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  • Foreign income of Australian residents working overseas

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

    Find out about:

    Tax on foreign income for Australian residents

    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 an Australian foreign income tax offset, if you pay tax in another country on foreign income you receive. Refer to 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 foreign income that is exempt from Australian tax as we may take it into account to work out the amount of tax you have to pay on your assessable income. For information about exempt foreign employment income you should not include in your tax return, refer to Exempt foreign employment income.

    See also:

    Types of foreign income and what is taxed or exempt

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

    • Foreign pensions and annuities  
      • Assessable income  
        • most foreign pensions and annuities
      • Exempt income  
        • certain pensions relating to World War II
    • Foreign employment income  
    • Foreign income – investments 
      • Assessable income  
        • passive income such as interest, portfolio dividends, royalties and rent
        • attributed income from foreign entities
      • Exempt income  
        • non-portfolio dividends paid to a company, subject to conditions
        • dividends received by an Australian resident, sourced from profits that have been previously attributed, subject to conditions
    • Foreign business income  
      • Assessable income  
        • income from exports of goods and services that is defined as foreign income that does not meet the branch profits condition below
      • Exempt income  
        • foreign branch profits of an Australian company, subject to conditions
    • Capital gains on overseas assets  
      • Assessable income  
        • most capital gains
      • Exempt income  
        • 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 referred to 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 has also entered into a number of tax information exchange agreements to promote international cooperation in tax matters through the exchange of information.

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    Audit and verification checks

    We do audit and verification checks and we match the tax-related 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.

    See also:

      Last modified: 21 Jun 2021QC 18313