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Foreign employment income

What you need to know about how Australian tax applies to foreign employment income.

Last updated 25 October 2016

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, wages, commissions, bonuses, allowances and income assessed under the employee share scheme provisions.

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 if you are an Australian resident for tax purposes.

Australia also has comprehensive tax treaties with over 40 countries, which provide for the exchange of information about income Australian residents earn overseas and income foreign residents earn in Australia.

Completing your tax return

You will need to include any foreign income that is subject to tax as assessable income in your tax return for the year you earned it. If you have paid foreign income tax on your foreign employment income, you may be eligible to claim a foreign income tax offset (FITO) to relieve double taxation.

You must also include all foreign employment income that is exempt from Australian tax in your Australian income tax return. However, there are two exceptions, do not 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.

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See also:

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.