In this publication, foreign resident is the same as non-resident.
If you are working in Australia, you need to work out whether you are an Australian resident for tax purposes. Foreign residents pay tax differently from residents.
Australian residents
If you are an Australian resident, you will need to report on your tax return all your:
- Australian income - except Australian-sourced interest, dividends and royalties you derived before you became an Australian resident from which non-resident withholding tax has been withheld
- foreign source income you derived from the date you became an Australian resident.
The Australian income year ends on 30 June. You need to lodge your tax return by 31 October, unless you have been granted an extension. You will have to pay more tax if you didn't pay enough while you were working. If too much tax was withheld from your pay, you will get a refund.
Not an Australian resident
If you are not an Australian resident, you must lodge a tax return and report all your:
- Australian income, except any income from which non-resident withholding tax has been withheld - that is, interest, unfranked dividends or royalties
- franked dividends.
Your tax rate will be different to the rate that applies to Australian residents and interest payments from your Australian bank account will have tax withheld.
Most working holidaymakers who visit Australia for less than six months are not Australian residents for tax purposes. However, if you have been paid a salary or wages in Australia, you must lodge a tax return.
It can take up to six weeks to process your tax return, so make sure you write an address on your tax return where we can send your notice of assessment.
If you are a foreign resident, you will pay tax differently from residents:
- You will pay tax at non-concessional rates on all salary and wage income you earn in Australia.
- Your Australian financial institution will withhold 10% of any interest you earn in the accounts you hold with them - you don't need to include your Australian interest in your assessable income; however, you need to advise your Australian financial institution of your overseas address or they must withhold 45% of any interest you earn.
- You will not pay the Medicare levy - generally, you are also not entitled to claim Medicare benefits.
- You are not entitled to the tax-free threshold.
- You will have tax withheld from unfranked dividends, so you need to advise the Australian company of your overseas address so they can withhold the tax at the correct rate or they will have to withhold 45% of your unfranked dividend income - no tax is withheld from franked dividends as the company has already paid tax on your behalf and you don't include your dividends in your assessable income.
- You are not entitled to claim certain tax offsets or tax credits that are available to residents.
- You must show any Australian rental income on your tax return.
- You will have foreign resident withholding (FRW) tax withheld for particular types of activities, such as payments
- for promoting or organising casino gaming junket arrangements
- for entertainment and sports activities
- under contracts for the construction, installation and upgrading of buildings, plan and fixtures and for associated activities.
If you are working in Australia and your monthly wage is more than A$450, your employer will generally contribute an amount equal to 9% of your wage into a superannuation account for you.
Temporary residents who work in Australia and have super contributions paid by their employer are entitled to receive their super benefits once they leave Australia. This payment is called a departing Australia superannuation payment (DASP).
To lodge a tax return, you will need a tax file number (TFN). This is a unique number we issue to individuals and organisations for identification and record keeping purposes.
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To find out how you can:
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If your status has changed from foreign resident to resident during the income year, answer 'yes' to the question on your tax return 'Are you an Australian resident?'. This ensures you will be taxed at resident rates for the income year. Your foreign residency for part of the year is taken into account by a reduction in your tax-free threshold. You are entitled to a pro rata tax-free threshold for the number of months you were an Australian resident.
To claim a tax offset for a dependent spouse, both you and your spouse must be Australian residents for tax purposes. You will need to reduce your claim to take into account the period you were both foreign residents of Australia.
Foreign resident of Australia are not required to pay the Medicare levy. You can claim the number of days that you are not an Australian resident during an income year on your tax return as exempt days.
You will need to include on your tax return the foreign source income you derived from the date you become an Australian resident. Any Australian-sourced interest, dividends and royalties you derived before you became an Australian resident are subject to the withholding tax provisions, so you should not include them on your tax return.
If you are a foreign resident of Australia for tax purposes, and you earned salary and wage income, business income, or rental income from an Australian source, you may be required to lodge a tax return.
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To work out whether you need to lodge a tax return:
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Proposed measures
The government continually reviews international tax arrangements. For more information about how potential legislative changes may affect you, refer to New legislation.
Contact us
If you need help applying this information to your own situation, contact us by phone.
You can phone us from overseas on +61 2 6216 1111 between 8.00am and 5.00pm (Australian Eastern Standard Time), Monday to Friday except national public holidays.
You can also fax us on +61 2 6216 2830.
Last Modified: Monday, 7 January 2013