Off shore bank accounts

Offshore bank accounts: 10 things you should know

Offshore bank accounts may sound great in theory, but make sure you’re aware of all the potential problems and pitfalls attached.

The mere mention of the words “offshore bank account” is enough to conjure up thoughts of tax evasion, unreported income and a wide range of other dodgy dealings. The bad reputation of offshore accounts was further reinforced by the Panama Papers scandal of early 2016, which involved many high-profile world figures and led to the offshore accounts of 800 wealthy Australians coming under investigation by the Australian Taxation Office (ATO).

Take a look at the banks that can facilitate offshore banking

Disclaimer: The products displayed on this page represent only Australian financial institutions that facilitate offshore banking.

Rates last updated January 16th, 2019
$
$
months
Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned Product Description
HSBC Serious Saver
3.10%
1.40%
1.70%
$0
$0 / $0
HSBC expat banking can help you invest anywhere in the world.
Citibank Online Saver
3.05%
1.70%
1.35%
$0
$0 / $0
If you invest over $250,000 with Citibank, you'll qualify for Citigold status that opens international opportunities.
Commonwealth Bank GoalSaver Account
2.30%
0.01%
2.29%
$0
$0 / $0
CBA's offshore banking unit offers tailored banking solutions for offshore clients.

Compare up to 4 providers

Rates last updated January 16th, 2019
$
$
months
Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned Product Description
HSBC Everyday Global Account
0.05%
0.00%
$0
$0 / $0
No foreign ATM or transaction fees.
$0 monthly account fee.
Enjoy no minimum ongoing balance or transaction requirements and the flexibility to hold up to 10 currencies. Apple Pay and Google Pay available.
Citi Global Currency Account
2.25%
2.25%
0.00%
$0
$250,000 / $0
Hold up to 10 currencies.
$0 monthly account fee.
Enjoy one linked debit card to hold up to 10 currencies and receive foreign currencies for free. Earn up to 2.25% p.a. interest on your AUD balance.
HSBC Foreign Currency Flexi Saver Account USD
0.01%
0.01%
0.00%
$0
$0 / $0
Save in multiple currencies with flexible access. USD, GBP, EUR, HKD, CAD, JPY, NZD, SGD, CNY and CHF

Compare up to 4 providers

Rates last updated January 16th, 2019
Name Product Min. Transfer Amount Transfer Speed Services Description Online Transfer Fee Rate Amount Received
TorFX International Money Transfers
AUD 200
1 day
Online, Phone, Bank Account to Bank Account
TorFX guarantees to match any competitor's exchange rate. Conditions apply.
Send money overseas in 30+ currencies with competitive rates for transfer amounts over $2,000.
WorldFirst International Money Transfers
AUD 2,000
1 day
Online, Phone, Bank Account to Bank Account
Send 60+ currencies at competitive rates with $0 transfer fees for Finder customers. WorldFirst will beat any eligible quote from another provider.
OFX (Ozforex) International Money Transfers
AUD 250
1 - 2 days
Online, Phone, Bank Account to Bank Account
$0 transfer fees for Finder customers.
$0 transfer fee on transfers over AU$10,000, $15 flat fee applies otherwise. 24-hour customer service available with a local support team.
WorldRemit International Money Transfers
AUD 1
Within an hour
Online, Bank Account to Bank Account, Cash Transfer
An online money transfer service with cash pickup, bank account to bank account and airtime transfers available.
Global Reach (formerly FC Exchange) International Money Transfers
AUD 3,000
1 day
Online, Phone, Bank Account to Bank Account
Global Reach will match any competitor's exchange rates. Conditions apply.
No transfer fee when transferring more than £10,000 or equivalent. Send money in over 130 currencies. No maximum transfer amount.
XE International Money Transfers
AUD 10,000
1 day
Online, Bank Account to Bank Account
With global payments provider XE, enjoy fast and secure transfers and a range of foreign currency tools and calculators while benefiting from $0 transfer fees.
FlashFX International Money Transfers
AUD 200
1 day
Online, Bank Account to Bank Account
Low minimum transfer amount of just AU$200, with no set-up fees or transfer fees.
Exclusive: InstaReM International Money Transfers
AUD 200
1 - 2 days
Online, Phone, Bank Account to Bank Account
Exclusive: finder customers receive $15 off their first transaction. T&Cs apply.
InstaReM offers simple and quick international money transfers with zero-margin exchange rates. There's a flat 0.5% transfer fee for most transfers. Earn loyalty points on sign up, referral and every transaction, plus finder customers receive $15 off first transfer (T&Cs apply).
TransferWise International Money Transfers
AUD 1
1 - 2 days
Online
Make online transfers with transparent exchange rates, low fees and low minimum amounts.
Remit2India International Money Transfers
AUD 50
Same day
Online, Bank Account to Bank Account
Instant transfers to India from anywhere in the world with $0 transfer fees.
New customers who create an account with Remit2India and make a transfer of AUD$500 or more for the first time will receive a complimentary $25 Coles/Myer e-voucher. Click 'Go to site' for T&Cs.
Hawk FX International Money Transfers
Hawk FX International Money Transfers
GBP 10,000
1 day
Online, Phone, Bank Account to Bank Account
The ‘Rate’ and ‘Amount Received’ displayed are indicative rates that have been supplied by each brand or gathered by Finder.

Exchange rates are volatile and change often. As a result, the exchange rate listed on Finder may vary to the actual exchange rate quoted for the brand. Please confirm the actual exchange rate and mention “Finder” before you commit to a brand.

Compare up to 4 providers

But despite their regular links with unlawful deeds, there’s actually nothing innately illegal about offshore bank accounts. So let’s take a look at 10 things you may or may not know about offshore accounts and how they work.

10 things you should know about Offshore bank account

1. How they work

An offshore bank account is one that is opened and held in another country. Offshore accounts are usually held in countries with minimal tax rates or other financial benefits, but there’s plenty of other reasons why you might need to open an offshore account. For example, maybe you need fast access to funds to manage an overseas investment property, or perhaps to pay for your child’s education at an overseas financial institution.

Banks in countries all around the world offer accounts to attract overseas customers; some major Australian banks have dedicated units that deal with foreign customers. Our guide to offshore accounts explains how you can compare your options and choose the right account for you.

2. They’re legal

Yes, you read that right – there’s nothing illegal about owning an offshore bank account. But if you don’t declare the income and earnings from that account in your annual tax return, you will find yourself on the wrong side of the law.

Australian residents are taxed on their worldwide income, which includes the money they earn from overseas assets, rental properties, and of course, bank accounts. Any income earned from an offshore account must be declared in your Australian tax return, and you can claim a foreign income tax offset in Australia if you’ve already paid tax on your earnings in another country.

3. Benefits of offshore accounts

The most obvious reason someone might want to set up an offshore bank account is to pay less tax, but there are plenty of other potential benefits offered by these accounts:

  • The ability to earn more interest.
  • Access to foreign investments.
  • Access to foreign banking products and services.
  • Greater privacy, for example, a business looking to protect its trade secrets.
  • For large, well-known businesses, offshore accounts can protect against the risk of overcharging by suppliers.

4. Opening an account and making deposits

The process for opening an offshore bank account will vary depending on the financial institution. In most cases you will need to provide your passport, a bank statement and a signed declaration about the source of the funds being used to open your account. Deposits can be made by international money transfer.

5. Harsh penalties apply to non-declaration

For some, the temptation to simply not declare their offshore accounts and therefore avoid paying tax is too great. In other circumstances, such as for some of the high-profile figures caught up in the Panama Papers Scandal, offshore accounts are used to finance illegal activity or manage the unlawful income obtained from such activities, which is hardly something the average taxpayer wants to include on their next tax return.

Whatever the case may be, failing to declare your offshore account to the ATO is a big no-no and harsh penalties apply. Penalties start at around 75 per cent of the unpaid tax on those foreign earnings, plus interest, and there is always the potential for further investigation and prosecution by the Australian Federal Police or the Department of Public Prosecutions.

6. Tax havens

What do you get when you combine low tax rates, a stable political and economic climate, and a local regime that’s reluctant to disclose any information to foreign tax authorities? You get a tax haven, a country that attracts money from wealthy people and large corporations all around the world that are looking to reduce their tax bill any way they can. The Seychelles, the Cayman Islands, the British Virgin Islands, Switzerland and, until recently, Panama are all attractive destinations for money from all corners of the globe.

By setting up a bank account in a country that does not have an agreement to exchange financial information with Australia, an Australian taxpayer could theoretically avoid being taxed on the money in that account. In more complex cases, a dodgy taxpayer could set up a foreign shell company to conceal the true owner of money or other assets and make it even more difficult for the ATO to catch up with them.

7. The ATO and undisclosed accounts

In recent years, the ATO has dedicated plenty of time and resources to hunting down tax evaders all over the world, as people like Paul Hogan can testify. It’s also committed an increasing amount of resources to targeting wealthy Australians with undeclared income in offshore accounts, establishing agreements with governments and major financial institutions around the world.

From March through to December 2014, the ATO ran Project DO IT (Declare Offshore Income Today), which allowed Australians holding illegal money offshore to declare those funds and receive immunity from prosecution. These tax dodgers also had the opportunity to avoid many of the significant financial penalties normally associated with bringing this income into the Australian tax system, and as a result it’s estimated that $600 million in income and $4 billion of assets were disclosed.

8. Panama Papers investigations

The Panama Papers data leak contained information about the financial dealings of more than 214,000 financial entities connected to people in over 200 jurisdictions worldwide, including around 800 Australians. As a result, the ATO launched an investigation into the activities of those 800 people accused of hiding their wealth.

Around the world, many high-profile figures were implicated in the scandal including Vladimir Putin, David Cameron, the Prime Ministers of Iceland and Pakistan, and even kung fu film star Jackie Chan.

9. Voluntary disclosure

If you have an undeclared offshore bank account, the sooner you disclose it to the ATO the better. Coming forward before the ATO comes after you can significantly reduce the penalties imposed and also the risk of prosecution. However, you should always seek legal and tax advice from an expert, for example your accountant or lawyer, before making a voluntary disclosure.

10. Never hesitate to get professional advice

Although this article is only a very general guide to offshore bank accounts, you will have figured out by now that opening and maintaining an offshore account can be a complicated undertaking. There are many laws and regulations you need to abide by, not to mention myriad tax implications to consider.

With this in mind, it’s recommended that you get some professional financial advice before opening an offshore bank account. This will help you work out whether an offshore account is right for you, and what you need to do to ensure that everything is legal and above board.

Compare tax agents below

Get in touch with a trusted financial or taxation adviser today if you’d like to learn more about the benefits and drawbacks of offshore bank accounts.

Updated January 16th, 2019
Name Product Fee for unlimited income items (Wages) Deduction Item Fees Payment Options Online tax returns On-site tax returns
finder Exclusive: $99 flat fee
Included in flat fee
Credit/Debit card
Bank Transfer
Pay with your tax refund (no upfront payment)
Australia wide
Melbourne
finder Exclusive: This discounted fee is only available to customers who apply for a tax return with A One Accountants through finder. Students, seniors and non-permanent residents enjoy a further discount with a $77 flat fee. Click 'Go to site' and complete the contact form to find out more. T&Cs apply. Option to pay with your tax refund for an extra fee of $22. Lodge returns online, via phone or in person.
$79*
$0 when you purchase the $49 income package
Credit/Debit card
Pay with your tax refund (no upfront payment)
Australia wide
N/A
Option to pay with your tax refund for an extra fee of $10 for basic returns. Lodge individual & company tax returns. Fast online form & free live chat.
$80*
$0 for up to $1000 of deductions
$30 for more than $1000 of deductions
Credit/Debit card
Cash
Australia wide
Sydney
Fast and reliable tax returns for individuals, businesses and self-managed super funds (SMSFs).
$80*
Business tax: starting from $250
General deductions: $0
For motor vehicle expenses: $15
Credit/Debit card
Australia wide
Perth
A boutique firm that provides personalised experiences for all customers. Ideal option for individuals and small businesses based in Perth.
One Minute Tax
One Minute Tax
$99*
$0
Credit/Debit card
Pay with your tax refund (no upfront payment)
Australia wide
Melbourne
Option to pay with your tax refund for an extra fee of $20. Lodge individual & company tax returns. Fast online form & free live chat.
$99*
$0 for up to 2 deductions
$29 for additional deductions
Credit/Debit card
Pay with your tax refund (no upfront payment)
Australia wide
Sydney
Option to pay with your tax refund for an extra fee of $29. Online and in-person tax services for individuals, sole traders and companies.
$99*
Business tax: starting from $179
$29 for up to 2 deductions
Additional $29 for extra deductions
Credit/Debit card
Bank transfer
Pay with your tax refund (no upfront payment)
N/A
Melbourne
Option to pay with your tax refund for an extra fee of $29. Basic tax returns over the phone Australia-wide. In-person individual and business tax returns in Melbourne.
$155*
finder Exclusive: $5 discount
$0 for all work related deductions
Bank transfer
Credit/Debit card
Australia wide
Canberra
finder Exclusive: $5 discount when you apply for a tax return with Bennetts Tax through finder. Click 'Go to site' and complete the contact form to find out more. Income item fee includes returns on interest, dividends, Superannuation and pension. A flexible option for individuals, sole traders and companies.

Compare up to 4 providers


Was this content helpful to you? No  Yes

Related Posts

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.

2 Responses

  1. Default Gravatar
    CharlesJuly 20, 2017

    I have been offered a large sum of money from a large corporation from an African country with the request to invest on their behalf. Which offshore accounts would best suit the matter.

    • Default Gravatar
      DanielleJuly 23, 2017

      Hi Charles,

      Thank you for contacting finder. We are a comparison website and general information service, we’re more than happy to offer general advice.

      You may refer to this page for options that may suit your needs. You may review and compare the offers available on the table. Once you have selected one, you may proceed by clicking the green “Go to Site” button.

      I hope this helps.

      Cheers,
      Danielle

Ask a question
Go to site