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  • Foreign income of Australian residents working overseas

    How tax applies to foreign income you earn working overseas as an Australian resident for tax purposes.

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    Tax on foreign income for Australian residents

    As an Australian resident for tax purposes, you are taxed on your worldwide income. This means you must declare all income you receive from Australian and foreign sources in your income tax return.

    You may pay tax on the foreign income you receive as an Australian resident both in Australia and the country from which you receive it. You may be entitled to a foreign income tax offset, if you pay tax on foreign income in another country. For more information on these rules, see Guide to foreign income tax offset rules.

    If you are an Australian Government agency employee (and not a member of a disciplined force), you now pay tax on income from delivering Australian official development assistance (ODA). Members of a disciplined force delivering ODA are still eligible for exemption.

    You must also declare exempt foreign employment income as we may take it into account to work out the amount of tax you have to pay on your assessable income.

    Types of taxable and exempt foreign income

    The following sets out the main types of foreign income Australian residents earn for tax purposes and how tax applies to that income.

    Types of taxable and exempt foreign income

    Type of foreign income

    Assessable income

    Exempt income

    Foreign pensions and annuities

    Most foreign pensions and annuities

    Certain pensions relating to World War II

    Foreign employment income

    Other foreign service employment

     

    Foreign income – investments

       

    Foreign business income

    Income from exports of goods and services that is defined as foreign income that does not meet the branch profits condition

    Foreign branch profits of an Australian company, subject to conditions

    Capital gains on overseas assets

    most capital gains

    • Foreign branch gains of an Australian company, subject to conditions
    • Certain capital gains made by Australian companies on the disposal of their shares in foreign companies with underlying active businesses, subject to conditions.
     

    Proposed measures

    The government is continually reviewing international tax arrangements. For more information about how potential international legislative changes may affect you, refer to New legislation.

    If you need help with applying this information to your own situation, phone us on the number that best matches your situation.

    Tax treaties and exchange agreements

    Australia has tax treaties with more than 40 countries. Tax treaties are also known as tax conventions or double tax agreements (DTA). They prevent double taxation and fiscal evasion, and foster cooperation between Australia and other international tax authorities by enforcing their respective tax laws.

    Australia also has several tax information exchange agreements to promote international cooperation in tax matters through the exchange of information.

    Audit and verification checks

    We do audit and verification checks and we data match the tax information provided in tax returns with data we collect from other parties, such as:

    • banks
    • financial institutions
    • investment bodies
    • employers
    • other government agencies.

    We recommend you ensure your bank has correctly recorded all your details, such as your name, address and tax file number. This will avoid any unnecessary follow-up action being taken by Australia or another country if a discrepancy is found.

      Last modified: 09 Jun 2022QC 18313