What is foreign employment income
Foreign employment income is income you derive as an Australian resident working overseas as an employee. Foreign earnings includes income you earn such as:
- salary or wages
- commissions
- bonuses
- allowances
- income assessed under the employee share scheme provisions.
How tax applies to foreign employment income
Australian residents are generally taxed on their worldwide income, whereas foreign residents are generally only taxed on their Australian-sourced income. To understand your tax situation, you must first work out your tax residency.
Australia has comprehensive tax treaties with over 40 countries. These provide for the exchange of information about income that Australian residents earn overseas and foreign residents earn in Australia.
For more information about sole taxing rights under a tax treaty and exempt foreign employment income, refer to Tax Determination TD 94/58 Income tax.
Completing your tax return
You need to include any foreign employment income that is subject to Australian tax as income in your tax return for the year in which you earned it.
If you paid foreign income tax on your foreign income, you may be eligible to claim a foreign income tax offset (FITO) to relieve double taxation.
You must also include in your return all foreign employment income that is exempt from Australian tax, with 2 exceptions. Don't include income that is exempt due to:
- a privileges and immunities agreement, or a law covering people connected with international organisations
- specific exemptions for the pay and allowances of members of the Australian Defence Force, related to qualifying service in a specified area.
Find out more about:
- Working overseas
- Coming to Australia or going overseas
- Foreign service and foreign earnings
- Foreign and worldwide income
- International tax for business.