Double tax agreement (DTA)
If you're living overseas and receiving income from an Australian payer, you may be covered by a double tax agreement (DTA) under the International tax agreements.
DTA’s help prevent foreign residents from being taxed twice on the same income and provide a tax relief mechanism. They also promote cooperation between Australia and international tax authorities by supporting the administration and enforcement of each country’s tax laws.
The full list of our tax treaties is maintained by The Treasury and can be found at Australian tax treatiesExternal Link.
Residency requirements for a PAYG withholding variation
To be eligible for a PAYG withholding variation, you must meet the Australian tax Residency tests. These include:
- Resides test
- Domicile test
- 183-day test
- Commonwealth superannuation test.
These tests help determine whether you are considered an Australian resident for tax purposes.
Factors to consider
Rental income
If you have rental property or rent out your home whist living overseas, the rental income is considered Australian sourced income, and you will still be required to lodge an Income tax return in Australia.
This includes formal and domestic arrangements where the property is rented out to family and friends, whether for commercial rates or at less than those rates.
Study and training support loans
Higher Education Loan Program (HELP – previously known as HECS), Australian Apprenticeship Support Loan (AASL – previously known as TSL) and VET Student Loans (VSL) are considered under worldwide income. Even though they are not taxable in Australia, they can still create repayment obligations if you earn over the HELP/AASL/VSL repayment threshold.
When processing your application, your net rental income and any amounts payable for HELP/AASL and VSL are taken into consideration in the reduced withholding rate.
Processing your PAYG withholding variation application as a foreign resident
To ensure your application is processed correctly for your circumstances, you need to include the following information when lodging your application:
At Reasons for lodgment:
- Select Other reason – excess withholding (12A2).
- In the free text field, enter
- 'non-resident for Australian tax purposes'
- the relevant DTA, and
- any other relevant information.
If your residency status is more complex and you have a private ruling, you must also include your private ruling number (provided by the ATO once residency is determined).
Your income must be entered in the:
Payers screen at payment type:
- Other (specify), with Specify details ‘non-resident for tax purposes’, and Prepare application screen:
- All income is to be entered into the applicable income fields in the Work and services, employment and compensation related payments screen.
- Enter $1 in the Other payment amount field with ‘non-resident for Australian tax purposes’ in the Specify details field.
If you receive rental income, complete all details in the Rent screen.
Further information you may need to provide to support your application
We may seek additional information from you before your application is processed. If you fail to provide this or there is some doubt of entitlement to a deduction, residency status or all information hasn’t been provided, we may not be able to grant a variation
We may request the following information or supporting documents from you:
- residency questionnaire
- employment contract – or evidence of overseas working agreement provided by the employer
- travel records (confirming no presence in Australia/183 days rule)
- VISA information
- work logs or location evidence
- evidence that you have declared your income, lodged the relevant tax return and/ or paid tax in your country of residence.