Bowman Offshore Bank Transfers Offshore bank accounts: 10 things you should know

Bowman Offshore Bank Transfers on Offshore bank accounts: 10 things you should know Offshore bank accounts may sound great in theory, but make sure you’re aware of all the potential problems and pitfalls attached. The mere mention of the words “offshore bank account” is enough to conjure up thoughts of tax evasion, unreported income and a wide range of other dodgy dealings. The bad reputation of offshore accounts was further reinforced by the Panama Papers scandal of early 2016, which involved many high- profile world figures and led to the offshore accounts of 800 wealthy Australians coming under investigation by the Australian Taxation Office (ATO). But despite their regular links with unlawful deeds, there’s actually nothing innately illegal about offshore bank accounts. So let’s take a look at 10 things you may or may not know about offshore accounts and how they work. 1. How they work An offshore bank account is one that is opened and held in another country. Offshore accounts are usually held in countries with minimal tax rates or other financial benefits, but there are plenty of other reasons why you might need to open an offshore account. For example, maybe you need fast access to funds to manage an overseas investment property, or perhaps to pay for your child’s education at an overseas financial institution. Banks in countries all around the world offer accounts to attract overseas customers; some major Australian banks have dedicated units that deal with foreign customers. Our guide to offshore accounts explains how you can compare your options and choose the right account for you. 2. They’re legal Yes, you read that right – there’s nothing illegal about owning an offshore bank account. But if you don’t declare the income and earnings from that account in your annual tax return, you will find yourself on the wrong side of the law. Australian residents are taxed on their worldwide income, which includes the money they earn from overseas assets, rental properties, and of course, bank accounts. Any income earned from an offshore account must be declared in your Australian tax return, and you can claim a foreign income tax offset in Australia if you’ve already paid tax on your earnings in another country. 3. Benefits of offshore accounts The most obvious reason someone might want to set up an offshore bank account is to pay less tax, but there are plenty of other potential benefits offered by these accounts: