What happens to your Australian bank accounts when you move overseas
Key points
You can generally keep your Australian bank accounts when you move overseas. Becoming a non-resident for Australian tax purposes does not automatically mean you need to close your Australian transaction, savings or term deposit accounts.
Interest earned on Australian bank accounts may be subject to 10% withholding tax. Once you become a foreign resident and notify your bank of your overseas address, the bank will generally withhold 10% tax from Australian interest income.
Updating your bank details is an important step when moving overseas. Failing to provide your Australian bank with your overseas address may result in tax being withheld at a significantly higher rate, while your new country of residence may also have its own tax implications for Australian interest income.
What happens to your Australian bank accounts when you move overseas
Moving overseas can involve a long list of financial considerations. From determining your Australian tax residency to reviewing your investments, superannuation and property, there are several important decisions to make before and after you leave Australia.
One question we regularly hear from Australian Expats is:
What happens to your Australian bank accounts when you move overseas?
The good news is that becoming a non-resident for Australian tax purposes does not generally mean you need to close your Australian bank accounts. However, the tax treatment of interest earned on those accounts can change once you move overseas and notify your bank.
Can I keep my Australian bank account when I move overseas?
In most cases, yes.
Moving overseas does not automatically require you to close your Australian transaction, savings or term deposit accounts. Many Australian Expats continue to maintain Australian bank accounts to receive Australian income, pay Australian expenses, manage property costs or hold Australian dollars.
However, it is important to understand the distinction between having an Australian bank account and being an Australian tax resident.
Your bank account does not determine your tax residency. Your Australian tax residency is assessed separately based on your individual circumstances, including factors such as your living arrangements, intention, family connections and economic ties.
So, when considering what happens to your Australian bank accounts when you move overseas, the account itself may remain open, but the tax treatment of the interest it earns can change.
The 10% withholding tax
One of the key changes for Australian Expats relates to interest earned on Australian bank accounts.
Once you become a foreign resident for Australian tax purposes and notify your Australian bank of your overseas address and non-resident status, the bank will generally withhold 10% tax from interest payments.
For example, if your Australian savings account earns $5,000 in interest, your bank may withhold $500 in tax, with the remaining $4,500 paid to you.
This withholding tax is particularly important for Australian Expats to understand because it can apply simply as a result of your change in tax residency and notifying your bank.
Why notifying your bank is important
If you move overseas and do not update your Australian bank with your new overseas address, you could potentially have tax withheld at a significantly higher rate.
The Australian Taxation Office (ATO) states that where a foreign resident does not provide their overseas address, tax may be withheld from interest at the higher rate of 47%.
This makes updating your bank details an important step when you move overseas.
It is also worth remembering that the 10% withholding tax is generally not an additional tax on top of your Australian tax obligations. For foreign residents, the withholding generally represents the Australian tax payable on the interest, meaning the interest subject to withholding generally does not need to be included in an Australian tax return.
Your country of residence may, however, have its own tax rules regarding interest earned from Australian bank accounts. This should be considered as part of your broader cross-border tax planning.
Should I close my Australian bank accounts?
Not necessarily.
There can be several good reasons for an Australian Expat to retain an Australian bank account, including:
Receiving Australian rental income;
Paying Australian mortgage and property expenses;
Receiving dividends or other Australian income;
Transferring money between Australia and your country of residence;
Holding Australian dollars;
Making it easier to manage your Australian financial affairs if you eventually return home.
However, retaining an Australian bank account does not necessarily mean that keeping large amounts of cash in the account is the right strategy.
If you have significant savings sitting in Australian cash accounts, it may be worth reviewing the interest rate, currency exposure, tax treatment and whether those funds remain appropriate for your broader financial objectives.
Your bank account does not determine your tax residency
Perhaps the most important point when considering what happens to your Australian bank accounts when you move overseas is that your bank account and your tax residency are two separate matters.
You can retain an Australian bank account while being a foreign resident for Australian tax purposes.
Similarly, closing your Australian bank accounts does not automatically make you a non-resident for tax purposes.
Your tax residency needs to be determined based on your overall circumstances, rather than simply where your bank accounts are held.
What should I do before moving overseas?
If you are preparing to leave Australia, consider the following:
Determine your Australian tax residency position.
Notify your Australian banks of your overseas address.
Ensure your foreign resident status is correctly recorded where appropriate.
Understand the 10% withholding tax that may apply to Australian bank interest.
Check how your new country of residence taxes Australian interest income.
Review whether your existing cash holdings remain appropriate for your circumstances.
Conclusion
So, what happens to your Australian bank accounts when you move overseas?
In most cases, you can keep your Australian bank accounts open after moving overseas. However, once you become a foreign resident and notify your bank, 10% withholding tax will generally apply to interest earned on your Australian bank accounts.
It is important not to overlook this change. Failing to provide your bank with your overseas address can potentially result in tax being withheld at a much higher rate.
Your Australian bank accounts are just one part of the broader financial picture when you move overseas. Your tax residency, investments, superannuation, property, cash holdings and financial arrangements should all be considered together as part of your Australian Expat strategy.
If you are planning to move overseas or have recently become an Australian Expat, obtaining professional advice can help you understand the implications for your Australian financial affairs and ensure your arrangements remain aligned with your long-term goals.
Runway Wealth Management is the trusted Financial Adviser to the Australian Expat community. Our tailored advice is backed by expertise, education and experience, which allows us to be at the forefront of Australian Expat Financial Planning.
If you would like to speak to one of our Expat Financial Advisers about this blog or if you have other queries, we would be more than happy to speak with you. Feel free to send us an enquiry through the 'Contact Us' tab provided in the link below:
General Advice Disclaimer: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.
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