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We both live in Australia. I don't want him to know it's from me. But I’m not hiding from the government. I’d prefer the money to go into his bank account so he can see it's real money. I have his home address, BSB/account number, phone number & email (he might have PayID).

I could do it as a birthday present and write “no strings attached”. I obviously want him to accept/keep/use the money. Do you know any charities in Australia that forward anonymous money gifts? I know of The Give Initiative, but they're American.

I'd rather not do a cheque because I don't think he'll cash it. It's also possible that if he receives a bank transfer, he will just transfer the money back to the sender (and if he does this, obviously I want to make sure that I'm able to get the money back).

It would be perfect if I could just send him a bank transfer. But the problem is that he will see my name on the bank transfer.

I am also considering registering a business name under an Australian Business Number (ABN) so I can make a business bank account under the business name, and then transfer the money to his account from there, so he will see the business name instead of my name. I don’t know if that’s legally okay or not though. Obviously I’m not going to pretend it’s a business expense. I will admit to the government that it was a personal transaction.

I am also considering creating my own charity that forwards money gifts for anyone who wants to gift someone money anonymously, like the The Give Initiative. That way (as the charity), I could assure him that the funds are lawful and that there will be no attempt to recover them, it would discourage him from sending it back because he’d think the donor might not get the money back, PLUS just in case he does send it back, it would be guaranteed that I would get the funds back.

I am also considering another option: doing the exact same as above, but registering it as a business with an ABN (which only costs $39) instead of a charity. Businesses might be easier to set up than charities. And there's nothing wrong with me using my own business's services, right?

Ally
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7 Answers7

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Use a Lawyer

To ensure the legality and anonymity of such a transaction you should be able to use a lawyer as an intermediary without revealing your identity to the friend.

Contact a lawyer and ask them if they can act as an intermediary to allow you to gift funds to your friend without informing the friend of the identity of the donor. A lawyer should be able to do this while also arranging tax matters are handled correctly and that the documentation is enough to satisfy all parties (including the government) that the monies are legitimate and have been transferred correctly. This would avoid potential issues with e.g. money laundering laws.

A lawyer can also arrange a procedure to permit your friend to decline the gift - remember that is always a reasonable option.

StephenG - Help Ukraine
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Frame Challenge (idk if that's a thing in this SE, but I think it should be in this case)

You're concerned your friend won't accept the money if he knows it is from you, how do you know he'll accept it from anyone else? You're at least his friend after all.

I think the only real answer is convince your friend to accept the money from you, or don't gift it. If they really need it, they should swallow their pride and be grateful to have such a great friend as yourself. If they don't really need it, you should stop worrying to such a degree this much hassle sounds like a good idea.

I don't know about AU, but in the US your ideas have tax implications (read: lots of paperwork) that don't seem fun to deal with.

Obviously anyone answering here (myself) doesn't have the full context, but that's the best I can do given what I read.

TCooper
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    In Australia, there really isn't heaps of paperwork. It will probably be about 30 seconds of extra work when it comes to doing taxes (online). – Gregory Currie Jul 21 '21 at 01:38
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    @GregoryCurrie I imagine that at the very least the business idea will require some work. You will have to register a business, apply for a bank account, file a tax return for the business, prepare any documentation which businesses are required to keep by law, and finally wind down the business when the transaction and filings are done. It's all achievable but definitely not in 30 seconds. – JBentley Jul 21 '21 at 09:16
  • @JBentley Yeah, spot on. I was referring to just a flat gift, not all the other... schemes that were discussed. Will delete comment as misleading. – Gregory Currie Jul 21 '21 at 11:20
  • Frame challenge is not just a thing on SE, it's bread and butter of SE. – val - disappointed in SE Jul 21 '21 at 11:52
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    Another frame challenge (not posting as an answer, because I might be wrong) : if the OP wants to help a friend who is in a desperate situation (in a lot of debt, has medical bills to pay, etc.) but is too proud or too shy to accept help, then a solution would be to pay the debt or bill in question, instead of just giving the money to the friend. This will be less suspicious (a simple bank transfer might be seen as a mistake or a scam) and also less likely to be sent back. – vsz Jul 21 '21 at 13:28
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    @vsz this is likely impossible without details like the friends bill number which they're unlikely to provide. – JonathanReez Jul 21 '21 at 16:54
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    Another way to approach this is if the friend would unlikely accept such a large gift, tell them it's a loan and that they can pay you back when they're on their feet again. Now, the OP should only think of this as a gift and not expect to get the money back, but it may help the friend swallow their pride a bit. – David K Jul 22 '21 at 13:07
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Have you considered the gift of cash? Four hundred and ten $100 notes delivered by courier (or friend unknown to the recipient). That could be as simple as half kilo package.

Withdrawing or depositing will flag you and your friend under money laundering/ terrorism funding and it may take a while to process, but it's possible.

Alternately, you could give your friend gold, which weighs the same as its value in $100 notes.

Edit: regarding tax (IANATA) but this is what the ATO says:

Generally, you don't declare amounts you receive for: rewards or gifts on special occasions, such as cash birthday presents and gifts from relatives given out of love (however, gifts may be taxable if you receive them as part of a business-like activity or for your income-earning activities as an employee or contractor)

Source: https://www.ato.gov.au/individuals/income-and-deductions/income-you-must-declare/amounts-you-do-not-include-as-income/

If the giver paid income tax on it you can give it without paying more tax. If it's a one off gift "given out of love" it's not taxed for the recipient. The same way that birthday presents aren't taxed (other than the income tax and sales tax).

Coomie
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    Sounds like tax evasion. – henning Jul 21 '21 at 08:23
  • What are you going to put on the customs form? How are you going to insure this? Isn't this just an anonymous gift to a random postal worker instead? – pjc50 Jul 21 '21 at 08:40
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    @henning It's only tax evasion if you evade tax. Dealing in cash per se is not tax evasion. Granted that it might look like tax evasion to an outside observer, but the OP has stated they are not intending to hide anything from the tax authorities. – JBentley Jul 21 '21 at 09:41
  • Has the giver accounted for the taxes that will be due on income of $41k? – CGCampbell Jul 21 '21 at 12:24
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    @JBentley Maybe they are not trying to hide anything, but if this "gift" does come to the notice of the tax authorities, the recipient is going to be flagged for a higher level of scrutiny by the tax office for several years into the future, or even for life. A nice unexpected present, not! – alephzero Jul 21 '21 at 12:56
  • "sounds like" tax evasion in the sense that mozart "sounds like" music – Fattie Jul 21 '21 at 14:17
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    If I got a stack of anonymous cash in the mail I would assume, even addressed to my name, it was the result of some kind of criminal scheme. For example: criminal 1 wants to send money to criminal 2 anonymously, criminal 2 stakes out pre-arranged address and takes any mail that is delivered before the addressee can pick it up. For some reason crim 2 misses and now I end up with it. – llama Jul 21 '21 at 15:29
  • @henning the concern with cash is usually centered around money laundering, rather than tax evasion. But JBentley's comment still holds: It's only money laundering if it is, though it would look a lot more like money laundering if cash is used. Enough so that I would recommend not using cash, to avoid the additional scrutiny. – TTT Jul 21 '21 at 19:02
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    @Fattie Giving someone a bunch of cash is not tax evasion. Not reporting that cash as income when filing your taxes is tax evasion. Last time I bought a (used) car I paid the previous owner in thousands of dollars of cash. If he chose not to include that income (or underreported it) on his taxes then he committed tax fraud, but the same would be true if I paid him with a check, paypal, etc. – Kevin Jul 21 '21 at 22:06
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To actually answer your question: The most straightforward answer has already been posted by @StephenG - get a lawyer. It's probably cheaper in the long run and certainly much quicker and easier. Lawyers do this kind of thing all the time for all sorts of reasons - trust disbursements, will benefits, insurance payouts, property dividends, and so on, with a nontrivial amount of those either anonymous, confidential, or at least impenetrable to the common recipient.

Alternatively:

  1. Several major bank ATMs, at least in capital cities, let you deposit into the ATM with just the BSB, Account number, and the depositor's mobile phone number (which could be fake, they have no way to know). If you can make multiple smaller deposits over time (none of them will accept close to the number of bills you're talking about all at once), this would work.
  2. You can set up a Trust. The Trustee of a trust can get a bank account in the name of a trust. You can then wind up the trust once you're done with it. There is nothing complicated about a trust, but it will take a small amount of research because it's going to be a pretty arcane system to a layman. In some states you may need to pay Stamp Duty to formalize a trust.
  3. If you're loaded and have a few months, you could buy real estate, sell it, and have the settlement include a payment instruction as a disbursement. The money will come from the account of the settlement agent or lawyer. It's totally traceable by various authorities, but won't be easily traceable by your friend.
  4. So, are you two loners who are only friends with each other? You don't have one mutual friend whom you could convince to transmit the money (by cash or electronic transaction) on your behalf, and swear not to tell?
  5. Convince your friend to set up a bitcoin wallet and ... well, it's not really anonymous so much as deniable.
  6. Grab an Uber to his house (ideally from a random street corner), and when you get there, tell the driver that you want to play a prank on your friend, and you'll pay him $50 to knock on the door and hand over this envelope with all these fake bills in it, I'll be hiding right over there so that I can film his reaction. Well, it would probably work - most rideshare drivers I've met are doing it as a second (or third) job and are always happy to get easy money like that.
  7. Or, even simpler, leave the cash-filled envelope in his mailbox? There is not really any risk if no-one, least of all your friend, expects it to be there.

Some quick notes:

In Australia, there is currently nothing illegal about dealing in cash (but the government is trying to change that... https://treasury.gov.au/policy-topics/economy/black-economy/cash-rules-2019). There is no requirement that a recipient has to be able to trace a payment - only that the authorities can. And you don't have to do anything to ensure that this is possible, only financial institutions have to have rules in place https://www.austrac.gov.au/business/legislation/amlctf-act (though it is illegal for you to deliberately deceive them to prevent this - and, no-one is going to make it easy for you to do legal things that look like or could potentially be illegal).

Part of those rules include that multiple regular smaller payments over time are to be treated with the same scrutiny as a single large one. Similarly, payments just under the threshold should be scrutinized the same as payments above the threshold. (If that sounds ambiguous and ripe for loophole abuse, you'd be right: https://www.austrac.gov.au/news-and-media/media-release/austrac-and-westpac-agree-penalty, https://www.austrac.gov.au/austrac-and-cba-agree-700m-penalty)

More importantly, as far as a non-cash transfer of any kind goes, I wouldn't try it myself. I know for sure that if I received any money I wasn't expecting and couldn't identify, I'd flag it with my bank as a mistaken transaction, and they'd retrieve it. Even if they couldn't actually return it to the depositor (such as for a cash deposit), it would still be surrendered to a bank holding account.

Also, you don't have to worry about tax implications for your friend. Cash gifts are not normally taxed as income (but interest earned on it is). Not being a charity simply means that you, the giver, cannot treat it as a deduction against your own tax (like you could if the recipient was an appropriately registered charity); it has nothing to do with paying tax, only with the inability to claim tax deductions. Though in principle, it is his obligation to prove to the ATO that it is not income if they ask (but in practice, him not knowing where it even came from is significant). People give gifts, shout each other drinks, place friendly bets, and all sorts of other things all the time. Simply because gifts are cash, even if they're anonymous, does not make them illegal - only if you try to frustrate regulatory efforts to trace your payment will you have problems. You are allowed to remain anonymous to a recipient, but not necessarily anyone else who helps to facilitate a transaction.

Setting up a business is overkill compared to setting up a trust, but a charity is even worse. The legal requirements for a charity are significant in Australia. But if it's your business, there's no reason that you can't operate it any way you want (in terms of whom you choose to make payments to for whatever reason). However, keep in mind that an ABN is not necessary but also definitely not sufficient for creating a business. ABNs are specifically for GST tax purposes and the "business" you've described (i.e. making one payment for nothing) wouldn't have either GST credits or GST debits, making it pointless. It also wouldn't help to hide your name, as you'd need a registered Business Name or Trading Name (https://asic.gov.au/for-business/registering-a-business-name/) to hide your own name, but that has a public register of the name of the business owner. A Private Company can be set up, but registration (https://asic.gov.au/for-business/registering-a-company/) is still with ASIC who, while they won't provide your ownership information for free on the internet, will provide an extract of registration to anyone who will pay a couple of dollars. Basically, you'd need someone (like an accountant or lawyer) to be substituted (in the correct legal fashion, and for a fee) if your purpose is to prevent casual inspection of the ownership of a business or partnership. In short, it's not a simple or cheap option to set up a business to make a single anonymous transaction.

Akunukl
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The short answer is that it is not right that money can flow anonymously. If that is possible, that all the terrorist group will have an easy time collecting donations without traces.

My friend worked in a bank in Singapore, and someone approach them with cash to be deposited as a new account. Then after some questioning into the origin of the cash, the opening of new account was rejected. Every liquidity sources and sinks have to be traced, so that illegal activity like money laundering or corruption money can be caught easily. Some banks still have strict secrecy laws - in the name of protecting the privacy of customer, but under the hood they are just making lots of money from the underworld.

Peter Teoh
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    It's a good point, but doesn't really apply here where the OP is happy for the government and banks to know about all parties to the transaciton. They only want the recipient to not know where it came from – coagmano Jul 21 '21 at 06:40
  • @FredStark I take the implied reasoning to be that it won't be easy to achieve because the system is not designed to allow it for the reasons set out in this answer, even though in this case it might be legitimate. – JBentley Jul 21 '21 at 09:19
  • @FredStark there is something in law which you can be charged also: abetting the use of financial gains from illegal means. Meaning if you use the money passed to you from a friend, and you know that the money is gotten illegally, then it become chargeable offence. It is the responsibilty of the receiver to find out everything about the source of money - if not possible, then he is obliged to report to the police. I am not legally trained, and may be wrong, or laws differs nationally – Peter Teoh Jul 21 '21 at 09:39
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    Unless OPs money is from an illegal source, that wouldn't apply here either. Since OP knows the source of the money, so there's no need to worry about "financial gains from illegal means" – coagmano Jul 21 '21 at 09:56
  • @FredStark I think you've missed Peter Tech's point. The recipient would, per the rules of the OP, not know the source of the money and therefor possibly be obligated to report it as potential ill-gotten, or face the possibility of being charged themselves. Even if a lawyer, or other "trustworthy" entity were the giver, the recipient simply cannot 'take their word for it' that the money was completely earned above board. – CGCampbell Jul 21 '21 at 12:20
  • @FredStark See s 328(1) of the Proceeds of Crime Act 2002 for a UK example of why the recipient could still be liable. Whether or not the money actually is from an illegal source is irrelevant; it is enough that you merely suspect that it is. To avoid committing an offence in such a case you would need to make a disclosure to the authorities per s 328(2)(a). – JBentley Jul 21 '21 at 12:34
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    @JBentley but if the money is provided legitimately, a lawyer or another intermediary could provide the necessary details to the authorities after the recipient makes the disclosure, so the recipient may confirm the funds are not ill gotten, while the giver is still anonymous, no? It would require additional steps (which is why suggested my solution was to convince the friend to accept it non-anonymously or don't bother), but should technically still achieve the goal? Obviously I don't know the legal details here... but seems to work in theory, just lots of paperwork – TCooper Jul 21 '21 at 16:55
  • @TCooper Either way, bearing in mind I was replying to a comment which said "there's no need to worry about [it]", there is a potential offence here for which the recipient will need to take active steps to avoid. On a practical note however, your idea is problematic. The OP's lawyer will be bound by confidentiality not to reveal information without his client (OP)'s consent. Asking for the consent is tricky because of the "tipping off" provisions (s 333A). – JBentley Jul 21 '21 at 18:14
  • @TCooper I.e. by asking his client for consent to provide the information to the authorities, he will reveal to the client that there has been a disclosure and/or an investigation. Perhaps you could work around this by giving the lawyer the consent in advance based on a hypothetical disclosure, but we're definitely into the realms of a complicated scenario where you'd have to tread very carefully. – JBentley Jul 21 '21 at 18:15
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    @JBentley You're referencing UK law extensively for specific details that, correct me if I'm wrong, we don't know if apply exactly in AU - either way, I agree whole heartedly it's overly complicated, not worth the time, and shouldn't be bothered with. I was just saying I think it technically works - not to say you wouldn't have to be a circus elephant jumping through hoops to make it happen. I still stand by my initial answer to the question - convince your friend to accept the gift from you, or don't give the gift – TCooper Jul 21 '21 at 19:08
  • @JBentley I have thought through a scenario in my answer which does exactly what you propose. Basically, traceability is guaranteed, and only the recipient doesn't know the source. – TTT Jul 21 '21 at 19:10
  • @TCooper Agreed, I have no idea what the equivalent laws are in Australia. – JBentley Jul 21 '21 at 19:14
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One way to do this is through your local church. It might be a bit problematic if you and your friend do not attend church but that is a common way to do it here in the US. If it was me, that is how I would do it (and have done so in the past) with perhaps giving some to the pastor for his time and trouble. For a gift this size, and the potential hassle he has to go through, I would give 1K to the pastor.

I would be concerned with such a large amount. Here in the US, transactions in excess of 10K are subject to higher scrutiny because of money laundering and narcotics laws.

Could it be a lesser amount with more frequency? Could you simply deposit money into their bank account?

Pete B.
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  • Neither of us attend church, but that is an idea. Good idea with smaller amounts with higher frequency. Yes I can deposit money into his bank account, but then he will see my name on the transaction. – Ally Jul 20 '21 at 18:28
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    Concealing a large transfer "because it is subject to higher scrutiny" is itself a potential crime, called 'structuring'. Don't do it! – Orange Coast- reinstate Monica Jul 20 '21 at 22:59
  • Since when were churches never involved in illegal activities? (Note, your own post could be interpreted as "my pastor will turn a blind eye to tax evasion for a 1K bribe") – alephzero Jul 21 '21 at 13:03
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    Is this answer a joke? So, as well as Ally and the "friend" going to jail, the "pastor" will also go to jail. – Fattie Jul 21 '21 at 14:15
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Multiple people have brought up the idea that you run the risk of brushing up against laws regarding tax evasion, and money laundering. It's important to make sure you avoid these risks. Here are some ideas:

Regarding tax evasion, realize that the gift is not tax deductible, even if you were to run the payment through a non-profit intermediary such as the aforementioned "The Give Initiative", or even your own charity that you might start. If you tried to deduct the gift (personally or as a business expense) you would enter into tax evasion territory. An exception would be if you hired the recipient and paid him as a contractor or employee, but then of course he would have to pay income tax on the amount received. That being said, fortunately there aren't any tax concerns from the recipient's point of view for gifts, since in countries such as Australia (and the US as well as many others) the recipient is not taxed on gifts received, anonymously or otherwise. (And this is why it's illegal to give gifts to employees or contractors without considering them income.)

Regarding money laundering, laws are centered around detecting money obtained illegally being converted into "clean" money. (Cleaned means the original illegal source has been changed to look like a legal source.) Typically money laundering involves cash since once you enter the funds into the banking system there is a record of it in your name. Transferring money from bank to bank in a traceable way (check or wire) is a pretty good way of announcing you aren't trying to launder money, since it is easily traceable back to you, and you can be audited to confirm where the money came from. This does not necessarily change if you use a single intermediary, as long as government authorities can still easily trace the flow of money if they ever wish to. In other words, it's fine for the recipient to not know the original source of the funds, but it must be the case that if the recipient were questioned, he could reveal he received the funds from the intermediary, and the intermediary could reveal the funds were received from you. (Unless the authorities are allowed to inspect the banking transactions themselves, which is likely in some countries.)

Given that, the suggestions would be:

  1. Do not deduct the gift (or consider it a business expense, etc).
  2. Do not transfer cash.
  3. Realize that the source of the funds should be easily traced back to you (by authorities with proper access, not the recipient).
  4. Select a trustworthy intermediary, perhaps an attorney as suggested in StephenG's answer.
  5. Make sure the intermediary has enough information to convince the recipient this isn't a scam, and that the money will be returned to you if it isn't accepted.
TTT
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