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May 18 2011

Currency Exchange GBP/AUD

Currency Conversion, UK to Australia

When converting one currency to another you may be quoted a fee that will be charged or you may not. Not being charged a fee does NOT mean that you would receive more Dollars for your £’s, as there is a “Hidden Charge” in the “exchange rate” that is used for all financial transfers.

Some companies may charge as high as 4% or even as low as 0.5%, over the normal base market foreign exchange rates.

Those currency margins are the main profit producers for most FX transactions.

Take an example of £20,000 transferred at three possible rates, with the official rate of the day being 2.00 to the £

1: 1% margin + $20.00 fee = $39,580 received

2: 1.99% margin + $0.50 fee = $39,203.50 received

3: 4.00% margin but FEE FREE = $38,400 received

You will see that the option with the lowest fee is actually the worst, but the one with the highest fee is the best.

This post is to aid in pointing you in the right direction to check the final result, and not just the quoted fees, when arranging your foreign exchange.

Keep an eye on the currency exchange rates between the British Pound and the Australian Dollar here

The current exchange rate for the Australian Dollar against the British Pound is:

Currency Website Links


Bringing Currency into Australia

There is no limit to the amount of currency you can bring in or out of Australia.

However, you must declare amounts of A$10,000 or more in Australian currency or foreign equivalent.

If asked by Customs you must also fill in a Bearer Negotiable Instruments (BNI) form if you’re carrying promissory notes, travellers cheques, personal cheques, money orders or postal orders.

www.customs.gov.au

There are no limits to the amount that can be transferred through the banking system.

Tax on Currency Brought over after Migration

The basic rule is that you will be taxed on any income that you earn worldwide, once you have become tax resident in Australia.

This will include any gain that you make from Foreign Exchange rates that you may make on any future currency conversions.

An example of this may be that you sell your UK house after migrating, and bring the proceeds over, say six months later. Any increase of the value, in A$, will become taxable.

Exchange rates can be seen at the ATO Website

This means that if the exchange rate changes in your favour, you pay tax on the extra A$ that you receive, but unfortunately, if the rate goes the other way, this applies; “foreign losses cannot be deducted from Australian source assessable income, and can only be carried forward to deduct from assessable foreign income in the same category derived in a later income year.”

Source: ATO Foreign Income

For Books with Free Delivery to Australia: BookDepository UK and USA

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