Moving money to Aus before we move

[saexpat]

I have some questions regarding moving money to Australia before relocating to Aus. My wife and I have been awarded PR and we will be in doing the activation trip in April – can’t wait. I would like to use the trip to deal with setting up Aus bank accounts for us amongst other things.

Once we have been to Aus and presented ourselves to our bank of choice to verify our identities (plan to set up accounts online in advance) do we require an Aus address? We wont be moving to Aus for a while yet (maybe even more than a year) so I was wondering if that will cause any issues with the Aus bank – don’t think so, would just like to hear is anyone has done this. Also do we need to register with the ATO once I have investment deposits in Aus?

As I am planning to use my FIA to move the funds to Aus I will have to declare the interest on the deposit to SARS while still tax resident in SA. Also, can anyone provide me some info on the tax agreement between SA/Aus.

Thanks in advance

[HadEnoughofJuju]

Hi saexpat

You can open a bank account while there on a validation trip however you are going to have a few issues. The first being an Australian Tax Number. You cannot get one online because you need to have proof of an Australian address. If you don't supply the bank with your Aussie tax number they will withhold tax on the interest, and its high.

If you open a non-interest bearing transactional account you have 12 months in which to get a tax number and give it to the bank. After the 12 months the account will start earning interest on which you will taxed heavily.

If I'm not mistaken I think there is also a time limit on when you are allowed to open the account, I don't think you can open an account more than 3 months before you leave. You also can't buy Forex more than 90 days before departure.

[Brad76]

You would have to declare the interest locally, but you receive an exemption of R3000 on foreign interest and dividends Locally (I don't think the exemption limit has changed), plus a rebate for any foreign tax paid.

I'd open an interest bearing account in Oz. Tax will be withheld at 46.5% if you don't supply the bank with an overseas address, if you do the rate drops to 10%. I'd rather earn interest than not.

I'm not sure about the 3 month rule! I opened an account with NAB 5 months before I transferred cash to the account and transferred cash 6 weeks before I activated the account which didn't seem to be a problem.

If you invest generally tax will be withheld at the maximum marginal rate if you don't have a TFN!

**Edited the post with regards to the account opening and funds transfer times**

Edited March 10, 2013 by Brad76

[saexpat]

Thanks for the fast response!

Any idea how much will be withheld by the bank? I'm guessing here but you should be able to sort it out once you have a tax number?

Looking at the opening of an account another way - it must be possible to do it for purely investment purposes even if not an Aus resident. The only problem would be to deal with the ATO as you pointed out so one will potentially need an Aus tax consultant for this. Any ideas?

Edit: - Brad76, only saw your response after I posted - thanks

Edited March 10, 2013 by saexpat

[HadEnoughofJuju]

I was at Standard Bank yesterday to FICA an account for the formal emigration process and walked past the Forex section and asked how long before the time do I need to come into the bank to get the Forex (also explaining that we had PR) and was hastily answered with I can't get Forex more than 3 months before departure no matter what visa I am on. Not the question I asked but anyway. I also asked the Forex dealer that works with CashKows and was also told that I could not transfer money to my Australian bank account more than 3 months before we leave.

I guess the point I'm trying to make now is the fact that it does not matter which expert (present company excluded) you talk to none of them seem to really know what the rules area. I have now heard three different answers to the question of how long before the time can you can open the account and whether or not your interest will be taxed.

I have now spoken to three different so called "professionals" about the whole Forex thing and all have different versions", I am guessing the only people who can answer these questions correctly would be the Aussie bank you choose to open an account with, the ATO and the South African Reserve Bank.

Do what works for you in the end and I am sure if you use a reputable company that they will not contravene the South African foreign exchange controls.

[HadEnoughofJuju]

@Brad

I am starting to think that the members on this forum know more about the immigration process and all the things that go with it than the people who get paid to do it for a living (there are of course exceptions to that rule and that's why those people are members of this forum).

[Brad76]

@Brad

I am starting to think that the members on this forum know more about the immigration process and all the things that go with it than the people who get paid to do it for a living (there are of course exceptions to that rule and that's why those people are members of this forum).

It's surprising the knowledge the forum seems to hold as a collective. I often read posts and wonder how the h*ll a person knows that! Perhaps we're just a little more focused on certain specifics relevant to this process and our lives at this time and read up on the relevant issues?

[fouche's]

For Australian tax:

If you are an Australian non-resident the tax withholding rate on any interest earned is 10% - need to provide the bank with your foreign (South African) address

If you are an Australian tax resident and provide the bank with a TFN (Tax File Number), there is no withholding tax - you will become a Tax Resident when you land in Australia with the intention to live in Australia and not when you get your PR visa activated.

If you do not provide a TFN, the tax withholding amount is 46.5% which is the max tax rate including the Medicare Levy.

[saexpat]

Thanks to all who have responded. I also must agree– the collective knowledge on the forum is formidable.

So in summary:

• Open your account online in advance with your bank of choice
• Transfer funds
• Once you have provided proof of ID to the bank you will be able to withdraw funds
• If you do not have an TFN from the ATO you will be taxed at 46.5% on all interest
• Providing the bank with an oversees address will drop the tax rate to 10% - due to the fact hat you are not a Australian tax resident
• You will be taxed in SA on your international interest earnings but the tax paid in Aus can be deducted from your SA return to SARS
• Withdrawing from the Aus account might have CGT implications in SA

The jury is still out on how far in advance you can actually open your Aus bank account. We will be visiting Aus in April to activate our PR and will report back on that.

If I have missed anything - please comment!!

[springmielie]

I can whole heartedly recommend Hugo2 (www.cashkows.com) for any questions you may have in connection with money matters. We received a reply quickly and my daughter had a bank account opened and her card is waiting for her as soon as she arrives in Brisbane. Thank you Hugo2 and Mariette Janse van Rensburg

[MrandMrsK]

HI Guys, could I please add a question to this discussion....

When opening an account in Oz before actually getting there, can you do internet transfers to get your money across?

Do you have to go through an agent/forex people? or is it better in terms of interest rate to go through these people?

Thanks

[HadEnoughofJuju]

HI Guys, could I please add a question to this discussion....

When opening an account in Oz before actually getting there, can you do internet transfers to get your money across?

Do you have to go through an agent/forex people? or is it better in terms of interest rate to go through these people?

Thanks

Hi MraandMrsK

If you have the banking details and swift code you can go to your bank and set up your Australian account as a beneficiary and transfer money through the bank and they will handle all the foreign exchange controls but you do need to tell them what you are doing. The only catch with this is that you are going to pay a high rate of commission and it's a schlep to do. I would suggest using one of the agencies like TreasuryOne, Exchange4Free or CashKows to move money. I did everything via email and they handled the rest (this is not something you would get right with the banks). You will also get a much better exchange rate using one of these companies.

[RichtB]

I agree with HEJ. Use one of the agencies they are cheaper than the commercial banks and efficient. It is the exchange rate that is the killer. Any one of the agencies mentioned can also help to open an Aus bank account whilst still in South Africa.

[MrandMrsK]

Ok, thanks. will call cashcows who have been very helpful so far with advise and suggestions.

I think I am ready, all I need is this illusive visa!!

[HadEnoughofJuju]

You will need to get the visa before you can transfer money to Australia. CashKows will require a copy of the visa grant letter and airline tickets as part of the paperwork to complete the transaction. Hope it comes through quickly for you guys.