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  • Foreign income

    If you're an Australian resident for tax purposes, you are taxed on your worldwide income. You must declare any foreign income in your income tax return. You may receive foreign income from:

    • pensions and annuities
    • business activities
    • employment and personal services
    • assets and investments
    • capital gains on overseas assets.

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    Your foreign income could be subject to double taxation if tax is withheld in the source country. To overcome this, Australia has a system of credits and exemptions and has signed tax treaties with more than 40 countries. This includes all our major trade and investment partners.

    Since September 2018, we receive and exchange financial account information with participating foreign tax authorities. This ensures Australian residents with financial accounts in other countries are complying with Australian tax law. You could receive penalties and interest charges if you do not declare your foreign income.

    If you're not an Australian resident for tax purposes, you are only taxed on your Australian-sourced income. You generally don't need to declare income you receive from outside Australia in your Australian tax return.

    If you have a Higher Education Loan Program (HELP), Trade Support Loan (TSL) or VET Student Loan (VSL) debt and you're a non-resident for tax purposes you'll need to either:

    • declare your worldwide income
    • lodge a non-lodgment advice.

    You can do this using ATO online services via myGov, or through a registered Australian tax agent.

    Your worldwide income may include income that we've asked you to ignore for determining your income tax obligations.

    For a summary on income derived from overseas, download Foreign income (PDF 642KB)This link will download a file.

    Income from employment and personal services

    If you have worked overseas or provided services to an organisation located outside of Australia, you will need to declare all relevant income as if it were earned in Australia. This may include:

    • salary and wages
    • directors fees
    • consultancy fees
    • business income
    • any other remuneration.

    For information on some specific circumstances in which the foreign salary is exempt, see:

    Income from assets and investments

    If you own assets or investments overseas, including offshore (overseas) bank accounts, you will need to declare all relevant returns as if they were in Australia. This may include:

    • interest from bank deposits or bonds
    • dividends from shares
    • royalties from intellectual property
    • rental income from real estate
    • pensions, annuities and lump sums from managed funds
    • income streams from super funds
    • some government pensions.

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    Capital gains on overseas assets

    If you own an asset overseas, you may have to pay Australian tax when you sell the asset. You need to keep appropriate records.

    If you acquired an overseas asset before you became an Australian resident, you are taken to have acquired the asset when you became an Australian resident.

    Similarly, if you stop being an Australian resident while holding an overseas asset, you are deemed to have disposed of that asset when you stop being an Australian resident.

    To accurately calculate the capital gain or loss, ensure you keep a record of the value of your asset at these times. This is a complex area of tax law and exemptions may apply.

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    Considerations for foreign income

    Tax paid on income overseas

    If you have already paid tax in the country that you have derived the income from, you may be able to claim a foreign income tax offset.

    To be eligible for a foreign income tax offset, you must:

    • have paid the tax on the income overseas
    • have records to prove that the tax has been paid.

    The offset amount you are entitled to will not always be the same amount of the tax paid overseas. If you are claiming more than $1,000, you will first need to work out your foreign income tax offset limit to determine your entitlement.

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    Convert foreign income to Australian dollars

    You must convert all foreign income, deductions and tax offsets to Australian dollars in your tax return.

    Depending on your circumstances and the type of income, you will need to use either the:

    • specific prevailing exchange rate
    • average exchange rate.

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    Apportion foreign income

    Unlike Australia, most countries do not have an income year ending on 30 June. You may need to report your foreign income and associated tax offsets in multiple tax returns in Australia.

    You will need to determine which tax years the income amounts align to and apportion them accordingly.

    See also:

    Last modified: 15 Jun 2020QC 31917