Money gift from overseas

Dear all,

My uncle from overseas would like to provide a one-off money gift (possibly A$50k) to me.

1. This is not taxable right?
2. Do I need to declare to ATO? If yes, when? When I receive it or at tax return?
3. Do I need to keep a documentation that this is a money gift from a relative?
4. I believe my bank that receives this money from overseas, will report to AUSTRAC directly is that right? Do I need to do anything myself?

Just want to ensure I do the right thing.

Thanks all!
 
1. No
2. No - Not until they ask what it was
3. YES - Austrack automatically record it and report it to crime agencies, ATO, Centrelink, Federal and State Police etc. They may ask for evidence (now or later) that its not illegal proceeds from a venture of concern. Keep evidence of the source. Just a letter from family wont be enough. Remember that inheritance isn't taxable here BUT if you inherit property etc and sell it there is a tax issue.
4. Correct. No do nothing. Austrac can lead to proceeds being frozen on transfer if you have known concerns (ie a bikie, criminal past etc)

I would be more concerned for the fees your bank will charge to convert the RTGS into AUD.
 
Thanks Paul!

1. Mind if I ask what's considered as adequate evidence of the source?
(It's money my uncle owns, from working in that country, so it'll be an overseas bank transfer to my bank)

2. Would it be best that he converts the currency into AUD already, and transfer AUD directly into my bank?

Thanks again!
 
other things to consider

1. documentation to show it is a gift and not to be repaid. if not and your uncle passes away the estate might argue it was a loan and ask for repayment. a hassle you want to avoid.

2. what are the funds being used for ? is asset protection important ? would it be better to gift the funds to a discretionary trust for asset protection purposes and then on-lend funds to you later on ?

3. look into www.hifx.com.au. the rates for transfers are quite good particularly for larger amounts

a good lawyer will be able to assist with those questions. accountants cant provide legal advice so best to see a lawyer versed in tax as well.
 
Thanks Paul!

1. Mind if I ask what's considered as adequate evidence of the source?
(It's money my uncle owns, from working in that country, so it'll be an overseas bank transfer to my bank)

2. Would it be best that he converts the currency into AUD already, and transfer AUD directly into my bank?

Thanks again!

As Mike said....Plus a client experience. They had a letter from the ATO. It identified the transfer and said "We think its income. Unless you can confirm its source and origins for the entitlement we propose to amend your returns after conducting an interview in our offices. In the company of the AFP."

Client obtained a foreign document that indicated it was from his parents. A gift to assist the kids. However a use of the gift couldn't be clearly ascertained. They didn't repay their loan. They kept it aside. They satisfied the ATO and tat seemed to end it. However parents wanted to come here for a holiday a few months later. Visa application was declined. reason : Likelyhood of non-return. Attributable to sum of money sent to Australia prior to travels sufficient to demonstrate intent to remain here. They sent the $$ back and the middle eastern country and Aus Govts both allowed them to visit.

The use of the funds doesn't need to be tax driven to create a problem.
 
Thank you so much Mike and Paul for the replies!

Paul you've certainly got me thinking? Never thought it'd be so complicated!

It was a straight forward scenario for me: my uncle only has 2 nephews (me and my bro) so he wants to help me out with my property journey, hence the one-off $50k money gift. (Maybe when he passes away I'll get inheritance but I don't think about that at all)

I plan to put this fund into my offset account, will there be any tax implications?

Thanks again guys!
 
Thank you so much Mike and Paul for the replies!

Paul you've certainly got me thinking? Never thought it'd be so complicated!

It was a straight forward scenario for me: my uncle only has 2 nephews (me and my bro) so he wants to help me out with my property journey, hence the one-off $50k money gift. (Maybe when he passes away I'll get inheritance but I don't think about that at all)

I plan to put this fund into my offset account, will there be any tax implications?

Thanks again guys!

Zero tax issue in the offset. The offset on your PPOR is a wise move. Alternatively consider repaying the loan down by the amount in the offset if its against your PPoR. Then apply for a new loan (same amount) and borrow the new increased amount to put towards an IP that earns rent - Its now tax deductible :)
 
Loved the story. Great way to drive visitors and investors away. No wonder the federal govt agencies are now shedding staff. Get what you vote for.
 
Thank you so much Mike and Paul for the replies!

Paul you've certainly got me thinking? Never thought it'd be so complicated!

It was a straight forward scenario for me: my uncle only has 2 nephews (me and my bro) so he wants to help me out with my property journey, hence the one-off $50k money gift. (Maybe when he passes away I'll get inheritance but I don't think about that at all)

I plan to put this fund into my offset account, will there be any tax implications?

Thanks again guys!

I shouldn't think so - i normally received funds 1-4 months before pay date(to pay nephew and niece's yearly private school fees), relatives migration sponsorship etc). Also help manage lease on relative's IP. If the ATO asks- i have proof of the funds etc to document everything i have said.
 
Loved the story. Great way to drive visitors and investors away. No wonder the federal govt agencies are now shedding staff. Get what you vote for.

50 nations all do the shame thing and 20 of them at least are starting to share the data too (G20). First steps are money transfers, pensions and tax residency. Even the Swiss have given up and giving info away too. Its money laundering, anti terrorism, crime and tax that all benefit. Its often easier to look for money than guns, drugs and a factory producing illicit outputs. Nobody votes for this. Its bi-partisan.

It doesn't affect legit affairs.
 
Centrelink do it too for residents. They (can) monitor benefit recipient accounts for large deposits / transfers and inflows / outflows too.

LOL - Just got another one for a client today. He just learned that closing his former South African pension account was taxable income here.
 
This is an interesting thread. My family have Italian postal bonds invested more than 30 years ago.. Seven years ago on a trip I went to cash some in at the local Italian post office. No problems. The transaction was carried out over the counter and the money simply transferred into our Australian bank account.

This year I tried to cash some more in. spent nearly two hours at the post office trying to work through red tape, with still no cash. The Italian government now questions any transaction above a certain amount for fear it is money related to drugs or terrorism. No money can leave Italy without a thorough examination of how it was obtained, where it came from and where it is going. It would have been a long, arduous process.

I am now cashing them in through the Italian embassy here in Australia, as it is much more straight forward.

An inconvenience, but happy to do it if it helps governments track drug money or terrorists' funds.
 
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