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Inheriting money from overseas
Your options for transferring an inheritance to Australia.
Key takeaways
- Inherited money from overseas is generally not taxed in Australia, unless it generates income.
- Specialist money transfer services or foreign currency accounts often save thousands on exchange rates and fees.
- Compare specialist transfer services for faster processing and competitive fees, avoiding slow bank cheques.
Options for transferring an inheritance to Australia
Bank cheques and bank transfers are the most common ways to inherit money from overseas. But there are newer options such as using an international money provider or a foreign currency account which can reduce your money transfer costs.
International money transfer service
One of the easiest ways to transfer money from overseas is using an international money transfer service. These specialist companies often provide a better exchange rate than your local bank and charge lower fees. Specialist providers such as TorFX and OFX have the potential to save you thousands of dollars if you're moving a large amount.
With most, you can set up a free account. Then you will be able to input your transfer details and see what rate and fees you will be charged. As with anything, it is best to compare a few quotes to make sure you are getting the best deal for you.
Foreign currency account
Another option is to open a foreign currency - or borderless account - and transfer the funds there. For example, Wise has a multi currency account that offers competitive exchange rates and low fees. These types of accounts often allow you to transfer money from one currency to another at a click of a button, as well as spend in your local currency with your card and set up direct debits with supported territories to pay bills and subscriptions.
The main downside we found with Wise is they charge a holding fee above a certain limit. For example, if you transfer £50,000, they will charge a 1.6% annual fee on any amount above £13,000. You'll need to move quickly to save on fees.
Bank transfer
Alternatively, you could arrange for the estate executor to deposit your inheritance directly into your Australian bank account. This is a quicker process than waiting for a cheque to clear. But the money transfer will still be subject to the bank's fees and exchange rate which typically cost more than using a specialist international money transfer service.
Bank cheque
Most of the time, when you inherit money from overseas, the estate will give you a bank cheque that you can deposit in your Australian bank account. The cheque should be made out in the foreign currency and will be subject to the exchange rate your bank offers when you deposit the cheque - which is not always the best on the market. It's also worth being aware that a bank cheque will take a long time to clear, so there are faster transfer methods available.
Finder survey: Would Australians be happy to pay a tax on their inheritence?
| Response | |
|---|---|
| No | 84.86% |
| Yes | 15.14% |
Source: Finder survey by Pure Profile of 1004 Australians, December 2023
Which international money transfer company should I use?
Our table below lets you compare services you can use to send money abroad. Compare fees, exchange rates and discounts from different money transfer services, and when you have made your choice, click Go to site.
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How we picked theseFinder Score for money transfer
We review money transfer providers for different features to assign them a score out of 10. The higher the score, the more competitive the product.
Is inherited money taxable in Australia?
In Australia, you don't need to pay tax on inheritance. An overseas inheritance is not taxable unless you are advised by the executor that a part of it is. If that is the case, it's advisable to seek professional tax advice.
There are cases where the estate could continue to make an income after the individual's death from the asset sale capital gains or interest accrued on savings accounts. So there may be some capital gains tax liability in these circumstances. Similarly, if you decide to invest your inheritance, you may be required to pay tax on any capital gains under Australia's Capital Gains Tax (CGT) laws.
If you are in any doubt at all, it is best to talk to a professional tax advisor to understand your tax obligations.
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