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  • Reporting your foreign employment income

    You must report all your foreign employment income in your Australian tax return, irrespective of whether it is assessable or exempt.

    Foreign employment income is income earned by an Australian resident working overseas as an employee. It includes salary, wages, commissions, bonuses and allowances. Your foreign employment income may be paid by an overseas or an Australian employer.

    Some foreign employment income (such as income from overseas defence, police or other official service) is exempt from Australian tax. You must still report this exempt income in your tax return, as it may be taken into account in working out the amount of tax you have to pay on your total assessable income.

    Your Australian employer must withhold tax from non-exempt foreign employment income if they continue to pay you while you are overseas.

    If your foreign employer is not registered for Australian PAYG withholding it is unlikely that they will withhold any amounts for Australian tax purposes from payments to you. You will have to report your total earnings in your Australian tax return.

    If any foreign tax has been paid on your overseas income and it is not exempt foreign employment income, you add the foreign tax back to your net employment income (called grossing up) to determine the assessable amount.

    You may be able to claim a foreign income tax offset for the tax you have already paid. Include the income in your tax return as 'Assessable foreign income'.

    When completing your tax return you must convert all foreign income, deductions and foreign tax paid into Australian dollars.

    Example

    Lachlan was employed in a foreign country from 15 October 2008 until 23 April 2009. During the period of his foreign employment, Lachlan earned A$11,250 after he paid A$3,750 in foreign tax and incurred work-related expenses for which he could claim a deduction of $A500 in relation to his foreign employment.

    After adding back the foreign taxes, Lachlan would have assessable foreign income of A$15,000. After claiming a deduction for his expenses, Lachlan would have net foreign employment income of A$14,500.

    Further Information

    Find out more

    Converting foreign income to Australian dollars

    End of further information
    • Last modified: 29 Jul 2013QC 33210