Moving to Australia permanently
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How tax works in Australia
If you migrate to Australia and intend to reside here permanently, you are an Australian resident for tax purposes. This means:
- You must declare income you have earned from anywhere in the world in your tax return.
- You can also claim the benefits of the Australian tax system, such as:
- the tax-free threshold
- tax offsets
- generally lower tax rates than a foreign resident.
Before you start working in Australia, or soon after, you may need to get a tax file number (TFN). The main tax you will pay is income tax. This is charged on income you receive, such as salary and wages, investment income and business income. At the end of the income year (30 June), most people must lodge an annual tax return.
You can get a registered tax agent to advise you on tax and prepare and lodge your tax return for you.
These agents are the only people allowed to charge a fee to prepare and lodge your tax return. They must be registered with the Tax Practitioners Board and follow strict regulations.
Annuities, pensions and superannuation from your previous country
Most Australian residents must pay tax on foreign pensions and annuities. This is the case even if the country that made your payment has already withheld tax from it.
You may be entitled to deduct the part of your annual pension or annuity income that represents your personal contributions being returned to you. This is called the undeducted purchase price.
You may claim a foreign income tax offset if your foreign pension or annuity is taxed both in Australia and in the country that paid it.
Pensions and annuities are usually taxable only in the country of residence of the recipient. If your payment has also been taxed in a country with which Australia has a tax treaty, you may be entitled to a refund of that tax from that country. You may also be able to arrange not to have tax withheld from future payments from that country. You can do this by supplying a tax relief form or a certificate of residency or status.
You may be able to transfer super from a foreign super fund to a complying Australian super fund or yourself. Whether you can make these transfers will depend on the rules of the super fund you are making the transfer from.
If you transfer super, you pay income tax on any earnings on your foreign super that have accrued since you became an Australian resident or terminated your foreign employment. But you don't have to pay any tax if you make the transfer within six months of either of these events.
Overseas properties you own
As an Australian resident, any income or capital gains you make from your overseas properties is generally taxable in Australia. It must be declared in your Australian tax return. If you have paid tax in another country on that income or gain, you may be entitled to a foreign income tax offset.
Offshore bank accounts
Some tax authorities in other countries don't require you to report interest earned overseas, but we do. If you hold bank accounts in other countries, you must report any interest or other income earned from these accounts in your Australian income tax return. You may have to pay additional charges if you don't do this.
Example: Offshore bank account
Javed came to Australia as an overseas student. Having completed his degree, he became a permanent resident under the skilled migration program. He visits his relatives in India every year and has left his Indian bank account open for easy access to local funds.
When preparing his first tax return as a permanent resident, Javed reads on our website that bank interest from offshore accounts is taxable in Australia. He discloses the interest that has accrued in his account in India over the year.
We receive information from the Indian Department of Revenue about interest payments as part of the Automatic Exchange of Information program. Javed’s name appears in the data. The interest amount reported is consistent across the two sources. Javed is complying with his tax obligations, so we take no follow-up action.
End of example
If you migrate to Australia and intend to reside here permanently, you are an Australian resident for tax purposes. This means you must declare income you have earned from anywhere in the world in your tax return, and you can also claim the benefits of the Australian tax system.