Entrepreneurs who have built a business in China, Hong Kong or Southeast Asia often want to bring part of what they have earned to Australia: to fund a new venture, support children studying or settling here, or buy property. Many are surprised by how many questions Australian banks and lawyers ask.
This article explains, in general terms, why those questions are asked and the issues to raise with your advisers. It does not explain how to move money. The starting point is simple: the transfer must comply with the laws of the country the money leaves and with Australian law.
Why Australian banks and lawyers ask about source of funds and wealth
Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act 2006 requires banks and other reporting entities to identify customers, understand transactions and report suspicious matters to AUSTRAC. “Source of funds” asks where this particular money came from. “Source of wealth” asks how the person built their overall wealth.
From 1 July 2026, the reforms commonly called Tranche 2 extended AML/CTF obligations to certain services provided by lawyers, conveyancers, accountants and real estate professionals. Your lawyer may now be legally required to verify who you are and who ultimately owns or controls the entities involved, and in some cases to understand where the money comes from, before acting. These questions are not a judgment about the client. Our separate articles on source of wealth checks and on the Tranche 2 obligations explain these in more detail.
The money must comply with the laws of the country it leaves
Some countries, including China, restrict or regulate cross-border transfers of money by individuals and businesses, and may require approvals, filings or specific channels. Whether a proposed transfer is permitted is a question of that country’s law, and local legal advice is needed. We do not advise on those laws or on ways around them. Where a client’s money is coming from overseas, we work with lawyers in that country on any outbound approvals and coordinate the Australian side.
Australian banks may decline, delay or report a transfer if they are not satisfied about its origin, and funds that left another country in breach of its laws can create risk for the recipient here.
Documentation that usually matters
The aim is a consistent paper trail from how the wealth was earned to the Australian account. This may include:
- business records showing the income, such as company accounts, dividend resolutions and tax returns or tax payment records in the country of origin;
- contracts and settlement statements for the sale of a business, shares or property;
- bank statements showing the money moving through each account;
- evidence that any outbound approvals or filings were completed; and
- certified translations of foreign-language documents.
Gaps and inconsistencies, more than the amount, usually slow a transaction.
Tax residency and foreign income
An Australian tax resident is generally taxed on worldwide income, with possible relief for foreign tax paid, while a non-resident is generally taxed only on Australian-sourced income. Residency depends on several tests, and a person may also remain a tax resident of another country.
The character of each amount matters. Australia and China both exchange financial account information under international reporting standards, so the ATO may already know about overseas accounts. Advice from a registered tax agent, working with tax advisers in the other country, is important.
Gifts and loans from overseas family
Australia generally has no gift tax, and a genuine gift is not usually income of the person who receives it. A genuine loan is also not income. The ATO has, however, publicly warned about arrangements where assessable income is mischaracterised as a gift or loan from a related overseas person or entity (Taxpayer Alert TA 2021/2), and it may ask questions where a large amount arrives from overseas.
What matters is substance and evidence. A gift may be supported by a deed of gift and records of the donor’s own source of wealth. A loan should be in a written agreement setting out repayment and interest, and the parties should actually follow it. The choice also has family law and estate planning consequences, which our separate articles on parents funding a child’s home and on family loans and gifts discuss.
Distributions from foreign trusts
Distributions from a foreign family trust to an Australian resident may be taxable under rules including section 99B, depending on their character. Our separate article on foreign trust distributions explains this.
Using the funds to buy property
Foreign persons generally need foreign investment approval to buy residential land in Australia. Under current Government policy, foreign persons are generally banned, with limited exceptions, from buying established dwellings: the ban began on 1 April 2025, and the Government announced in the 2026–27 Budget that it would be extended to 30 June 2029. FIRB guidance now reflects that date as Government policy, so the current position should be checked at the time of purchase. States, including Victoria, also impose duty and land tax surcharges on foreign purchasers and owners, and vacancy obligations may apply. Whether a buyer is a “foreign person” can depend on visa status and, for companies and trusts, on who holds interests.
Why informal money transfer channels are a legal risk
Informal or unregistered money transfer channels carry serious legal risk. Remittance businesses operating in Australia must be registered with AUSTRAC, and dealing with unregistered providers can expose a customer to having funds frozen, accounts closed or transactions refused. In Australia, dealing with money that may be the proceeds of crime, or deliberately breaking up transactions to avoid reporting, can be a criminal offence. We do not assist with informal channels, and anyone who has already used one should get legal advice before taking further steps.
A hypothetical scenario
Consider a founder who sold part of her business in China and wanted to help her son buy a home in Melbourne. Questions arose about the outbound approvals, whether the son was a foreign person, whether the money for the home should be a gift or a loan, and what records the bank and the conveyancer would need. The right approach depended on facts that needed advice.
Questions to discuss with your adviser
- Does the transfer comply with the laws of the country the money is leaving, and who is advising on that?
- Can we show a clear trail from how the wealth was earned to the Australian account?
- Who is the Australian tax resident, and how will the money be treated for tax?
- Should funds to a family member be a gift or a loan, and how should it be documented?
- If buying property, is the buyer a foreign person, and what approvals and surcharges may apply?
Frequently asked questions
Is it legal to transfer money to Australia from China?
It can be, but the transfer must comply with Chinese law, which regulates cross-border transfers, as well as Australian law. Whether a particular transfer is permitted needs advice from a lawyer in China.
Why does my lawyer need to know my source of funds?
Since 1 July 2026, lawyers providing certain services have AML/CTF obligations, including customer due diligence.
Do I pay tax on a gift from my parents overseas?
A genuine gift is not generally income in Australia, but the ATO may ask questions about large overseas gifts.
Every family’s situation is different, and the answer often turns on details. Book a consultation so we can review your documents and circumstances before you act.
How Chua Tan Associates can help
Chua Tan Associates helps entrepreneurs and families bring business income and wealth into Australia lawfully and transparently. We document gifts, loans and capital contributions, act on property purchases and company set-ups, and work with lawyers in the country the money comes from on outbound approvals. Justin Chua trained in accounting (Bachelor of Commerce, accounting major) and worked in finance in Hong Kong before law. We work alongside the client’s accountant and registered tax agents, and advise in English, Mandarin and Cantonese.
Important: This article is general information only and must not be relied on. It is not legal, tax or financial advice, does not take your circumstances into account, and may not reflect changes in the law after publication. Laws of other countries may also apply. Do not act or refrain from acting on the basis of this article. Reading it or contacting us does not create a lawyer–client relationship. Please book a consultation for advice on your situation.
Related reading
Chua Tan Associates acts for families, executors, trustees and their professional advisers in estate planning, estate administration and estate disputes in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice.
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