Banking, Money and Taxes in Australia
PDF GuideAustralia is a major regional financial hub with a sophisticated banking system, and expats will find there’s plenty of professional support available when it comes to educating yourself about and understanding different aspects of financial management in the nation.
Money in Australia
The Australian Dollar (AUD or $A) is the official currency in Australia, and is divided into 100 cents. Within Australia, expats will see currency simply abbreviated as $; though, this isn’t to be confused with the US dollar.
- Notes: 5, 10, 20, 50 and 100 dollar notes
- Coins: 5, 10, 20 and 50 cent coins, and 1 and 2 dollar coins
Both cash and credit/debit cards are readily accepted in most places in Australia. Furthermore, ATMs are ubiquitous; with all services in English.
Banking in Australia
Expats wanting to open a bank account in Australia should always investigate all available options, particularly as interest rates can vary between one bank and another. Australia’s major banks are: the Commonwealth Bank of Australia; ANZ Bank; Westpac; and National Australia Bank.As banks are always keen to attract new customers, most have a wide service offering, and are keen to provide assistance to expatriates. Opening a bank account in Australia is a fairly straightforward procedure requiring a certified passport copy, proof of residential address and a bank statement from the previous three months.
Taxes in Australia
Planning your tax may be fairly low on your to-do list, but having a strategy can help you take advantage of opportunities that exist for expats and can help you avoid some of the traps that can prove costly if you don’t comply.
Whether you’re planning to work in Australia as a temporary or permanent resident, understanding Australian tax and how tax rules apply to you can make a big difference to your hip pocket.
Get it right and you’ll be able to enjoy the financial rewards of your work experience and keep on the right side of the Australian Tax Office.
Find out more about some of the opportunities and traps you need to be aware of.
Temporary Residency
Australia welcomes a significant number of temporary residents each year, seconded here by their employers or as professionals seeking experience of working in their chosen field in Australia.
Salary packaging, share options, and other employment-related taxation requirements are just some of the things you or your employer will need to consider. It's recommended to consult an Australian tax specialist to find out about eligibility and benefits.
Living away from home allowance
Living Away from Home Allowance (LAFHA) is available for eligible tax payers who incur expenses or financial disadvantages by living away from your normal home and while you work for your employer. Broadly speaking, some of the typical benefits include:- Recovery of domestic expenses such as food and rent incurred while you’re away from home;
- Packaging other costs as part of your salary at a tax-free rate, such as utility connection fees, education, leasing of household goods and relocation costs;
- A tax reduction to go on holiday with your family.
So that’s the good news, but the bad news is that as of July 1, 2012, the LAFHA is going to be severely amended (if the legislation passes); it will only be available to those foreigners who own at least one home in Australia, and who can prove that they are living away from this AUSTRALIAN home for work.
Thus expats formerly eligible for LAFHA that have become accustomed to having their accommodation costs supplemented by this tax-free stipend of sort will need to restructure their budget. It may even be necessary for these individuals to renegotiate their contract with their employer, and to make sure the overall value of their package is still equivalent to what was previously agreed upon.
Tax on foreign investments
If you’re not a permanent resident of Australia, then you no longer pay tax on investment income earned from foreign investments. Just be aware that if you become a permanent resident, that may change.
Superannuation
Australia has a compulsory superannuation contribution system where your employers are required to make a minimum contribution of 9% of your income to a super fund; this is similar to the way a pension works in most countries. This is called the Superannuation Guarantee. Australian employers are required to contribute to a superannuation fund for all employees who earn more than $450 a month before tax. You can also make additional voluntary contributions as an Australian taxpayer above the compulsory contributions from your employer.
If you’re a temporary visa holder and you’ve decided to go home, you can request to withdraw your superannuation benefit if you’re returning to your country of residence. Be aware though that you may be subject to a 45% departing tax, so it is worthwhile seeking advice from a tax specialist to get advice for your particular situation.
Permanent residency
If you’ve decided to take up permanent residency in Australia, then your taxation position in Australia changes significantly.
You’ll be subject to tax on your worldwide income, your foreign assets may become subject to capital gains tax, and you’ll be subject to anti-tax deferral rules. You’ll also be ineligible for the Living Away from Home Allowance and be subject to the Medicare Levy and surcharge.
You will, however, also gain access to a whole range of benefits as a permanent resident. Some of these include being able to access the Australian social security system, obtaining a Medicare card and access to the Australian free health system, and fewer restrictions on your working life and retirement.
