If you're an Australian resident for tax purposes, you need to declare all income earned both in Australia and overseas on your Australian tax return (even if you've already paid tax on it overseas).
If you've paid foreign tax on income in another country, you may be entitled to an Australian foreign income tax offset.
Generally, we consider you to be an Australian resident for tax purposes if you:
- have always lived in Australia or you have come to Australia and live here permanently
- have been in Australia continuously for 6months or more, and for most of that time you worked in the one job and lived at the same place
- have been in Australia for more than 6 months of the year, unless your usual home is overseas and you do not intend to live in Australia
- go overseas temporarily and you do not set up a permanent home in another country
- are an overseas student who has come to Australia to study and are enrolled in a course that is more than 6 months long.
There are 4 statutory tests to determine your residency:
- Resides test
- Domicile test
- 183-day test
- The commonwealth superannuation test.
For information about foreign and temporary residents, see Foreign and temporary residents.
If you are an Australian resident for part of the year, your tax-free threshold will be less than the full tax-free threshold of $18,200 that applies to Australian residents if you:
- became an Australian resident for tax purposes
- ceased being an Australian resident for tax purposes.
If you became or ceased to be an Australian resident for tax purposes during the financial year, you will receive the part-year tax-free threshold and resident tax rates will apply to your income.
Part-year residents have a tax-free threshold of at least $13,464. The remaining $4,736 of the full tax-free threshold is pro-rated according to the number of months during the financial year you were a resident for tax purposes.
If you're a foreign resident for the full financial year, you will not be entitled to the tax-free threshold. As a foreign resident, you will pay tax on every dollar you earn in Australia and foreign resident tax rates will apply.
When you complete your individual income tax return, you must include the:
- date that you became or stopped being an Australian resident for tax purposes
- number of months that you were an Australian resident.
We will work out your tax-free threshold using the information you provide.
For more information on lodging your tax return early, see Departing Australia and lodging your tax return early.
You're a dual resident if you're a resident of both:
- Australia for domestic income tax law purposes
- another country for the purpose of that other country’s tax laws.
Where Australia has a double tax treaty with a foreign country, a treaty tie breaker test would usually determine which country has the right to tax Australian and foreign sourced income.
For more information about working out your residency, see Work out your residency status for tax purposes.
If you're an Australian resident for tax purposes and you:
- have a temporary resident visa
- receive foreign income
- income may be taxed in both Australia and the country from where you received it
- tax paid in another country on your foreign income may entitle you to an Australian foreign income tax offset
- receive income from a country that Australia has a tax treaty with