Even if you relocate from Australia, you may still be subject to Australian expat tax regulations by the Australian Tax Office (ATO). The Aussie tax year runs from 1 July to 30 June each year. Tax returns are due by 31 October.
Navigating the complexities of expatriate taxes can be daunting. We’re here to help you understand the latest rules and regulations to ensure you meet your tax requirements from overseas.
Are You an Australian Tax Resident?
Your tax obligations in Australia depend upon your tax residency. Australian residents are taxed on their worldwide income, while non-residents are only taxed on their Australian-sourced income.
Key Criteria for Australian Tax Residency
The Australian Taxation Office (ATO) has outlined key criteria to determine whether an individual is considered an Australian tax resident while living overseas.
- Permanent Residency: If you have always been an Australian resident or have lived in Australia permanently.
- Significant Presence: If you have resided in Australia for at least six months and maintained a significant connection, such as working and living in the same place for most of that time.
- Temporary Absence: If you have temporarily lived abroad without establishing a permanent residence elsewhere.
- Student Visas: If you have studied in Australia for more than six months as an international student.
Generally, Australian expats living overseas with little intention of returning to Australia are considered non-residents for tax purposes. It’s important to note that there are exceptions to these general rules for expat taxes.
ATO Residency Tests
The ATO uses four tests to assess your status.
You’re considered an Australian tax resident if you pass any of these tests. Getting professional help to confirm your tax residency status is always a good idea.
Review Your Overdue Taxes as an Aussie Expat
Don’t let the stress of Australian expat taxes from overseas overwhelm you. Start your Australian expat tax journey with an ATO health check!
Do Aussie Expats Get Tax Benefits?
If you remain an Australian tax resident after moving overseas, you’re generally liable for Australian tax on your worldwide income. This can significantly increase your tax burden.
However, there are strategies to minimise your Australian tax liability. You can reduce your tax exposure by demonstrating a clear intention to establish a permanent home overseas. You can own foreign assets, generate foreign income, and sell Australian property to achieve this.
Essentially, you must demonstrate a clear, long-term commitment to living overseas to minimise your Australian tax liability.
What Are the Types of Taxable Foreign Income?
If you’re a resident of Australia, you must pay taxes on your worldwide taxable income. This includes:
- Foreign pensions and annuities
- Earnings from foreign employment, excluding specific professions like those in the defence forces, police, international organisations, and aid projects
- Investment income generated from foreign sources such as interest, dividends, and rental income
- Business or company income from abroad
- Capital gains are made on foreign assets
What are the Income Tax Rates for Tax Residents in 2025-26?
Australian resident tax rates are lower than those for non-residents. They benefit from a tax-free threshold of $18,200, with a marginal tax rate starting from $18,200. For residents earning up to $45,000, the tax rate is 16%, among other updated rates.
Australian Resident Tax Rates 2025-26
| Income Thresholds | Tax Rate | Tax Payable |
|---|---|---|
$0 – $18,200 | 0% | No tax payable |
$18,201 – $45,000 | 16% | 16c for every dollar over $18,200 |
$45,001 – $135,000 | 30% | $4,288 plus 30c for every dollar over $45,000 |
$135,001 – $190,000 | 37% | $31,288 plus 37c for every dollar over $135,000 |
$190,001 and over | 45% | $51,638 plus 45c for every dollar over $190,000 |
Australian Resident Tax Rates 2025-26
Here are the amounts you can expect to pay in income tax for the financial year 2025-2026:
- 16% income tax for $18,201 to $45,000 taxable income
- 30% income tax for $45,001 to $135,000 taxable income
- 37% income tax for $135,001 to $190,000 taxable income
- 45% income tax for taxable income exceeding $190,000
Permanent residents must also pay capital gains tax and the 2% Medicare Levy, with the ATO adding their capital gains to their worldwide and Australian income and taxing the net sum. The Medicare Levy Surcharge also applies in certain situations.
What are the Tax Offsets and Exemptions?
For Australian Tax Residents
Tax residents in Australia may be eligible for certain offsets and exemptions, such as:
- Tax-Free Threshold: The first $18,200 income is not taxed for Australian residents.
- Capital Gains Tax Principal Residence Exemption: Tax residents are exempt from capital gains tax (CGT) when selling their primary residence in Australia if they have lived there for 12 months or more.
- Low-Income Tax Offset: A tax offset of up to $700 is available for residents with a total income of less than $66,667.
- Low and Middle-Income Offset: Residents earning between $37,001 and $126,000 can receive up to $1,080 in offset.
- Foreign Income Tax Offset: Double income tax may be offset in full or partially if income tax is paid in two countries.
- Medicare Levy Surcharge Exemption: The surcharge is not required if an individual has sufficient private health insurance.
For Australian Expats and Non-Residents
Unlike Australian tax residents, expats and foreign residents are generally ineligible for most tax offsets and exemptions. This includes significant benefits such as the capital gains tax main residence exemption and Medicare Levy exemptions.
While expats remain Australian citizens, their tax obligations differ. One key offset available to expats is through double tax agreements (DTAs). DTAs help prevent double taxation by allowing credits for taxes paid to foreign governments.
However, it’s important to note that DTAs don’t directly reduce your tax liability but rather offset it against your Australian tax bill.
Unfortunately, most other tax offsets and exemptions are inaccessible to expats, limiting their potential tax savings.
Will I Be Taxed Twice?
For residents of Australia, paying double tax on the same income is a significant worry. They have to pay taxes in Australia and abroad on their worldwide income.
However, if you earn income in multiple countries in a tax year, you will not have to pay double taxes, although it is possible.
Australian Expat Tax Treaties
Australia has tax treaties with over 40 countries to reduce or eliminate double taxation. However, these double tax agreements may only provide partial tax benefits and do not always offset foreign taxes entirely.
The country where the taxable income is sourced is typically given priority, so if you sell Australian capital assets while living in Singapore, you would have to pay Australian capital gains and income taxes. Still, Singapore would retain the right to tax its residents under its laws.
Most tax treaties include provisions for dual citizens and allow for foreign tax credits and relief against their tax obligations. It is important to declare all income on tax returns, even if eligible for foreign tax offsets.
Which Countries Have a Double Tax Agreement With Australia?
Australia has Double Taxation Agreements with the following countries.
- Singapore
- Canada
- New Zealand
- Philippines
- China
- United Kingdom
- United States
- Vietnam
- And many more countries.
Find out more about Australian Tax Treaties on the ATO website.
Which Countries Do Not Have a DTA With Australia?
Australia doesn’t have tax treaties with Dubai, UAE, Saudi Arabia, Bahrain, Qatar, Macau, Oman, and more countries.
If you are an Aussie expat living in a country with a tax treaty with Australia, it may be necessary to consult with an Australian expatriate tax expert to find out if any credits or reductions for foreign taxes are paid.
Our tax specialists can assist you in finding the best tax exemptions and deductions. Contact us for more information about the tax regulations for Australian expats and foreign residents earning income in Australia.
What if I’m a Tax Non-Resident?
If you’re not a resident of Australia for tax purposes, you still need to be mindful of the tax consequences on your Australian and foreign earnings.
For example, if you live outside of Australia but still receive income from Australia, such as rental income from owning a property, you must declare that income on your tax return and pay taxes accordingly.
As a non-resident, you will be subject to higher foreign income tax rates and not eligible for most offsets, exemptions, or the tax-free threshold available to residents.
Return Not Necessary Form
Suppose you have ever been an Australian permanent resident. In that case, you will have a tax file number, and the ATO will expect a response from you at the end of the tax year, even if you didn’t earn any taxable income in Australia.
In this case, you must fill out a Return Not Necessary form. Failure to inform the ATO of your change in circumstances could result in a fine of $900.
Remember that if you only receive withheld income, such as the Foreign Capital Gains Withheld Tax, you don’t need to file a tax return.
It’s also essential to let the ATO know if you will no longer be earning any Australian income for an extended period and won’t need to file any future tax returns.
Should I Pay Medicare Levy?
As a non-resident, you aren’t required to pay the Medicare Levy or any surcharges, since you don’t reside in Australia. Most likely, you will have access to a reciprocal health care agreement in your new country of residency.
What Are the 2025-2026 Income Tax Rates for Non-Residents?
Non-residents have to pay slightly higher tax rates than residents. The Australian tax rates for non-residents are as follows:
- If you earn between 0 to AUD 135,000, you will pay a tax rate of 30%.
- If you earn between AUD 135,001 to AUD 190,000, you will pay a tax rate of 37%.
- If you earn over AUD 190,000, you will pay a tax rate of 45%.
For instance, a non-resident who earns AUD 100,000 in Australia will pay AUD 30,000 in taxes.
Non- Resident Tax Rates Australia 2025-26
| Income Thresholds | Tax Rate | Tax Payable |
|---|---|---|
0 – $135,000 | 30% | 30c for each $1 |
$135,001 – $190,000 | 37% | $40,500 plus 37c for each $1 over $135,000 |
$190,001 and over | 45% | $60,850 plus 45c for each $1 over $190,000 |
Australian Foreign Resident Tax Rates 2025-26
Expat Taxes Offsets and Exemptions
As a non-resident expat, you may not be eligible for many tax exemptions and offsets available to residents. For instance, the principal residence exemption of the capital gains tax (CGT) is unavailable to expats, even if they are still Australian citizens.
However, one of the most significant tax benefits for expats is the double tax agreement, which helps prevent paying taxes twice on the same income, even if it does not reduce the total tax payment.
How Do I Pay Less Australian Tax?
As an Australian expat, you can still claim expenses against your taxable income, so keeping detailed records of your costs is a great way to minimise your tax liability.
For instance, if you own a rental property in Australia, you incur significant expenses to keep the property in good condition.
If you’re an expat who owns a rental property in Australia, there are various costs associated with maintaining the property that you can deduct from your taxable income.
These costs may include the following:
- property management fees
- advertising for tenants
- strata fees
- mortgage interest, and
- other bank charges & home loan fees
By keeping records of these expenses, you can lower your tax bill.
However, it’s worth noting that foreign residents must pay a higher tax rate than residents and may also be subject to stamp duty and land tax surcharges.
Next Step: Speak With Our Aussie Expat Tax Expert
The tax rules for Australian expats mainly depend on your residency status. Although most expats are not considered tax residents in Australia, some may still have ties to the country.
In such cases, there is a risk of paying double taxes, but this can be offset with the help of tax treaties between countries. In most cases, it is better to pay higher tax rates as a non-resident than pay tax on worldwide income.
If unsure of your residency status, speak to our Australian expat tax expert to clarify your tax residency and simplify your Australian tax journey. Get a personalised action plan to maximise your benefits!
FAQs about Australian Tax Rules for Expats 2024
Do I have to pay taxes in Australia if I live overseas?
If you move overseas but remain an Australian resident for tax purposes, you are still required to lodge an Australian tax return. This includes declaring any foreign employment income you earn while living abroad.
If you are a non-resident for tax purposes, you only pay taxes on your Australian-sourced income, such as income from Australian rental properties or investments. Non-residents do not qualify for the tax-free threshold, so all Australian income is taxed at higher non-resident rates.
Does Australia tax expats?
Taxes for expats depends on your residency status and income.
Residents must file a tax return if their annual income exceeds AUD 18,200. If you’re classified as a resident for tax purposes, you must declare your worldwide income. However, Australia has measures, like the US-Australia tax treaty, to prevent double taxation.
Non-residents must file a tax return if they earn any income from Australian sources, regardless of the amount. Non-residents are taxed at higher rates than residents and only need to report their Australian-sourced income.
How are non-residents taxed in Australia?
Non-resident expats face higher tax rates than tax residents in Australia and aren’t eligible for the tax-free threshold.
The ATO also taxes them on their overall income, i.e. both Australian and worldwide, which can be quite expensive unless Australia has a double tax agreement with the taxpayer’s country of residence.
However, non-residents are not required to pay the Medicare Levy or taxes on foreign income.
What is the expat tax rate in Australia?
For non-resident expats, Australian income is taxed at 30% for earnings up to $135,000. Revenues between $135,001 and $190,000 are taxed at 37%, and any income above $190,000 is taxed at 45%. Unlike residents, non-resident expats don’t have a tax-free threshold, meaning all their income is subject to taxation.
Can non-Australian residents claim tax-free threshold?
Non-tax residents in Australia are subject to a tax rate of 32.5% on all their Australian income up to $120,000, whereas Australian residents are eligible for a tax-free threshold of $18,200 and pay a tax rate of 19% on income up to $45,000.
Do expats have to pay tax in Australia?
As an expat, your tax obligations depend on your residency status. Tax residents must report all their worldwide income to ATO, while non-tax residents only need to pay taxes on their Australian-based earnings.
Regardless of your residency status, you must file a tax return if you have a tax file number.
Do Australian expats need to pay capital gains tax?
Yes, Australian expats may be subject to Capital Gains Tax (CGT) on assets located in Australia, such as property or investments.
However, the rules depend on whether you are a tax resident or a non-resident.
- Tax Residents: Pay CGT on worldwide assets.
- Non-Residents: Pay CGT only on taxable Australian property, such as real estate or business assets.
It’s important to understand your tax residency status and seek advice to ensure compliance with Australian CGT laws.
Can you be a tax resident in two countries?
As an individual, it’s possible to be considered a tax resident in multiple countries. When this happens, it’s important to examine each country’s tax year dates and regulations.
Fortunately, Australia has established double taxation agreements with over 40 countries which allow for the reduction of foreign taxes against one’s taxable income in Australia.
How are expats taxed in Australia?
Expats who are non-residents are taxed at 30% on all Australian income up to $135,000. For income between $135,001 and $190,000, the tax rate increases to 37%, and any income exceeding $190,000 is taxed at 45%. Non-residents, including Australian expats, do not qualify for a tax-free threshold.
What is the 45-day residency rule in Australia?
The 45-day residency rule helps determine your tax residency status. If you spend fewer than 45 days in Australia during the income year, you are generally not considered a resident for tax purposes. However, if you stay in Australia for more than 183 days, you are classified as a tax resident.
Under the updated rules, your tax residency depends on the time spent in Australia during the income year. Spending over 183 days typically qualifies you as a resident, while staying fewer than 45 days ensures you are not a tax resident.
What are the new expat tax rules in Australia in 2024?
As an Australian expat, you must lodge a tax return or submit a ‘Return Not Necessary’ form to the ATO. Any Australian-sourced income must still be declared, even if you’re not a tax resident.
- Residents: Taxed on worldwide income, with a tax-free threshold of AUD 18,200.
- Non-Residents: Taxed at 30% or more on Australian income, with no tax-free threshold.
Additional taxes like the Medicare Levy and CGT may also apply.
How do I know my residency status for tax purposes as an Australian expat?
To determine your tax residency status as an Australian expat, consider the following criteria:
- 183-Day Rule: Spending 183 days or more in Australia during a tax year may classify you as a resident.
- Domicile Test: If Australia remains your permanent home and you intend to return, you may be considered a resident.
- Superannuation Test: Australian government employees working overseas are generally regarded as residents.
- Ordinary Residency Test: Strong ties to Australia, such as family, property, or financial interests, may indicate residency.
Your residency status determines whether you’re taxed on your worldwide income or only on Australian-sourced income.
How much tax do foreigners pay in Australia?
Foreigners in Australia are taxed only on Australian-sourced income. Non-residents face higher tax rates, starting at 30% for income up to AUD 135,000, with no tax-free threshold.
Additional taxes may apply, including Capital Gains Tax (CGT) on property sales and foreign buyer surcharges on real estate purchases.
How do I avoid double taxation?
To avoid being taxed twice on the same income, it is recommended to use the foreign income tax offset, which is available through the tax treaties that Australia has with many other countries.
The Australian Taxation Office will automatically apply the offsets if you’re eligible for the foreign-earned income exclusion. If you have questions about double taxation on foreign income, consider speaking with a tax specialist.
