• 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.

    Foreign income you receive as an Australian resident may be taxed in both Australia and the country from which you received it. If you have paid foreign tax in another country on foreign income you received, you may be entitled to an Australian foreign income tax offset. Refer to Guide to foreign income tax offset rules.

    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.

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    Types of foreign income and what is taxed or exempt

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

    Foreign pensions and annuities

    Income type

    Assessable

    Exempt

    Most foreign pensions and annuities

    X

     

    Certain pensions relating to World War II

     

    X

    Foreign employment income

    Income type

    Assessable

    Exempt

    Foreign services with the defence forces, police, international organisations and aid projects, subject to conditions

     

    X

    Qualifying service in respect of approved overseas projects, subject to conditions

     

    X

    Eligible duty of members of the Australian Defence Force in a specified area, subject to conditions

     

    X

    Other foreign service employment

    X

     

    Foreign investment income

    Income type

    Assessable

    Exempt

    Passive income such as interest, portfolio dividends, royalties and rent

    X

     

    Non-portfolio dividends paid to a company, subject to conditions

     

    X

    Attributed income from foreign entities

    X

     

    Dividends received by an Australian resident, sourced from profits that have been previously attributed, subject to conditions

     

    X

    Foreign business income

    Income type

    Assessable

    Exempt

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

    X

     

    Foreign branch profits of an Australian company, subject to conditions

     

    X

    Capital gains on overseas assets

    Income type

    Assessable

    Exempt

    Most capital gains

    X

     

    Foreign branch gains of an Australian company, subject to conditions

     

    X

    Certain capital gains made by Australian companies on the disposal of their shares in foreign companies with underlying active businesses, subject to conditions

     

    X

    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.

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      Last modified: 24 Aug 2016QC 18313