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Banks & Taxes in Australia
A Comprehensive Guide about Opening a Bank Account and Managing Your Taxes
Managing finances in Australia does not have to be complicated with the right preparation. To open a bank account in this country, you can do so with just your passport if you do so within six weeks of arriving in Australia. Understanding the tax system may prove to be a little bit more complicated. Personal tax income rates in this country are calculated at a progressive rate. It is based on a tiered structure meaning the more you earn, the more you will be taxed.
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Opening a bank account and navigating the tax system are two critical steps an expat will need to take care of when relocating to Australia. This is especially important if they are a working professional or business owner who will be receiving an income there. You will need to get familiar with Australia’s double tax agreements, for example, so you avoid double taxation in Australia and back in your home country. The Commonwealth country has tax treaties with more than 40 jurisdictions.
While figuring out the tax system can be intimidating, opening a bank account in Australia as a foreigner is not. The country makes it quite easy for a non-resident to open an account and you can do so even before you arrive.
How to Open a Bank Account in Australia
If you are wondering how to open a bank account in Australia for non-residents, or if it is even possible for an expat, you will be glad to know it is. Setting up an Australian bank account can be done in a matter of minutes. This section will cover all you need as a non-resident to do so.
Can I Open a Bank Account in Australia?
Yes. Most Australian bank accounts make it quite simple for foreigners to open a bank account in the country. Unlike some places, you do not have to be in the country to do so. Most institutions make it possible to open an account via the internet or over telephone.
Some of the most common accounts in Australia are
- everyday transaction accounts—used for day-to-day transactions, daily withdrawals and deposits;
- savings accounts—similar to transaction accounts but with a higher interest rate for your savings balance;
- credit card accounts—like in other countries, these allow you to access money that is not immediately available;
- foreign currency accounts—larger banks will offer these types for those who are still receiving income in a different currency;
- joint accounts—used for opening an account with a spouse, business partner, or another second party
- term deposits—similar to a savings account with high-interest rates except your money is locked in the account until an allotted period of time has passed.
While opening a bank account is relatively easy, getting issued a credit card might be harder for an expat. However, some banks will issue one to non-residents, and those are
- Commonwealth Bank (CommBank);
- National Australia Bank (NAB);
- Australia and New Zealand Banking Group (ANZ Bank);
Requirements and Required Documents to Open a Bank Account as a Non-Resident
Australian banks use the 100 point check, a government-adopted personal identification system. Different pieces of ID that an individual can produce (such as a driver’s license, passport, tenancy agreement, utility account, etc.) are worth a certain number of points. Essentially, you need to satisfy a minimum of 100 points total to open an account.
It is entirely possible to open a bank account online in Australia as a non-resident from overseas. The top banks in Australia (see below) allow foreigners to open a checking account from abroad via the web before they even relocate.
To do so, you will require
- date you plan on arriving in Australia (sometimes a departure date as well);
- address of where you will be living in the country;
- visa with which you will be entering Australia;
- employment and salary details;
- passport number or another proof of identity;
- 100 points worth of documentation when you arrive in the country.
You can typically open your account anywhere between three to twelve months before your arrival date. Most banks will require you to be at least 18 years of age. Westpac and Commonwealth allow for younger clients to apply. The entire process should take between five to ten minutes.
If you wait until you are in the country to open your account and do so within six weeks of arriving in Australia, all you will require is your passport. You can forgo the 100 point check.
Bank Fees and Minimum Deposit
No-fee bank accounts in Australia are the norm, as many institutions do not charge monthly fees and offer unlimited transactions. If they do, they are very low and are usually waived provided a minimum amount is deposited each month. This is typically set to 2,000 AUD (1,377 USD), which is lower than the average monthly salary.
Fees you will need to be aware of, however, are ATM withdrawals. With more than 29,000 ATMs sprawled across the country, you should have no issue taking care of banking transactions when you need to. ATMs are usually free if you withdraw from your own bank’s ATMs. However, if you use another institution, you will be charged around 2 AUD (1 USD) per transaction.
Overdraft fees may also apply in some banks while others do not charge. To be on the safe side, you may also want to ask about any other rates and charges, currency conversion fees, and international money transfers before settling on a bank.
Top Banks in Australia
The four big banks in the country are
- ANZ Bank;
International Banks in Australia
Australia has several foreign subsidiary banks and branches of foreign banks in the country. Some examples are HSBC Bank, BNP Paribas, Citibank, Bank of China, and Royal Bank of Canada. Get a full list of international banks on finder.
Australia’s Best Online Banks
Nowadays, most of Australia’s banks offer online services so you can manage your accounts online or through an app. Some of Australia’s online-only banks include
- ING—offers everyday transaction and savings accounts, term deposits, business savings accounts, commercial mortgage accounts, home loans, superannuation accounts, self-managed super funds (SMSF) cash accounts, and term deposit accounts;
- ME Bank—offers transaction and online savings accounts, term deposits, credit cards, personal and home loans, and business savings accounts and term deposits;
- UBank—offers savings accounts, combined savings and transaction accounts, home loans, and SMSF accounts;
- RaboDirect—high-interest savings accounts, regular savings accounts, notice savings account, term deposits, and SMSF accounts;
- Easy Street—everyday transaction accounts, online savings accounts, personal loans, a variety of home loans and insurance options.
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What is the Tax System in Australia?
What is the tax system like in Australia? The tax system in Australia is a mix of both direct and indirect taxes imposed by both the Commonwealth and State governments (depending on the type of tax).
Types of taxes in Australia include excise, sales, estate, property, and income, the latter being the most important. Taxable income can consist of salary, wages, income from business, interest, rent, and dividends. Residents are also required to pay 2% of their taxable income to Medicare. Non-residents are not obligated to pay this levy. The federal government collects tax through the Australian Taxation Office (ATO). In comparison to other developed and wealthy nations, Australia’s tax burden is relatively low (27.8% of GDP in 2018).
The government of Australia is working on building a better tax system to support workers and small- to medium-sized businesses in the country (see below under Taxes for Self-Employed People in Australia). For example, low- and middle-income tax earners will receive immediate tax relief to ease cost of living (up to 1,080 AUD (745 USD) for singles or 2,160 AUD (1,489 USD) for dual-income families). Also, the current 32.5% tax rate will be reduced to 30% in 2024-25. In turn, this will mean that 94% of taxpayers will face a marginal tax rate of no more than 30%. It is estimated that by 2024-25, 60% of personal income tax will be paid by 20% of the highest earners.
To help out individuals and small businesses, the government will also establish ten tax clinics across Australia to offer free tax advice as a twelve-month pilot. Invoicing will also become easier with the government’s e-invoicing system. It is projected to save businesses an approximate 28 billion AUD (more than 19 billion USD) in transaction costs.
Deductibles in Australia include work-related expenses (e.g., vehicle and travel; clothing, laundry, and dry-cleaning; home office; phone and internet; overtime meals; self-education; tools and equipment; etc.); the cost of managing your tax affairs; gifts and donations to registered charities; personal super fund contributions; interest, dividend and other income deductions (e.g., bank fees; interest on money borrowed to buy shares that have provided you with dividends; or investment management fees).
What is the Income Tax in Australia?
In Australia, if you become a resident or stay for at least six continuous months in a year, you are considered a tax resident. You will be subject to tax on all income, including money earned overseas. The good news is that Australia has income tax treaties with several countries (more than 40 jurisdictions) to help you avoid double taxation. Temporary residents will also be subject to tax but at different rates than Australian residents. You should hire a professional accountant with experience working with expats to assist you during this process and with your tax returns once in Australia.
With InterNations GO!’s Settling-In Services, you can get assistance registering with local tax authorities. We arrange the services of professionals who speak your language like financial advisors and accountants.
Individual income tax rates in Australia are calculated at a progressive rate and based on a tiered structure—the more you earn, the more you will be taxed. The current tax on salary in Australia is as follows for residents and non-residents (for tax purposes).
|Tax Bracket (AUD)||Tax Bracket Conversion (USD)||Income Tax Percentage|
|180,001 and over||123,735 and over||45|
|Tax Bracket (AUD)||Tax Bracket Conversion (USD)||Income Tax Percentage|
|180,001||123,735 and over||45|
The employer usually pays personal income tax—it is taken out of an employee’s pay before it is received. This amount is then handed over to the ATO.
Taxes for Self-Employed People in Australia
People that are self-employed, sole traders or in a partnership do not have to make super guarantee (SG) payments (money put aside for retirement). However, personal contributions are encouraged as a way to save for retirement.
Super funds get special tax treatment by allowing you to pay less on tax earnings within a superannuation. You get better investment returns than in a bank savings account. The money you contribute is inaccessible until you retire.
If you are a business owner, it is recommended you save all your receipts and work-related expenses. An accountant can help you sort through them at the end of each quarter to figure out your deductibles, and what expenses you can claim so you pay fewer taxes.
The main taxes affecting businesses in Australia are Company (Income) Tax, Capital Gains Tax (CGT), and the Goods and Services Tax (GST). These are all set by the Australian Government.
All companies in Australia (including non-resident companies) are subject to a federal tax rate of 30%. Small and medium businesses (with turnovers below 50 million AUD (more than 34 million USD)) are subject to a reduced tax rate of 27.5%. This will later be reduced to the following:
- 26%—2020/21 income year
- 25%—2021/2022 and later income years
Businesses can make tax payments monthly, quarterly, or annually.
You must submit your tax return at the end of each fiscal year, and this is done online. These are usually due between July 1 and October 31 for the previous financial year. Afterward, you will either get a tax refund or bill depending on whether or not you owe any taxes.
Do you want to relocate? If you have never moved abroad, the process will be overwhelming, and if you have, you know the burden that lies ahead. Whatever stage you are at, InterNations GO! can help you with a complete set of relocation services, such as home finding, school search, visa solutions, and even pet relocation. Our expert expat team is ready to get your relocation going, so why not jump-start your move abroad and contact us today? Best to start early!