DAMAGED NOTES

The Reserve Bank of Australia (RBA) aims to have only good quality notes in circulation. This helps to maintain confidence in Australia’s currency by making it more difficult for counterfeit notes to be passed or remain in circulation.

It is not possible to remove damaged notes from circulation immediately any damage becomes obvious – nor is it necessary when the damage is only minor. Minor damage does not prevent ongoing use of a note or affect its value. The RBA works with banks, other authorised deposit-taking institutions such as building societies and credit unions, and cash centre operators such as armoured car companies to remove damaged notes from circulation as soon as practicable.

A genuine note that has become worn or sustained minor damage in circulation can be exchanged for full face value. These notes are classified as unfit notes and may have small pieces missing or small holes (less than 20 per cent of the note missing in both cases), have been torn, have heat damage affecting less than 20 per cent of the note, have adhesive tape on them or have been stapled or defaced. These notes can continue to be offered and accepted in transactions because they are worth full face value. The RBA asks banks, other authorised deposit-taking institutions and cash centre operators, to remove unfit notes from circulation when they are returned to them by their customers.

When damage to a note is such that a piece of the note is missing, i.e. the note is incomplete, the RBA needs to take into account the possibility that both pieces may be presented for value separately. It is clearly not sustainable to exchange each of the pieces for full face value. If two people have two pieces of the same note, the RBA’s policy is that the most equitable outcome is for each person to receive a share of the value equal to the proportion of the note they hold. The combined value paid should be the face value of the original note.

The RBA adopts the following policy1 for determining the value of damaged notes where pieces are missing:

Banks and other authorised deposit-taking institutions are authorised by the RBA to accept, assess and pay value for incomplete notes presented to them, and most do that. Assessed value is based on the surface area of the note remaining, rounded to the nearest dollar. The RBA provides grids to banks and other authorised deposit-taking institutions to assist them with calculation of value of incomplete notes. An Incomplete/Badly damaged/Contaminated Australian Note(s) Claim Form must be completed by the holder of incomplete notes when they are presented for assessment/payment. Because full face value is not paid on incomplete notes, care should be taken when accepting such notes. There is no obligation to accept an incomplete note when offered in payment/change.

Notes with unusual damage such as severe heat damage (affecting 20 per cent or more of the note), contamination from blood, chemicals or other substances, or badly damaged notes where the value or genuineness is in doubt are classified as badly damaged/contaminated notes. These notes need to be returned to the RBA via banks or other authorised deposit-taking institutions for assessment/evaluation. The RBA pays the appropriate value for such notes after assessment/evaluation. Assessment/evaluation is based only on the visual presence of a note. If, for example, a note is totally reduced to ash in a fire, no value is paid. If part of a note remains, the value is determined on the same basis as for incomplete notes. An Incomplete/Badly damaged/Contaminated Australian Note(s) Claim Form must be completed when badly damaged/contaminated notes are accepted for on-forwarding to the RBA.

Claims of $1,000 or more presented to the RBA should be accompanied by an Identification Reference Form.2 The RBA provides Identification Reference Forms for individuals, Australian companies, associations, and co-operatives, and government bodies. Other types of entities (foreign companies, associations, and co-operatives, trusts, and partnerships) may make claims through their bank or authorised deposit-taking institution, or contact the RBA to discuss the required documentation. An Identification Reference Form is not required if the claimant has previously completed this form.

Incomplete and badly damaged/contaminated notes may also be presented at the RBA’s branches in Canberra and Sydney or they may be sent to the RBA at the following address accompanied by a completed Incomplete/Badly damaged/Contaminated Australian Note(s) Claim Form and the relevant Identification Reference Form:

The Manager, Processing
National Note Processing and Distribution Centre
Note Printing Australia Ltd
PO Box 21
CRAIGIEBURN VIC 3064

Claims forwarded to the National Note Processing and Distribution Centre by mail are sent at the risk of the sender. The RBA accepts no responsibility for claims until they are received at the Centre.

The RBA provides to banks, other authorised deposit-taking institutions and cash centres a Note Sorting Guide which details additional information on the sorting of notes.

Common questions about damaged notes, which are answered in the Frequently Asked Questions About Notes section of this website include:

What should I do if I have a damaged note?
Should I accept a damaged note offered to me in payment/change?
What are unfit, incomplete and badly damaged/contaminated notes?
Are damaged notes worth full face value?
Is the serial number used when assessing the value of damaged notes?

If you require further information about damaged notes or note sorting, please contact the RBA:

or write to

The Head of Note Issue
Reserve Bank of Australia
GPO Box 3947
SYDNEY NSW 2001

Footnotes

1. This policy has applied since March 2004. Prior to that time, the value of incomplete notes was assessed as follows: (back to text)

2. The requirement to verify the identity of customers is a result of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). The part of the Act requiring customer identification commenced on 12 December 2007. (back to text)