What to do about the rising Australian Dollar

There are a very few groups more affected by the rising Australian dollar than Australia expats and migrants to the Australia. We believe there is a veritable "mountain of money" sitting offshore waiting for a better exchange rate - and this has been the case for two or three years - imposing enormous costs on individuals and families. The financial cost has been twofold; if anything the exchange rate has worsened over the period, and often the funds which have been in cash have sat in bank accounts earning virtually nothing.

There is no silver bullet to resolve the situation, but just a few comments that might be helpful in some situations.

1. If your pension funds are waiting for a transfer into Australian superannuation, one alternative is to make a transfer and retain funds in your current currency, eg. USD or GBP within your superfund. Any improvement in the exchange rate which leads to foreign currency gains is then clearly made within a lower tax regime. Those funds could also be used to purchase shares and other investments in that currency rather than sitting in low interest-bearing deposits. It may also be much easier to exchange the funds into AUD when (and if) the exchange rate improves. Typically, you will need a self managed superannuation fund (SMSF) for this flexibility, but it is becoming available in a number of other superannuation funds.

2. If you are resident in Australia, you could consider bringing their money back and using it to pay off entirely or partially any mortgage you may have on the family home. You can then re-mortgage the family home and use those funds to purchase the same exposure in the overseas currency - in shares, bank deposits or other investments. In this manner you maintain your exposure to the foreign currency overseas but at least the interest costs should be deductible. Obviously you must obtain advice from a tax advisor/financial planner to confirm this approach works in your situation, and then to assist you in putting the approach into practice.