What Income Will Be Subject To Tax In Australia While I Am Living And Working Overseas?

Once you are living and working overseas, you may still have to pay tax on income that is ‘sourced’ in Australia. The Tax Office web site provides a list of types of income that would be subject to tax in Australia at this link.

The main type of income earned by foreign residents is property income. Like many other developed countries, Australia reserves the right to tax income and capital gains earned in respect of immovable property situated in the country.

That means that while ever a foreign resident owns Australian property which is rented out, they are obliged to lodge an annual Australian Income Tax Return.

Some types of income are subject to withholding tax at source.One example would be interest income, which is taxed at a rate of 10%. The financial institution paying the income is required to remit the 10% tax to the Tax Office.

If you don’t advise your financial institution that you are a foreign resident, then tax may not be remitted to the Tax Office. In that situation, you can simply include the interest income earned in your Australian Income Tax Return and you can pay the tax that way.

The same is true of unfranked dividends and royalties – if tax is not deducted by the payer, you can include the income in your tax return and tax can be paid that way.

For more details on the taxing of capital gains, go to xxx.