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  • Foreign and worldwide income

    You may need to declare any foreign income you earn and pay tax on it. The income you pay tax on depends on your residency for tax purposes. Generally, Australian residents are taxed on their worldwide income and foreign residents are taxed only on income from Australian sources. Work out what income you need to declare if you are an:

    If you have a Higher Education Loan Program (HELP), Trade Support Loan (TSL) or VET Student Loan (VSL) debt you may need to declare your worldwide income. Your worldwide income may include income that we usually ask you to ignore for working out your income tax obligations.

    See also:

    For a summary of overseas income you need to declare, download Foreign income (PDF, 314KB)This link will download a file.

    To work out if you are an Australian resident or foreign resident for tax purposes, see Your tax residency.

    Australian resident

    As an Australian resident for tax purposes, you must declare income you earn anywhere in the world on your Australian tax return. This is known as your worldwide income. This includes any foreign income you may receive from:

    • pensions and annuities
    • business activities
    • employment and personal services
    • assets and investments
    • capital gains on overseas assets.

    Australian residents (for tax purposes) with a tax file number generally pay a lower rate of tax than foreign residents.

    If you are an Australian resident for tax purposes and you:

    • have a temporary resident visa
      • most of your foreign income isn't taxed in Australia
      • we tax your income from actual work you do overseas while you are a temporary Australian resident (see Exempt foreign employment income)
    • 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 has a tax treaty with Australia
      • you can ask the tax authorities in that country to reduce their withholding tax or to exempt you from paying tax in that country
      • done by supplying a tax relief form or a certificate of residency or status.

    Your foreign income could be subject to double taxation if tax is withheld in the source country. To overcome this, Australia has a system of credits and exemptions and has signed tax treaties with more than 40 countries. This includes all our major trade and investment partners.

    Since September 2018, we receive and exchange financial account information with participating foreign tax authorities. This ensures Australian residents with financial accounts in other countries are complying with Australian tax law. You could receive penalties and interest charges if you do not declare your foreign income.

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    Income from employment and personal services

    If you have worked overseas or provided services to an organisation located outside of Australia, you will need to declare all relevant income as if it were earned in Australia. This may include:

    • salary and wages
    • directors fees
    • consultancy fees
    • business income
    • any other remuneration.

    For information on some specific circumstances in which the foreign salary is exempt, see:

    Income from assets and investments

    If you own assets or investments overseas, including offshore (overseas) bank accounts, you will need to declare all relevant returns as if they were in Australia. This may include:

    • interest from bank deposits or bonds
    • dividends from shares
    • royalties from intellectual property
    • rental income from real estate
    • pensions, annuities and lump sums from managed funds
    • income streams from super funds
    • some government pensions.

    Capital gains on overseas assets

    If you own an asset overseas, you may have to pay Australian tax when you sell the asset. You need to keep appropriate records.

    If you acquired an overseas asset before you became an Australian resident, you are taken to have acquired the asset when you became an Australian resident.

    Similarly, if you stop being an Australian resident while holding an overseas asset, you are deemed to have disposed of that asset when you stop being an Australian resident.

    To accurately calculate the capital gain or loss, ensure you keep a record of the value of your asset at these times. This is a complex area of tax law and exemptions may apply.

    See also:

    Considerations for foreign income

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    Tax paid on income overseas

    If you have already paid tax in the country that you have derived the income from, you may be able to claim a foreign income tax offset.

    To be eligible for a foreign income tax offset, you must:

    • have paid the tax on the income overseas
    • have records to prove that the tax has been paid.

    The offset amount you are entitled to will not always be the same amount of the tax paid overseas. If you are claiming more than $1,000, you will first need to work out your foreign income tax offset limit to determine your entitlement.

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    Convert foreign income to Australian dollars

    You must convert all foreign income, deductions and tax offsets to Australian dollars in your tax return.

    Depending on your circumstances and the type of income, you will need to use either the:

    • specific prevailing exchange rate
    • average exchange rate.

    See also:

    Apportion foreign income

    Unlike Australia, most countries do not have an income year ending on 30 June. You may need to report your foreign income and associated tax offsets in multiple tax returns in Australia.

    You will need to determine which tax years the income amounts align to and apportion them accordingly.

    See also:

    Foreign resident

    If you are a foreign resident working in Australia, you declare any Australian-sourced income you earn in your Australian tax return. Your Australian-sourced income may include:

    • employment income
    • rental income
    • Australian pensions and annuities, unless an exemption is available under Australian tax law or a tax treaty
    • capital gains on Australian assets.

    You generally don't need to declare income you receive from outside Australia in your Australian tax return.

    You also don’t declare any Australian-sourced interest, dividends or royalties you derive while you are a foreign resident, provided the Australian financial institution or company that pays you has already withheld tax. They do this automatically if you advise them that you were a foreign resident.

    You aren’t entitled to the tax-free threshold, so you will pay tax on every dollar of income you earn in Australia.

    You don’t pay the Medicare levy in your Australian tax return, as you aren't entitled to Medicare health benefits. You can claim an exemption from paying the Medicare levy for the number of days in the income year you are a foreign resident.

    Payments for the following are subject to foreign resident withholding tax:

    • promoting or organising casino gaming junket arrangements
    • entertainment and sports activities
    • contracts for the construction, installation and upgrading of buildings, plant and fixtures and for associated activities.

    Your payer will withhold this tax. You report the payments in your Australian tax return and claim the withheld amounts as a credit against the tax assessed.

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    Last modified: 21 May 2021QC 31917