The challenge: Maria Bekiaris
For a top deal, check the exchange rate as well as the fee
So you’ve sold an overseas property or received an inheritance from someone overseas and you want to transfer the money to Australia – how do you do it? It’s a question Money gets a lot, particularly from UK expats, which is why we will use that as our example.
Start by comparing providers’ costs. Consider both the transfer fee and the exchange rate as providers often add a mark-up into the exchange rate, says Mozo’s Kirsty Lamont. “When you are dealing with a large sum of money, even a difference of a few cents in the exchange rate can make a huge impact on your final amount,” she says. “While most banks offer a money transfer service, it is usually more cost-effective to opt for an international money specialist if you’re transferring a large amount of funds overseas.”
Mozo’s number crunching found that to transfer £500,000 to Australia you would get the best deal from Compass Global Markets – you’d get $895,704 after transfer fees. XE and WorldFirst followed with $895,526 and $893,911. In comparison with NAB, which was offering the best rate from the big banks on the day, you’d get just $862,357 – $33,347 less than the best offer!
No doubt ensuring your money is safe is a major priority. “Consumers should check that the international money transfer specialist they’re considering is licensed in the UK and falls under the regulation of the Financial Conduct Authority (FCA),” says Lamont. If you use a company that isn’t authorised, you may not be covered by the dispute resolution services or compensation scheme if a problem arises, she adds.
Also ask about any transfer limits and transfer speeds.
Once you’ve chosen a provider you will need to create an account. “You will need to go through a process of proving your identity. You should make sure the name on your bank account also matches the name on your money transfer account, otherwise your transfer could get rejected due to European regulations,” says Lamont.
After you have supplied the relevant details you’ll need to pay for the transaction and the provider will make the transfer.
Whether there are any tax implications depends on the underlying source of the money, says Mark Chapman, from H&R Block. “So the sale of an overseas property will give rise to a capital gains tax liability, money earned overseas from foreign employment will be taxed as income but inheritances and gifts will not (usually) give rise to any Australian tax implications.”
Chapman says the government’s money monitoring service, AUSTRAC, will pick up large flows of money and report these to the ATO. So even if there is no taxable transaction, you may be asked about the money so it’s important to have documentation to prove the source.