Bringing inheritance money into Australia. What you need to know.

With more than 27% of Australians being born overseas as of 2021, being the beneficiary of an overseas inheritance is not as uncommon as it once was.¹ The big question though is how do you bring this foreign inheritance money into Australia?

This article will go through some of the key things to know when it comes to bringing inheritance money in, and whether it's taxable. It is important to note that you should always get advice from a tax consultant and attorney if you have come into an inheritance from a relative overseas.

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Note: This article is purely for general information purposes and is not to be taken as financial advice. We recommend that you obtain independent financial advice before making any form of decision.

What is inheritance money from overseas?

An inheritance is acquired by an individual after a family member passes away.² Inheritance assets from overseas are from a relative that resides overseas rather than from one that resides in Australia.

Whether in Australia or overseas, there will usually be a Will or a succession agreement that would have been drawn up during the passed relatives life, listing the beneficiaries of their own assets.³ An Inheritance can come in the forms of:

• Cash
• Property
• Investment fund including shares
• Personal possessions

If there is more than one person listed within a Will, these will be distributed evenly or as provisioned in the Will if specified.

Is it the same as inheritance from Australia?

When it comes down to it, being nominated to receive an inheritance from overseas is treated the same as getting an inheritance from an Australian relative. There are some laws and rules about whether your inheritance could be taxable.

What are the rules for inherited overseas property or money

When you inherit something in Australia, you are only liable to one set of rules. When you bring another country's laws and regulations into the mix, it starts to become more complex, especially if the inheritance involves multiple parts.³

Overseas property

This one can be tricky as there are very different laws between countries over ownership of a property as a foreigner. There may also be on-going tax obligations in the country where the property is that you may have to adhere to going forward.²

Money

There are no specific laws that restrict you from receiving a lump sum of inheritance money when it is properly documented in Australia. You may find though that the country where the inheritance money is from may have different rules.

The main thing to keep in mind is that if what you inherit starts making you money, you will have a new set of tax obligations.²

What is inheritance tax?

An inheritance tax is a levy owed based on the value of an inherited estate. There is no inheritance tax applied in Australia to beneficiaries of an inheritance at home or from overseas. However, many countries around the world do apply an inheritance tax. If you were to receive a foreign inheritance, it may be taxed before you can send it back to Australia.⁴

Getting proper advice from a local tax consultant and/or attorney will help you avoid unforeseen issues and headaches.

Is overseas inheritance money taxable in Australia

Overseas inheritance money is not immediately taxable in Australia, especially if it comes in a lump sum. If the money is invested into something after the fact, then it can be taxed. Here are some ways you might get taxed on inheritance benefits.

Overseas property

If you inherit an overseas property for example, and you may have to pay Capital Gains Tax (CGT) on it if you end up selling the property. If you are an Australian tax resident and receiving rent from the overseas property, this money may be taxed as part of your overall income.⁵

Investment funds

Inheriting shares and other investments on their own does not attract any extra inheritance taxes in Australia. However, if they give you any dividends or are disposed of, they could be liable for CGT or income tax.⁵ Also if you end up gifting any of the investments to someone, this can be seen as a disposal of an investment and you may also be liable for CGT.⁶

Transferring inheritance money into Australia. What are the options

There are a few ways to get your inheritance money into Australia that have not already been mentioned. You can use these methods that are also known as Bearer Negotiable Instruments (BNI).⁷

• Bill of exchange
• Cheque
• Promissory note
• Bearer bonds
• Traveller's cheque
• Money or postal order

You should note that you must declare amounts over $10,000 if any of these methods are used to avoid a penalty.¹⁰ You can get the money sent electronically with one of the big four Australian banks including:

• National Australia Bank (NAB)
• Commonwealth Bank
• ANZ Bank
• Westpac

You may also be able to send money with a provider that specialises in sending or receiving money internationally such as:

• Wise
• Western Union
• Paypal
• Worldfirst

You should contact the provider before initiating a large transfer as it could be rejected if over the reporting limit.⁹

Are there limits on how much can be brought in

There are no limits on how much money can be brought into Australia. However there are limits where you’ll need to declare your money to Australian Authorities if cash is being brought into the country.

Read more: Tax Implications of Transferring Money from Overseas to Australia

Physical cash

When you are carrying more than $10,000 in physical cash or the foreign exchange equivalent across the Australian border, you must declare it before you reach customs. You can do this by filling an online form before you leave your destination for Australia. If you don’t declare amounts over this limit, you may receive a fine.⁷

Money Transfers

If the inheritance money is in a bank account overseas, you can choose to transfer the money electronically rather than carry the physical cash. Some Australian banks may not offer international money transfers or set their own limits on how much you can receive.

You should also be aware that when making money transfers from abroad, it is common for extra fees to be attached. This can add up if you are going to transfer large amounts. Here are some things to consider when using international money transfers as your method to transfer your inheritance.

You should also consult with your receiving bank on any potential receiving limits they may have. Discussing with your bank will help smoothen out the transfer process.

The SWIFT Network

Many foreign banks utilise the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network to move money across borders. SWIFT was founded in the 1970’s and connects over 200 countries and 11,000 member institutions to facilitate the movement of international transfers. SWIFT transfers can incur extra fees as transfers go through intermediary banks that charge their own fees across the transaction.⁸

Foreign Exchange Fees

When sending money from one country to another, conversion of currencies may be necessary. The conversion rate will depend on the provider, when its converted during the transaction and if multiple conversions are required to get to the final denominated currency.⁹

What things does an Australian need to keep in mind with overseas inheritance?

Here are some other things you should keep in mind when it comes to overseas inheritances.

Foreign Trusts

In some cases, an inheritance can come in the form of becoming an owner or beneficiary of a foreign trust. Unfortunately there are special laws around receiving payments or assets that are part of a foreign trust. Any money allocated from foreign trusts need to be included as part of a person's annual income and will be taxed accordingly.¹¹

Consulting a professional

Whether you know you are going to become a beneficiary of an inheritance or already in the process, it is important to consult a tax agent or lawyer. They will help guide you around any potential obligations you will have based on what you are set to inherit.

Send money the Wise way

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This article is purely for general information purposes and is not to be taken as financial advice. We recommend that you obtain independent financial advice before making any form of decision.

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Sources:

1. Australia diversity
2. ATO deceased estate
3. Attorney General's wills
4. Walker Pender Lawyers inheritance tax
5. CSTTAX accountants and CGT
6. ATO inheriting investments
7. AUSTRAC money declaration
8. SWIFT Network transfers
9. NAB Receiving transfers
10. Reserve Bank of Australia cash reports
11. ATO Foreign Trusts

Sources checked on: 14 October 2023