Can you use damaged banknotes?

What to do if you’re given a note with staples, stains, holes or tears.

With an Australian banknote staying in circulation for up to 10 years, you’re likely to come across a note that’s worn or has staples, stains, holes or tears.

The Reserve Bank of Australia works with banks and authorised deposit-taking institutions (ADI), such as building societies or credit unions, to remove damaged notes from circulation as soon as possible.

Unfit banknotes

A note that’s worn or has minor damage, such as tears, staples, worn ink, holes or heat damage, are classified as unfit.

These notes can continue to be used but will be removed from circulation when they end up at a bank or ADI.

Incomplete banknotes

A note with a significant piece missing is classified as incomplete and may not be worth its full face value.

The Reserve Bank stipulates that the value of an incomplete bank note is proportional to the part of the note remaining:

If less than 20% of the banknote is missing.   Full face value is paid. 
 If 20-80% of the banknote is missing.  Value is paid in proportion with the percentage remaining, e.g. $5 value for half of a $10 banknote.
If more than 80% of the banknote is missing.   No value is paid.

As full face value is not paid on incomplete notes, there is no obligation for you to accept an incomplete note as payment or change.

Badly damaged or contaminated banknotes

A banknote that has significant or unusual damage is classified as badly damaged or contaminated.

These notes may have damage that prevents the verification of security features or be contaminated with substances such as chemicals or blood.

The value of a badly damaged or contaminated note is based on visual assessment of each individual note. 

What do I do if I have a damaged banknote?

Take any damaged notes to your bank or ADI for assessment and reimbursement of the value of the note. 

Incomplete and unfit notes can be assessed on the spot but badly damaged or contaminated notes will need to be sent to the Reserve Bank for assessment.

You will need to fill in a claim form for incomplete or damaged/contaminated notes detailing how the damaged occurred or, if you received the damaged note as change, the shop it came from.

The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.