Moving back to my home country and bringing offshore funds with me

[sojourner007]

I'm an Australian who has been living in Thailand for many years. I'm thinking of leaving Thailand for good and returning to Australia. I have about EUR 1M in an account with a European stock broker and I'd like to transfer the funds to Australia. Has anyone had a recent experience of moving similar, or larger amounts, to their home countries from abroad? I'm primarily concerned about my Australian bank freezing the funds and asking questions about their origin and how they were earned. I've not worked for more than 15 years and I'm not running any business. Originally I earned the money from jobs in Australia and overseas but unfortunately I did not keep much documentation from those years proving my employment and salaries in contract roles that I had then.
Would it result in fewer questions if I first transfer the money to a USD account in Thailand and then move it to Australia, rather than directly paying the funds from an offshore financial centre to an Australian bank? A lot has been written on this forum about problems and limitations of transferring smaller amounts from baht accounts to banks in home countries. Are local banks' foreign currency accounts subject to the same limits and documentary requirements for international transfers?
I'm planning to use the money to buy a property in Australia. Perhaps, if I find a suitable property,  I could then pay the money directly from my offshore broker's account to the real estate agent's escrow account towards the purchase, bypassing my own Australian bank account?
I'm currently a tax resident of Thailand. Will my Australian bank ask fewer questions if I first declare myself a tax resident of Australia and then move the funds from offshore?

[scubascuba3]

If the Funds (stocks and shares funds) you hold are also available to invest in Australia then it should be a case of transferring to the new administrator\broker, who will usually help with that. Depends on what you hold of course. As for tax, only if you sell

[Liverpool Lou]

44 minutes ago, sojourner007 said:

I'm primarily concerned about my Australian bank freezing the funds and asking questions about their origin and how they were earned.

As it would be the one to decide, have you thought about asking your Australian bank about any potential problems?

 

I can't imagine that any bank would have any issue accepting investment funds from an established stockbroking account.

 

 

Edited October 28, 2022 by Liverpool Lou

[sojourner007]

6 hours ago, Liverpool Lou said:

As it would be the one to decide, have you thought about asking your Australian bank about any potential problems?

 

I can't imagine that any bank would have any issue accepting investment funds from an established stockbroking account.

 

 

I will ask the bank, but its customer service staff nowadays is located in the Philippines or India and whatever their answer is on the phone carries no significance to what will actually happen when the funds arrive.  The current money-laundering regulations make banks paranoid about incoming transfers from overseas.  Plenty of reports on the internet about banks accounts in Anglo-saxon countries being frozen when receiving large international transfers.

[kwonitoy]

You need to talk to a good accountant in Australia who is familiar with these matters.

I did the same thing that you are thinking of.

A similar amount FWIW

I had a Interactive Broker investing account while living in Thailand and working internationally.

In 2021 I moved permanently back to Canada.

In the Canadian system I was deemed to have sold my assets the day I left Thailand and repurchased them in Canada at zero cost difference.

I never used a bank to transfer these assets, I would not trust a bank to give proper advice about international tax matters

I had to open a new IB account with a Canadian jurisdiction and the funds were transferred about a month later after a long vetting process.

No cost for this, just a transfer from my original account to my new account

Now my investment account is Canadian based and I pay taxes on any Capital gains made.

 

I could have liquidated my stocks while held in Thailand and just transferred the money without any problem.

This was option B, but I wanted to maintain my stock investments.

 

I did have to show how the money was earned, much like a get to know your customer form at a brokerage.

Not to difficult, worked offshore for XX years, sold a condo in Jomtien for a good amount of profit

 

During my time in Thailand I had changed my status to the CRA as being a non resident citizen. 

I had to undo that process upon returning to Canada, and integrating back into the system here.

After a year it's more or less done.

 

Do your research and ask a good accountant is the most important

Understanding Australian rules is a must. 

[JimmyJ]

You are correct to be very cautious.

 

 

[Liverpool Lou]

15 hours ago, sojourner007 said:

Plenty of reports on the internet about banks accounts in Anglo-saxon countries being frozen when receiving large international transfers.

"Anglo-saxon" [sic] countries?   What are they?

[Liverpool Lou]

15 hours ago, sojourner007 said:

I will ask the bank, but its customer service staff nowadays is located in the Philippines or India and whatever their answer is on the phone carries no significance to what will actually happen when the funds arrive. 

But you think that opinions posted on Asean Now carry any significance over your Australian bank's procedures!?

[scubascuba3]

4 minutes ago, Liverpool Lou said:

But you think that opinions posted on Asean Now carry any significance over your Australian bank's procedures!?

The bank staff will be no use, it would need to go to a specialist team if it existed which is unlikely. As i said originally the new administrator \broker will give guidance as it's in their interest + consult a specialist accountant if need be

[Rhys]

Keep us updated on the procedure and outcome.. I trust all works out in your favor.

 

Edited October 29, 2022 by Rhys

[Chris.B]

It is very sad nowadays when someone has to worry about providing proof that their money was honestly earnt. ☹️

 

Why don't you transfer it in small amounts over a period of time? Say 50,000 Euro a time.

 

 

 

Edited October 29, 2022 by Chris.B

[Inala]

If you've been living in Thailand for many years then you're deemed by the ATO to be a 'non-resident for tax purposes'. This is further reinforced as you state yourself to be a tax resident of Thailand. As a non-resident for tax purposes, the ATO are not interested in how you earned the money and in law, they have no claim over it anyway. However, you need to transfer it back PRIOR to landing back in the country with the intent to resume residency. Anything AUD10k or more that hits your bank account after you arrive back (to take up residency) is logged with Austrac and the ATO then have a two year time frame after those transfer dates in which they can query the transactions and potentially deem them to be funds earned as a tax resident.  

 

The money you mentioned was earned in Australia could potentially be taxable (did you not pay tax on it at the time?) This would depend on your tax residency status at the time of earning it. Be careful with this point, because becoming a non-resident for tax purposes is actually harder than it sounds. You need to the demonstrate to the ATO a clear intent to break ties, such as cancelling Medicare, selling off cars, boats etc, cancelling club membership. If you don't own a house and have no Australian sourced income, it's much easier to prove no enduring relationship that would lead to failing the domicile test. In any case, the ATO has a kind of unwritten point which is when you're out of the country for 2+ years they will more easily view you as a non-resident. It sounds like you easily pass this. 

 

For the property transaction, buy the house whilst still overseas as a non-resident. You will be required to transfer the funds to the RE agent's trust account, thus insulating yourself a further step from any possible queries from the ATO about these funds. Perfectly legal, and in any case this is the same step you would be required to do if you were a resident purchasing in Australia. 

 

DO NOT, under any circumstance, declare yourself a tax resident of Australia and then move the funds from offshore. This is the exact opposite as to what you should do. As a tax resident, you'll be liable to pay tax, plain and simple. You will lose about 450k of those Euros... In any case, you cannot just declare yourself a tax resident from overseas. Tax residency comes with certain benefits (such as tax free threshold, lower tax withholding on earnings etc) and after such a long time away you need to land back in the country with the intent to permanently reside (i.e. not just coming back for a 2 or 3 week holiday) before you regain tax residency.

[sojourner007]

5 hours ago, Inala said:

If you've been living in Thailand for many years then you're deemed by the ATO to be a 'non-resident for tax purposes'. This is further reinforced as you state yourself to be a tax resident of Thailand. As a non-resident for tax purposes, the ATO are not interested in how you earned the money and in law, they have no claim over it anyway. However, you need to transfer it back PRIOR to landing back in the country with the intent to resume residency. Anything AUD10k or more that hits your bank account after you arrive back (to take up residency) is logged with Austrac and the ATO then have a two year time frame after those transfer dates in which they can query the transactions and potentially deem them to be funds earned as a tax resident.  

 

The money you mentioned was earned in Australia could potentially be taxable (did you not pay tax on it at the time?) This would depend on your tax residency status at the time of earning it. Be careful with this point, because becoming a non-resident for tax purposes is actually harder than it sounds. You need to the demonstrate to the ATO a clear intent to break ties, such as cancelling Medicare, selling off cars, boats etc, cancelling club membership. If you don't own a house and have no Australian sourced income, it's much easier to prove no enduring relationship that would lead to failing the domicile test. In any case, the ATO has a kind of unwritten point which is when you're out of the country for 2+ years they will more easily view you as a non-resident. It sounds like you easily pass this. 

 

For the property transaction, buy the house whilst still overseas as a non-resident. You will be required to transfer the funds to the RE agent's trust account, thus insulating yourself a further step from any possible queries from the ATO about these funds. Perfectly legal, and in any case this is the same step you would be required to do if you were a resident purchasing in Australia. 

 

DO NOT, under any circumstance, declare yourself a tax resident of Australia and then move the funds from offshore. This is the exact opposite as to what you should do. As a tax resident, you'll be liable to pay tax, plain and simple. You will lose about 450k of those Euros... In any case, you cannot just declare yourself a tax resident from overseas. Tax residency comes with certain benefits (such as tax free threshold, lower tax withholding on earnings etc) and after such a long time away you need to land back in the country with the intent to permanently reside (i.e. not just coming back for a 2 or 3 week holiday) before you regain tax residency.

Thank you, Inala, for your insightful and very helpful comments on my problem.
While the focus of your comments is tax implications of bringing offshore funds to Australia, I'm also concerned about the money being simply frozen by a bank on their receipt for money-laundering screening. Do you think that there is a risk of that happening if one makes an international transfer to an Australian RE agent's trust account for a property purchase?
After reading your post, I've come across the following in an online article by Austrac, Strategic analysis brief: Money laundering through real estate 2015,: "The following indicators may assist to identify potential money laundering...Deposits to buy a property have been sourced from an offshore bank...Transactions in which the parties are foreign or a non-resident for tax purposes".
Taken that into account, do you think that it is then safer to move the money first to a Thai bank, which would not be considered as a typical offshore one, and then pay the Australian RE trust account?

I initially thought that Australian banks are perhaps less vigilant, in regards to money-laundering screening, towards large incoming international payments, if the account holder is an Australian tax resident. The above Austrac reference may seem as confirming somewhat my view.  However, as you point out, that such a transfer may incur a huge Australian tax liability if one is already a tax resident. I guess, to avoid the liability, one would have to prove to the ATO that the money transferred have been earned, and paid tax on, in Australia or in a country which has a double taxation treaty with Australia? That would be difficult for me to prove, as I mentioned in my original post.
 

[nigelforbes]

Assuming the money was earned legally and there was no tax avoidance involved, documenting in advance the history of where the funds were earned and when may be useful. I found myself in a not dissimilar situation years ago after working in Hong Kong and elsewhere overseas, I settled in Thailand but left most of my funds onshore in the UK initially. At some point, new "know your customer" rules were introduced by banks who targeted people such as me and asked them to account for their wealth. It took me a while to put together a credible earnings history and to remember what funds came from what sources when. Ultimately, my explanation was accepted by the bank and the problem passed but it took me a while recall an accurate earnings map. You may wish to do similar, in advance. 

[Misty]

On 10/28/2022 at 10:35 PM, kwonitoy said:

You need to talk to a good accountant in Australia who is familiar with these matters.

I did the same thing that you are thinking of.

A similar amount FWIW

I had a Interactive Broker investing account while living in Thailand and working internationally.

In 2021 I moved permanently back to Canada.

In the Canadian system I was deemed to have sold my assets the day I left Thailand and repurchased them in Canada at zero cost difference.

I never used a bank to transfer these assets, I would not trust a bank to give proper advice about international tax matters

I had to open a new IB account with a Canadian jurisdiction and the funds were transferred about a month later after a long vetting process.

No cost for this, just a transfer from my original account to my new account

Now my investment account is Canadian based and I pay taxes on any Capital gains made.

 

I could have liquidated my stocks while held in Thailand and just transferred the money without any problem.

This was option B, but I wanted to maintain my stock investments.

 

I did have to show how the money was earned, much like a get to know your customer form at a brokerage.

Not to difficult, worked offshore for XX years, sold a condo in Jomtien for a good amount of profit

 

During my time in Thailand I had changed my status to the CRA as being a non resident citizen. 

I had to undo that process upon returning to Canada, and integrating back into the system here.

After a year it's more or less done.

 

Do your research and ask a good accountant is the most important

Understanding Australian rules is a must. 

Agree - check with a good accountant in Australia. In Canada any unrealized gains may be zeroed out with the assets considered "deemed to have been sold" the day you leave Thailand.  But this is not the same for all countries - i.e. the UK and US.  Depending on Australian tax rules, if you have substantial unrealized gains on your investments you may be better off selling them before you relocate to Australia, even if you purchase them back again immediately and then transfer the investments.  That way the gains will be realized before you become an Australian tax resident.

[sojourner007]

If one cannot produce documents proving that one's money come from a job, can sale of an investment, such as a property, serve as an acceptable source? When the 'know your customer' craze started among Western financial institutions a few years back, I was suddenly asked by my stock brokers, where I held my investments for years, to explain the original source of the funds. And while some demanded evidence of former wages that I received, others were satisfied with account statements showing that the money to fund my account came from sold previous investments. So if I move my offshore EUR 1M to Thailand and buy a property here, sell it a short while later, hopefully without a significant loss on commission and tax, then transfer the sale proceeds to Australia, would the sale agreement document likely to satisfy my Australian bank as evidence of a legitimate source of the money received?

[Jenkins9039]

17 hours ago, Inala said:

If you've been living in Thailand for many years then you're deemed by the ATO to be a 'non-resident for tax purposes'. This is further reinforced as you state yourself to be a tax resident of Thailand. As a non-resident for tax purposes, the ATO are not interested in how you earned the money and in law, they have no claim over it anyway. However, you need to transfer it back PRIOR to landing back in the country with the intent to resume residency. Anything AUD10k or more that hits your bank account after you arrive back (to take up residency) is logged with Austrac and the ATO then have a two year time frame after those transfer dates in which they can query the transactions and potentially deem them to be funds earned as a tax resident.  

 

The money you mentioned was earned in Australia could potentially be taxable (did you not pay tax on it at the time?) This would depend on your tax residency status at the time of earning it. Be careful with this point, because becoming a non-resident for tax purposes is actually harder than it sounds. You need to the demonstrate to the ATO a clear intent to break ties, such as cancelling Medicare, selling off cars, boats etc, cancelling club membership. If you don't own a house and have no Australian sourced income, it's much easier to prove no enduring relationship that would lead to failing the domicile test. In any case, the ATO has a kind of unwritten point which is when you're out of the country for 2+ years they will more easily view you as a non-resident. It sounds like you easily pass this. 

 

For the property transaction, buy the house whilst still overseas as a non-resident. You will be required to transfer the funds to the RE agent's trust account, thus insulating yourself a further step from any possible queries from the ATO about these funds. Perfectly legal, and in any case this is the same step you would be required to do if you were a resident purchasing in Australia. 

 

DO NOT, under any circumstance, declare yourself a tax resident of Australia and then move the funds from offshore. This is the exact opposite as to what you should do. As a tax resident, you'll be liable to pay tax, plain and simple. You will lose about 450k of those Euros... In any case, you cannot just declare yourself a tax resident from overseas. Tax residency comes with certain benefits (such as tax free threshold, lower tax withholding on earnings etc) and after such a long time away you need to land back in the country with the intent to permanently reside (i.e. not just coming back for a 2 or 3 week holiday) before you regain tax residency.

Also... don't liquidated into Thailand and then send to Australia, as that would be a taxable event in Thailand due to territorial taxation.

 

Do completely offshore to Australia (before you set foot in Australia).

 

 

[talahtnut]

On 10/28/2022 at 7:24 AM, sojourner007 said:

I did not keep much documentation from those years proving my employment and salaries in contract roles that I had then.

This will be a major problem with 1M euros.