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I have recently emigrated to Australia as a PR. Am I eligible to drive upon arrival in Australia and can I transfer my driver's license from Alabama to Northern Territory?

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According to the Department of Transport:

A person may use their interstate or overseas issued driver licence to drive in the NT for a period of up to 3 months. After this time you must hold a Northern Territory issued driver licence.

That page also describes what is required to transfer an overseas licence. Briefly, you must:

  • provide a valid and current overseas driver licence
  • pass an eyesight test
  • provide completed form L1- Application for a Northern Territory Driver/Rider Licence.'
  • provide Evidence of Identity and Residency.
  • Pay the relevant fee for a 1-5 year licence

Although the above information appears on a page titled "Heavy Vehicles", it seems to apply to car and motorcycle licences.

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If you're arriving as a resident, you have three months to change your license, and can use your overseas license during that time.

The Northern Territory Department of Transport has a page describing the process after that: Transfer Overseas License.

This mentions that a theory and practical test is required, if you do not have a valid and current license from "a recognised country".

The recognised countries are listed on Leaflet L15 (pdf).

The list does include the whole of the USA (it's not broken down by state), as well as Canada and many Western European countries (among others). So your Alabama license will be recognised. If you have held it for under a year if over 25, less than two years if younger than 25, you'll only get a provisional license.

There's a separate list of countries on that document where over-25's only don't need testing, these are mostly Eastern European countries.

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