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A Guide to Moving Assets Into and Out of Australia

Australia is one of the best places to live. Speaking as a migrant, the quality of life is second to none, with amazing beaches, weather and a lifestyle to match. Not only does Australia offer an incredible lifestyle but it also provides a world class healthcare system, economic stability and abundant opportunity. It is no surprise, that many wealthy families and individuals look to Australia as a place to make a home.

Navigating the complexities of international asset transfers is critical for families with substantial wealth, particularly those aiming to optimise their financial strategies across borders. In a world that is increasingly globally focused, families looking to move assets into or out of Australia do so at the mercy of tax and legislative challenges. If you are weighing up your options as an Aussie expat moving abroad, or an international resident coming into the country, here is an overview of the key considerations and strategies for transferring assets into and out of Australia, ensuring compliance with legal and tax obligations.

Understanding the Basics

Transferring assets internationally involves important legal and tax considerations. For families moving wealth into Australia, understanding the Foreign Investment Review Board (FIRB) regulations is crucial as these can impact investment strategies significantly. The FIRB monitors things like real estate purchases in Australia from overseas residents, and foreign-controlled businesses in Australia. Understanding your options and potential limitations relating to these rules is crucial as non-compliance can lead to substantial penalties or even the reversal of transactions.

Conversely, moving assets out of Australia requires involves navigating complex rules around tax residency, capital gains tax (CGT), home ownership, and tax return obligations to avoid unnecessary double taxation or penalties. The ATO focuses on ensuring that all cross-border transactions comply with Australian tax laws, including the proper declaration of overseas transfers and the payment of any applicable capital gains taxes. Being aware of your tax residency status is essential as the ATO uses data matching and information sharing with other countries to identify undeclared offshore income and assets. Understanding these guidelines helps in planning the timing and method of asset transfers to minimise tax liabilities and avoid legal issues.

Avoid foreign exchange risk

Managing exchange rate risk is a crucial aspect of any cross-border wealth transfer, with fluctuations potentially significantly impacting the value of assets, income, and expenses, making it essential to implement effective strategies to mitigate this risk.

Foreign Exchange (FX) brokers offer various tools and services to manage exchange rate risk such as forward or options contracts that allow you to lock in a specific exchange rate for a future date, providing certainty of conversion rates in future.

In addition, adjusting your investment strategy can help manage exchange rate risk by investing across different currencies via international equities or bonds which can spread risk across multiple currencies and markets reducing the potential impact against one particular currency pair.

Exchange-Traded Funds (ETFs) offer the opportunity to hedge or speculate on currency movements, often at a low cost. Currency ETFs offer a way to hedge and protect your wealth against specific currencies without directly trading in the foreign exchange market. This can be particularly beneficial when gradually transferring assets over a period of time into a new currency.

Strategic Planning and Compliance

Transferring wealth offshore involves more than just moving assets, it requires careful planning and understanding of Australian tax residency rules, your ongoing tax return obligations and exchange rate risk. Consulting with a financial planner or tax advisor who specializes in cross-border wealth management is essential to navigate these complexities and ensure that your wealth transfer is tax-efficient, legally compliant and has risk reduced where possible.

A financial adviser who has expertise in international wealth transfer can provide tailored advice that aligns with your family’s goals such as exploring your lifestyle options as you move to your new home, schools for your children, investment opportunities, etc.

How can we help?

For families with substantial wealth considering the transfer of international assets, especially moving them into or out of Australia, engaging a financial adviser through McKinley Plowman is key. We will ensure that your asset transfers are not only compliant with international regulations but are also strategically aligned with your long-term financial objectives, and this includes engaging our in-house international tax consulting team and other specialised finance professionals. If you’re ready to experience our proactive approach and enhance your family’s wealth for future generations, contact us today on 08 9325 2411 (Perth), 08 9301 2200 (Joondalup), or via our website.

Please note the information provided within this article is general of nature and is not a personal advice recommendation. Prior to considering strategies discussed in this article we recommend you seek personal financial advice. Please be aware that, without the benefit of financial advice, you may be committing yourself to financial strategies or products that are not appropriate for your overall personal situation, needs and objectives.

written by:

Will Lyons

Will has 15 years industry experience working in both consultant and technical positions. Prior to becoming a qualified Financial Planner in Australia, Will worked as a pensions consultant in the UK gaining Advanced Diploma qualifications whilst working there. He has also attained an Advanced Diploma in Financial Planning and has completed the FASEA Financial Adviser Exam and Ethics qualification.

At McKinley Plowman, Will has progressed over the years from our UK Pensions Division all the way through to senior Financial Adviser and now Associate Director within the Wealth team – amassing invaluable experience and knowledge along the way.

Will is a keen cyclist and occasional triathlete that loves going out and socialising with friends.

Will is an Authorised Representative of Fortnum Private Wealth Ltd.