Sunday, May 13, 2018

Opening an Australian bank account by a Singaporean

I have been getting some queries on my post on opening an Australian bank account. I guess the reason is because the aussie dollars have reached parity with the Sgd lately and people are becoming more interested.
I have kept my Australian account for about 2 years 5 months just purely for holidaying and have not been taxed a single cent on my interest income. I will summarise the way to avoid taxes legally or at least minimise the tax incurred.

1)  Put a non-Australian address ( a.k.a put your Singapore address)

If you put an australian address, maybe because you have an investment property there, the Australian Tax Office (ATO) will deem you a resident and tax your interest. As you are not working there, you have no tax file number ( TFN) and so will leave this field as blank. That's spells disaster!
The bank will, by default, charge you the highest tax of 46.5% on your interest earned.

By putting a Singapore address, your interest income is subjected to 10% tax.

2) Keep the total annual interest income lower than $120

With my National Australia Bank (NAB) earning about 2.5% pa annually, my full interest income will be taxed once the deposits reaches about $4800 ( interest is compounded monthly since interest is credited monthly so the threshold is actually slightly less than $4800) . 

Now, knowing this, i would open in my wife, father, mother, sister, helper, mother-in-law, father-in-law name, friend name, so that i have many accounts to squirrel into to be below the threshold. BUT, one need to be there in person to open. Haha... no free lunch!

3) Open the account in your children's name

The annual interest income threshold for a child is $420, which is deposits less than $16,800 ( the threshold is lower based on the reason i cited above). They still have to be there in person to open.

Anyway, i will gladly pay the 10% anyway if i were to invest in Aussie dollars while waiting for the commodities super cycle since, i will still be getting 2.25% pa NETT interest without the many hoops i have to jump across of local banks and the caps that each have. (UOB one, DBS multiplier, BOC smartsaver, Citibank Maxigain, SCB bonus saver).

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