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Transferring Money to Australia

Foreign Exchange (FX) or transferring money to Australia

Please bear with us here as Transferring Money to Australia can look and sound complicated at first glance, but it is a part of every move that can save you a lot of money and we have tried to make it as simple as possible to understand.

When you’re moving or planning to emigrate to Australia, you will need to convert your local currency into Australian Dollars and as it is not practical (nor safe) to carry currency in cash, the safest, most convenient and cheapest way to do this is a foreign currency exchange into an Australian bank account, which you can open very easily following the process explained above.

Generally, we tend to use our bank to transfer funds to Australia and to convert our currency into Australian Dollars and there are plenty of good reasons why we shouldn’t!

The main reason is that as individuals we are regarded as too small (in financial terms) to matter to most banks; retail foreign exchange is one of their least profitable areas and they therefore charge comparatively more for the service than they should – i.e. they make more money out of us than they should…

Most of us are more worried about what (small £10-30 or $10-50) bank fees our bank charges us to do a funds transfer than the exchange rate we receive (as we often don’t really understand how exchange rates work), which, depending on the amount being transferred, can mean a difference of thousands of dollars in our new account in Australia!

If you live in a country that has access to Foreign Exchange brokerages or boutique companies, and that is most countries other than heavily regulated ones (e.g. China), then you have the ability to shop around for the best deal. If you don’t have access to a currency exchange service, and the amount being transferred is quite substantial (i.e. more than $50,000), then it may work to discuss what deal your Australian bank can offer to convert your funds in Australia – this means you send your funds to Australia in your local currency and it gets converted in Australia by your Australian bank.

Transferring Money to Australia (©Tony Hewitt)

FX Explained in simple terms

Before we get into deals and who we would recommend, we’ll try to explain how the foreign currency exchange (or FX) markets work and what it means for you in simple everyday English (with some of the common terms explained):

Exchange Rate:

This is the rate at which your funds (be they in British Pounds, Euro, Rand or New Zealand Dollars etc.) are converted into Australian Dollars. This rate is not fixed and changes 100’s of times in any day and is impossible to predict as is influenced by 1000’s of factors.

Interbank Rate:

This is the exchange rate we see on the news and in the newspapers and it reflects the Inter-Bank exchange rate, this is the rate at which the banks trade currency and not the rate we receive EVER!

Retail exchange rate:

This is the rate that we receive and typically when we use a bank to change currency or a smaller money changer, it is normally 3-5% worse for us than the Interbank Exchange Rate and represents profit for the bank or money changer.

An Example of a currency transfer:

The exchange rate for Australian Dollars (Interbank rate) on the news is $2.00 to the pound.

A migrant transfers £100,000 to Australia via their bank who charges them a £25 fee and gives them an exchange rate of $1.94 to the pound.

The customer receives $194,000 less the UK bank fee of £25 (and any receiving fee charged by the Australian bank), so they will get approximately $193,950 in their bank account in Australia. The difference of $6,050 represents the income made by the transferring bank.

Consider if they had been given an exchange rate of $1.96 to the pound (i.e. the bank / FX company makes less) and paid £100 in bank fees (as a worst case illustration to highlight how little the fees matter), they would have received $195, 804 for their original £100,000, a difference of $1,854 in their pocket instead of the bank’s!

Consider the difference it would make in the example above if the exchange rate (interbank rate) was $2.05, an additional $4,995 in your bank account!!!

Please also remember that the exchange rate moves frequently (100’s of times a day) and the above example is NOT a reflection of the rate you would receive when you complete your own transfer.

Tips for Transferring Money to Australia

If you have significant funds (>$100,000) to send to Australia and are unsure, sceptical or worried about how all this (above) works, then there may be a simple and practical way you can test the system (as we have seen many customers do in the past):

  • Allow as much time to complete your transfer as possible – typically 6-9 months before you leave. The exchange rate between the Australian Dollar and other currencies can vary by more than 20% in a year ($20,000 per USD$100,000 exchanged)!
  • Take three equal amounts of $10,000, £10,000, or your local currency equivalent.
  • Arrange a transfer with two different FX companies and your bank, i.e. open an account with two foreign exchange companies.
  • Book the transfer of the funds with each organisation for the same time on the same day in advance and ask them to send you their reference number for the transfer when it has been completed.
  • A few days later (as it can take 2-3 days for the funds to clear in your Australian bank account due to time differences and banking systems) log onto your Australian bank account via internet banking or speak to your bank in Australia to see how many AUD you received from each company that you used for the transfer.
  • This will determine which company has the lowest margins and lowest fees and who to use to send your life savings, how to get the most AUD for your local currency.

Alternatively, you can call your bank and two FX companies and ask them for a live quote to buy AUD at the same time (call them immediately after each other and ask “Can I please have a quote to buy Australian dollars, how many AUD would I currently get for £10,000, Euro, Rand, etc?”).

Transferring Money to Australia FX (©Tony Hewitt)

Different Foreign Exchange Options

There are different ways to send money overseas and most people use what is called a “spot contract”, this is what you get when you transfer money through a bank. Spot contracts are when you call your FX company, ask for a quote to buy Australian dollars, and if you are happy with the exchange rate quoted you book the transfer and your funds are sent to your Australian bank account.
Some migrants also make use of a “Forward Contract”. This is when you are happy with the current exchange rate, though do not want to transfer funds until a later date as may not have the funds readily available to send. You can book a forward contract up to a year in advance and have to pay a deposit to secure the rate (typically 10% of the amount that is booked) up front. Please be aware that these are binding contracts and whilst they protect you from the exchange rate dropping, they do not increase the exchange rate if it improves – the exchange rate of the contract is fixed!
Another option is a “Limit Order”. This is when you tell your FX company that you only want to send your money at a certain exchange rate that you are happy with. They then watch the exchange rate for you and when it reaches your desired rate they buy the Australian dollars and send your funds to your Australian bank account. It is IMPORTANT to note that if the rate you nominate is reached, then the deal is processed automatically and cannot be reversed.
FX Companies also offer the added bonus services of “Rate Watch” and “Regular Transfers” which most banks don’t. Rate watch means they will keep an eye on the exchange rate for you and will contact you when it reaches the rate you like and you can either book your transfer or reassess. Regular payments are really useful for transferring money home to pay regular bills (like a mortgage, pension contributions, etc.).

Recommended Australian FX Companies

TorFX are regulated by the Australian Securities and Investment Commission (ASIC) and hold a current Australian Financial Services (AFS) Licence. They specialise with helping transferring money to Australia and also with transfers from Australia to your home country to pay bills, mortgages and for family.

Benefits include:-

  • Save 1-5% on bank exchange rates.
  • NO FEES.
  • Dedicated account managers to assist you with your transfers.
  • 24/7 online transfer service.
  • Preferred exchange rates for Move 2 Aus customers.
  • Highly rated customer service (Canstar 5 star).

Simply click on the banner below for a free, no obligation quote:

Recommended UK FX Companies

The companies listed below are approved and FCA (Financial Conduct Authority UK, formerly FSA) Authorised and Regulated UK Foreign Exchange companies who specialise in transferring money to Australia and dealing in exchange from UK Stirling and Euros to Australian Dollars.

TorFX LogoMoving to Australia? Send Money Overseas and Save 5% with TorFX.
TorFX was established in 2004 when the directors had a vision to provide better exchange rates, friendly and personal service and expert guidance on foreign exchange to individuals and companies. They process over £1.2bn in foreign exchange payments annually and operate segregated client accounts in accordance with the FCA rules on safeguarding client funds. They also have an office in Australia, so can easily assist you with any transfer needs back to the UK during Australian hours.

TorFX can take all the hassle out of one element of your emigration by helping you save up to 5% on your foreign currency transfers.
They offer the following client benefits:

  • Competitive exchange rates: to help clients enjoy the best return they can on their currency transfers.
  • Fast, free, secure transfers.
  • No commission costs or transfer fees.
  • TorFX are authorised by the FCA and operate segregated client accounts so your transfers are totally secure.

TorFX assign you a dedicated Account Manager to talk you through your requirements and help you pick the most suitable transfer option. They’ll also keep you up to date on the latest Australian Dollar news with free regular market updates.
They also offer additional services such as fixing a favourable exchange rate up to two years ahead of moving your money to (or from) Oz and the ability to set up a free, automated regular overseas payments facility.

Please visit the TorFX Website for a free quote, more information and to open an account or call them on +61 7 5560 4444.

Transfer money to Australia - Currencies Direct
For over 20 years Currencies Direct have been helping people to get the best exchange rate when transferring money to Australia (and back to the UK too). They understand what’s involved in moving your life overseas and will be there to help you with your money transfers every step of the way – both before and after you arrive in Australia.
Whether you’re transferring a large one-off sum to buy a property, sending over small amounts to pay for living expenses or setting up regular payments to receive a salary or pension, Currencies Direct’s competitive exchange rates could save you up to 5% on all of your overseas money transfers.
Benefits include:-

  • Bank beating exchange rates
  • No fees
  • Free expert guidance to assist you with your transfers
  • 24/7 online transfer service
  • Preferential exchange rates for Bar Council members and Move 2 Australia customers.

Registering is easy and they can set you up with an online account that you can access 24/7, to make and manage your payments wherever, whenever. The process is quick, simple and 100 per cent safe. Currencies Direct is authorised by the Financial Conduct Authority in the UK (FRN No.504360 for provision of payment services. Registered office: 51 Moorgate, London EC2R 6BH, UK. Registered No: 03041197.) Which means your money is kept in safeguarded client accounts – so it’s completely secure.

Joining Currencies Direct is free and only takes two minutes. Alternatively, contact them over the phone or visit their website – their friendly team of experts are always on hand to help.

Give them a call in London on +44 (0)20 7847 9446 or complete a currencies direct request information form and one of their helpful team will get back to you.

Foreign Exchange for South Africans

South Africa is unique – it is one of the few remaining countries that continues to operate an exchange control system. Governed by the South African Reserve Bank, exchange control restricts the amount of money individuals are allowed to transfer out of South Africa.

The regulations apply to all transactions no matter what the amount and as a breach may be deemed a criminal offence, it’s important to get it right and avoid a situation that could be detrimental to your visa or citizenship application process.

All transfers necessitate an active up to date tax record with the South African Revenue Service.

During the calendar year that you leave South African you may transfer R11M out of the country as follows:

  • R1M Discretionary Allowance
  • R10M Foreign Investment Allowance (tax clearance certificate required)

In each subsequent year you can transfer R10M out of the country:

  • R10M Foreign Investment Allowance (tax clearance certificate required)

A special application can be submitted to the authorities to transfer an amount in excess of these limits.

IMPORTANT: Indefinite use of your South African credit or debit card in Australia may be deemed a criminal offence (by the South African Government), as you are effectively transferring funds without SA exchange control approval; the penalties can be significant so it’s important to speak to a financial migration specialist before you leave to ensure get things right.

Recommended South African FX Companies

The companies listed below are well known to us, are regulated and approved Foreign Exchange companies in South Africa that can assist you with transferring money to Australia. They will also convert your Rands into Australian Dollars at exchange rates that are better than what the South African banks offer.
They can also assist with Exchange Control questions and help you attain the relevant tax clearances and/or Reserve Bank Clearances as part of their service. The South African exchange control restrictions and limits have changes significantly over the past 5 years and may well change again. We highly recommend that you seek professional advice on what the limits are and restrictions for sending money to Australia from SA before carrying out any transfers from one of the companies listed below.

TreasuryOne_LOGO_RGBcopyTreasuryOne is one of the largest privately owned foreign exchange companies in South Africa and processes foreign exchange transactions of around ZAR 60 billion annually. Their significant strength in the corporate sector means better exchange rates for migrants and overseas investors. Hennie and his team have been assisting migrants and investors with their FX and exchange control requirements for 15 years. In addition to providing much better than bank exchange rates, they also take care of and assist customers with the relevant exchange control and SARS paperwork needed for foreign exchange transfers – at no cost to you.

Call their private client team now in Pretoria on +27 (0)12 003 2059 or Cape Town on +27 (0)21 447 3274 for assistance and to discuss your FX needs.
You can also visit the TreasuryOne Website for more information on the services they offer.

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