When you are moving overseas and joining the ranks of your fellow Australians who have made the move before you, understanding the Australian tax rules for expats can be just as important as picking your new home or school for the kids.
Unlike those Australians who are classified as a resident for tax purposes when you qualify as a non-resident for tax purposes your tax obligations can change.
Working Out Your Tax Residency Status
When you move overseas as an Australian citizen you will fit into one of these three tax residency status categories:
Australian resident for tax purposes – if you qualify as a Australian resident for tax purposes you are required to declare all income you have earned both in Australia and overseas in your annual Australian tax return, even if you have already paid tax overseas. You may be able to use a foreign income tax offset to reduce the Australian tax on the foreign earned income.
Foreign Resident for tax purposes – if you qualify as a foreign resident for tax purposes (otherwise known as a non-resident for tax purposes) you must declare on your annual Australian tax return any and all income that you may have earned in Australia, including rental income, employment income, capital gains on taxable Australian property as well as income from a Australian pension or annuity.
Temporary Resident – if neither you or your spouse are Australian citizens or permanent residents of Australia and you have a temporary visa, then you are classified as a temporary resident and you only need to declare income that you earned in Australia plus any income that you may have earned overseas while you were a temporary resident of Australia.
Australian Tax Rules for Expats
When considering a move overseas the Australian tax rules for expats need to be taken into account so that you understand the financial affects of relocating offshore.
The first big difference is that the income tax rates for Australian expats who qualify as a non-resident, and earn any income that is assessable by the ATO, are different to that of an Australian resident.
Foreign resident tax rates 2019-20
Taxable Income Band (AUD) Income Tax Rate
$90,001 – 180,000 37%
$180,001 + 45%
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