Every week we will break down, debunk and demystify your rights as a shopper in Australia. This week we are looking at damaged banknotes and how residents can receive what they’re entitled to.

We all know life is getting more expensive than ever before, and how important it is to stretch every dollar you make.

That’s why each week we’ll answer a question surrounding what shoppers are – and aren’t – entitled to when dealing with retailers and manufacturers.

An image provided by the RBA to indicate different kinds of damage to a banknote that may make it unfit. (Reserve Bank of Australia)

Do shops have to accept banknotes that are a little bit damaged? 

I have this $20 note that I think I received as change and it’s missing a chunk out of one corner.

No machine will accept it and I don’t want to pass it on to some small business who then will probably have trouble cashing it in.

I’m owed this $20, but it feels like I’ve been caught short with a dud! That also makes me wonder about people who draw moustaches on the face of the Queen on money?

Hi there, that’s a lot of questions!

Have no fear – there is a way that you can receive your $20 and rid yourself of that damaged note.

Shops are not obliged by law to accept banknotes that are damaged, especially as some forms of damage may arouse suspicion over whether the note is genuine.

A concept image showing a half burnt flat Australian dollar paper note still on fire. It is a criminal offence to deliberately deface Australian money. (Getty Images/iStockphoto)

The Reserve Bank of Australia (RBA) looks after banknotes in this country, not the Australian Royal Mint, which deals with coins.

The RBA is keen to remove damaged banknotes from the system, as having shoddy and worn money introduces a whole new set of problems, including a greater chance of counterfeit currency being used.

To cut a long story short – you can simply take your $20 note to your bank, and depending on how badly it is damaged, they will replace it for you.

One of the grids provided by the RBA to assess the percentage of missing banknote from a $5 note. (RBA)

Every bank is given a set of “grids” by the RBA that can determine how much a damaged banknote is worth.

If you only have half a $20 note, well then you’ve only got $10.

This is roughly how it pans out:

If less than 20 per cent of the banknote is missing: Full face value is paid.

If between 20 and 80 per cent of the banknote is missing: The value is paid in proportion to the percentage remaining, for example, $5 value for half of a $10 banknote.

If more than 80 per cent of the banknote is missing: No value is paid.

Damaged or torn banknotes doesn’t mean you’ve lost your money. (Getty Images/iStockphoto)

If it’s more than $1000, you’ll also have to prove your identity.

Oh and drawing a moustache on the Queen? Well, that’s actually illegal under the Crimes (Currency) Act 1981.

If you intentionally deface, disfigure, mutilate or destroy an Aussie banknote, you could be looking at a maximum penalty of $5000 or two years in prison – or both!

Do you have a Money Matters question you want answered? Contact Stu via [email protected].

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.

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