspicious transactions. All the providers on Mozo’s website are accredited providers, so you can have full confidence using our IMT comparison table.