The foreign exchange market is a global decentralized market also known as an over-the-counter market where bank dealers make the market to determine the interbank exchange rate, i.e. the rate the banks use when trading with one another.
The interbank rate is the mid-point between the buy and sell rate for a currency on the open market and is the most accurate rate of exchange at any given time. You can easily check this at any time using the XE Currency Converter.
Unfortunately for most of us, this rate is reserved solely for banks and large financial institutions trading in large amounts of foreign currency.
For retail or business banking customers looking to make smaller international money transfers, a margin (or spread) will be applied to the interbank rate to ensure a profit for the service making the transfer. As a retail banking customer, this margin may be anywhere between ~4-5% of the interbank rate.
The graph below illustrates the rate that a customer may expect to receive from the bank when converting their AUD or NZD to GBP.
What determines whether I receive a competitive rate?
Naturally, when sending money abroad, it’s in your best interests to ensure you keep as much of your money as possible by locking in a favorable rate of exchange.
The exchange rate you receive will be based on a number of factors, including:
- Volume – the amount you are converting
- Currencies exchanged
- Knowledge and awareness
- Frequency of transactions – ongoing or one-off
However, one of the most sure-fire ways to ensure you are receiving a competitive rate is to look at using a money transfer specialist like XE who provides a much sharper rate of exchange than you would otherwise receive from the banks.
Why you should look beyond your bank
XE works closely with our broad network of referring partners to provide their clients with a competitive, secure money transfer solution.
As such, when you choose XE Money Transfer via one of our partners, you will receive preferential rates of exchange that are more competitive than you would receive from other providers.
…It’s not just about the rate
At XE, we pride ourselves on delivering our clients value beyond a great rate, providing a much more comprehensive service than they could expect to receive from the banks.
Exchange rates fluctuate at any given minute and as such our expert team is on hand to be your eyes and ears in the market and advise on how to ensure you lock in the best rate possible.
We also offer a range of products typically not made available to retail banking clients, including Market Orders and Forward Contracts, that will help you reduce your exposure to currency risk.
Whatever your needs or situation, feel free to get in touch with the team at XE to discuss the best approach to your foreign currency needs.
There are many challenges with relocating, with some challenges rating higher on the stress scale than others. Once the logistics of the move are over and you are no longer stepping over boxes or searching for teaspoons, settling in is the next hurdle.
By settling we don’t just mean sorting out your new home, but how do you make your new environment ‘feel’ like home?
It can be daunting with family and friends no longer near at hand. The ‘euphoria’ of arriving safely with your belongings is quickly overtaken by the realization ‘that’s it, I’m here, what now?’
The settling in period can be quite different for those who have relocated for work and for those who have accompanied their partners. Your new work environment is your new routine and you tend to hit the ground running.
Many companies offer support and programs to assist with settling in. These are really worthwhile participating in, especially if language or cultural differences are a challenge with the new job.
Social or sports clubs attached to your company are a great way to meet people initially. Meeting up with people who have the same interests will broaden your social circle, while you slowly build your own network. If you have relocated overseas, seek out expat groups to join.
Expats have already done what you’re doing and can be a wealth of information and may even prevent you from making mistakes due to your inexperience. Remember this is not about trying to etch out a piece of home in a foreign land it’s about finding a support system to help, in what can be for some, a lonely settling in period.
Don’t neglect opportunities to form friendships within your local community too, it’s the best way to assimilate and feel part of your new environment. If on the other hand, you are relocating because of your spouse or partners job, it presents with its own kind of challenges.
You may not be able to work, due to visa restrictions, unrecognized qualifications or having young children. You may find yourself somewhat isolated, in the initial phase, while your partner’s days are full and busy with their new job.
You may be waiting for them to return home from work ready to hear all their news only to be met by an exhausted partner, whose day has been full of learning new systems, meeting new colleagues, navigating new roads or transport systems, and all in another language.
You, on the other hand, may not have spoken to another adult all day! It can put a strain on the relationship.
It’s important for both parties to see what challenges the other is facing. Good communication is key to understanding and acknowledging what the other is going through.
For it to be a success, both parties need to feel supported and listened to, while navigating their new life. It is not uncommon for a couple or family to return home because they were not prepared for the possible struggle of the early months.
It can be a painful learning curve to know that it needs to work for both, for it to work at all.
As an expatriate moving to Australia one of the important tax issues is how your salary would be taxed.
Australia does not have a separate salaries tax per se. Rather your employment income and all your other income such as investment income is added together and forms part of your assessable income in Australia.
Once you have calculated your assessable income you then need to work out your ‘allowable deductions’ before you arrive at your taxable income.
A number of items can be considered to be deductions against employment income but care needs to be taken to ensure the strict rules regarding employment-related deductions are complied with.
You pay tax based on your taxable income. The personal income tax rates which apply to you are published every year by the ATO. Australia’s current personal tax rates can be found here.
You will notice that the top tax rate in Australia is 45% and this rate applies once your income is more than $180,000 for the tax year. The income tax year commences on 1 July and ends on the 30 June year.
If you derive employment income then Australian tax law requires your employer to deduct what is known as PAYG (Pay as You Go) from your salary and you are paid a net amount after tax.
Your Australian employer is then required to pay the ATO (typically on a monthly basis) the amount of PAYG they withhold from your salary.
At the end of the year (30 June) your employer has to issue what is known as a PAYG Payment Summary which details the gross salary paid to you for the tax year, the amount of PAYG withheld and the net amount paid to you.
The information is automatically reported to the Australian Taxation Office and recorded against your Tax File Number.
If you are receiving allowances, such as car allowances or travel allowances, then these will also be summarised on the PAYG Payment Summary.
If you are moving to Australia and you commence your employment halfway through a tax year then typically your employer will still be required to deduct PAYG from your employment income as if you had been employed for a full year.
Because of the graduated tax rates, this would mean that typically unless you have other income to declare – such as investment income – you would receive a tax refund in your first year after moving to Australia.
How employee share scheme interests are treated
Many expats moving to Australia also participate in employee share schemes.
In Australia (as in many countries) gains made from the participation in employee share schemes are considered to taxable as employment income.
Employers in Australia must also prepare annual payment summaries (known as ESS Payment Summaries) where they are required to report the total amount of income that an employee has earned that year through participation in an employee share scheme or employee options plan. This can be a complicated area of tax for many expatriates.
One issue which many expatriates can tend to overlook is if they receive foreign salary income or employee share scheme income after they move to Australia, then they will be taxable on that income even if they performed the employment duties outside Australia.
Hence expats moving to Australia who may be due to deferred bonuses or other employment-related compensation need to be aware that such income is taxable in Australia.
If the tax is paid overseas on that income then generally the expat will be able to claim a foreign income tax offset (foreign tax credit) in Australia for tax already paid overseas. It is only in rare circumstances that employment-related payments would not be taxable income in Australia.
If you have questions about cross border salary payments or other employment income issues which you need to be resolved CST Tax Advisors can assist you.
Written by: Matthew Marcarian from CST Tax Advisors
Under Australia’s foreign investment framework, foreign persons need to apply for foreign investment approval before purchasing residential real estate in Australia.
The Government’s policy is to channel foreign investment into new dwellings as this creates additional jobs in the construction industry and helps support economic growth. Foreign investment applications are considered in light of this principle.
It is important that foreign investors understand and comply with Australia’s foreign investment framework as strict penalties may apply for breaches of this law, including orders requiring you to dispose of property purchased by you without approval.
New Dwellings and Vacant Land
Foreign persons generally need to apply and/ or receive foreign investment approval before purchasing new dwellings and vacant residential land for development.
Applications to purchase new dwellings are usually approved without conditions. Applications to purchase vacant land are normally approved subject to construction being completed within four years. Once new dwellings are built or purchased, they may be rented out by the foreign investor, sold, or retained for their own use.
Land that has previously had an established dwelling on it would generally not be treated as vacant land for the purposes of Australia’s foreign investment framework. Further, a single dwelling that has been built to replace one or more demolished established dwellings would generally not be considered a new dwelling for the purposes of Australia’s foreign investment framework.
Non-resident foreign persons are generally prohibited from purchasing established dwellings in Australia. However, reflecting the fact that foreign persons who are temporary residents need a place to live during their time in Australia, temporary residents can apply to purchase one established dwelling to use as a residence while they live in Australia.
The purchase of an established dwelling in these circumstances would normally be conditional on the foreign person selling the property when they leave Australia or cease being a temporary resident and do not become a permanent resident or an Australian citizen.
In addition to his, temporary residents cannot acquire established dwellings to rent out or for use as a holiday home.
The Application Process
Foreign persons should apply for approval before taking an interest in residential real estate. However, foreign persons who want to minimise the risk of a property they are interested in purchasing being sold to someone else before they receive foreign investment approval can enter into a contract as long as the contract is conditional on receiving foreign investment approval.
Foreign persons are required to pay a fee for each application made or notice given, under the Act and the Regulation (limited exceptions apply).
The fees that are payable for residential land applications depend on the price for the acquisition of the interest and can end up being quite costly, another reason why foreign persons may wish to enter into a conditional contract.
The board has a statutory period of 30 days to make a decision from the date of full payment of the relevant fee on the application, and a further 10 days to notify the applicant of the outcome.
Article from: NL & Associates
Written by: Nicole Leggat
Professional Indemnity Insurance (PI) is required by expat professionals whilst operating their business in Australia.
Professionals are someone who offers services or advice in a specialised field or discipline. The professional is qualified to provide such advice/service usually for a fee/remuneration.
Traditional professionals include accountants, lawyers, insurance brokers, engineers, architects, real estate agents, and consultants. Non-traditional professionals include agricultural consultants, migration consultants, freelance journalists, translators, naturopaths and any business which provides professional services or advice.
Professional Indemnity is designed to protect Insured Professionals from economic loss, sustained by third parties as a result of the performance of the Insured’s professional services and advice.
The (PI) policy provides the Insured cover for Investigation, Defence Costs, and Settlements.
Professional Indemnity can also be known as E&O (Errors and Omissions) or Professional Liability Insurance.
Most PI policies operate on a “claims made and notified” basis. This means a claim must first be made against the Insured and notified to the Insurer during that period of insurance.
Therefore, when the Insured first becomes aware of a claim or circumstances which may give rise to a claim against them, they must notify the Insurer of this event during that period of insurance. The Period of Insurance is always clearly outlined on the policy schedule.
A claim against the Insured includes a verbal notice made against the Insured during the Period of Insurance, as well as a written notice for damages by a third party or civil proceeding.
Below are examples of claims recently received by Insurers we deal with:-
The Insured was hired to provide advice to a customer regarding the correct management of their crops. The Insured failed to consider the soil residual herbicide that had been applied to the crops in the prior year and as a result, the crops failed. The client sought reimbursement for loss of income and yield from the Insured.
The Professional Indemnity Insurer appointed lawyers, assessed the loss and payment was made in the amount of $60,000 to the client subject to them signing a deed of release.
A former client made a claim against the Insured regarding negligent advice in regard to making contributions into their Self-Managed Super Funds (SMSF).
The client’s Financial Planner had prepared a Statement of Advice recommending the superannuation contributions, which the Insured approved. As a result, the claimant had to pay $150,000 in excess contributions liability.
The Insured claimed under the PI Policy and commercial settlement was reached between the parties and a deed of release was signed. The payment amount was $99,000.
Land Surveyor and Town Planning/Building Surveyor
A claim for loss was made against the Insured in regards to providing incorrect advice on the potential sub-division of a property a client of the Insured had purchased.
The Insured was covered under his PI Policy for legal and defense costs in responding to the claim. A settlement payment of $800,000 was made.
The above claims scenarios are evidence of the importance of Professional Indemnity Insurance for any business person who provides professional services and/or advice.
Written by: Michael McMahon from Gibson Insurance
Immigration into Australia is mainly based on a system that aims to reinforce the national economy, through the acquisition of new labour skills, the promotion of foreign investments, as well as family reunions.
The Australian migration system is very complex, with the Department of Home Affairs (DHA) representing the Government entity which selects the migrants.
There are currently 99 visas available, some of them temporary, some permanent, but each of them with different and very specific requirements.
The temporary and permanent migration programs allow people to enter Australia for a variety of reasons – such as tourism, study, short or long-term employment, business, and investment or to re-join and live with a family member.
Everyone is required to have a visa to enter Australia and this must be applied for prior to arrival. Most of the airline companies will not carry you if you do not have a visa.
Our guide, written by Emanuela Canini of Migration World will provide you with vital information required to navigate through the complex issues regarding the immigration process in Australia.
To Download our guide, click here.
One of the great challenges upon arrival in Expatland is often how to manage your money.
There is no easy answer and it depends upon the complexity of your affairs. Similar to your home country jurisdiction, financial planning requires a number of steps.
Strategy One’s guide to Financial Planning assists expats with choosing the right planner, creating a financial plan and important questions to ask your advisor.
To download this guide click here:
There are many lenders including banks, credit unions and non-bank lenders operating in the Australian property market and offering finance to purchase Australian property.
Of these lenders, they will have many different loan products with their own features and benefits, some of which are more appropriate to different objectives. Navigating the finance and product options is time consuming trying to work out what is best for you.
Alycia and the team at Stoneturn Mortgages have written a guide to assist with the complexities of choosing the best option including:
- Understanding the Finance Process
- Pre-qualification and Credit Advice
- Post Settlement
To read this guide click here:
On December 19, Expatland Giving Back joined the Exodus Foundation in helping out their community.
It’s an opportunity dedicated to contributing to the foundation’s mission of helping the community’s less fortunate and spreading joy this holiday season.
It was a great day and the team is grateful for the chance to give back through their own way, making this event truly memorable.
Australia is experiencing a dip in consumer confidence at the moment.
As we can see, we are still above the historical average. But what does this mean for the Sydney property market?
Retail credit is still hard to come by (except for Expatland service providers) but is the rest of the Sydney population thinking its credit crunch 2.0? 2008 was a decade ago now and many are saying that we may dip again below the trending average in 2019. The Sydney property market is watching 2019 through a lens of skepticism.
The political sphere is driving this down with a March state election where the Premier is not handling her team well while no-one knows the name of the opposition leader. What’s going to happen? I know that treasury is screaming from the reduced forecast of stamp duty revenue.
What are they to do?
Federally we have a new PM that wants to reduce population growth and an opposition leader that wants to run on the premise of getting rid of negative-gearing? Do any of our leaders really want to foster a growth environment again?
What I do know is this? Buy low. Sell high.
The increased interest in doing deals in Sydney right now on both residential and commercial property is rife. We are negotiating on several investment properties for our clients in which the developer needs to sell remaining product or product with settlement risk with a 5-15% discount. Additionally, our clients are capitalising on buying established home’s for repatriation due to the pressure on some homeowners to sell.
One Sydney expat client from Hong Kong called to get some advice as she was not scheduled to come back to Sydney for another few years but wanted to take advantage of the current market and find her home for retirement. Over the New Year period, three private inspections will happen via Skype.
So don’t let the consumer sentiment get you down, take advantage of the counter market cycle and use the Christmas and New Year periods to reflect and plan for the next year or years ahead.