How Australian Expats in Japan and South Korea Are Finding a Registered Tax Agent Who Understands Both the Local System and Australian Non-Resident Rules in 2026

For Australian expats living in Japan or South Korea, filing an Australian tax return is not simply a matter of reporting overseas income to the ATO. The real challenge is finding a registered tax agent who understands the Australian non-resident tax framework well enough to apply it correctly to your specific situation abroad. Whether you are a foreign resident tax Australia filer managing rental property back home or someone whose tax residency status has never been formally resolved, the complexity of applying non-resident tax rules requires specialist knowledge. ODIN Tax serves Australian expats across both countries as part of a practice that has handled 2,300+ expat tax cases across 40+ countries.

Why Is Filing an Australian Tax Return Overseas More Complicated for Japan and South Korea Expats?

Australian expats in Japan and South Korea face a structural problem that expats in other regions also encounter, but with added complexity from two countries whose domestic tax systems operate on very different logic to Australia’s. Japan taxes residents on worldwide income. South Korea does too, with a highly organised residency registration system that can affect how Australian authorities view your ties to Australia. The question is not just what you owe locally – it is how the two systems interact, and which country gets priority over which income stream.

When you file an Australian tax return as a non-resident, several things change immediately:

• You are taxed on Australian-sourced income only (rental income, capital gains on Australian assets, certain interest and dividends).
• Non-resident tax rates apply from the first dollar – there is no tax-free threshold available to non-residents.
• The 50% CGT discount that Australian residents enjoy on long-held assets is not available to foreign residents at the time of the CGT event.
• HECS/HELP repayment obligations still apply based on your worldwide income, not just Australian income.

A local Tokyo or Seoul-based accountant has no formal mandate to understand ATO compliance obligations or non-resident tax framework requirements.

What Does the Australian Tax Residency Test Actually Determine?

The Australian tax residency test is the foundational question that drives every other obligation. It is not a simple checklist – it is a legal determination with four possible tests, and the outcome controls whether you are taxed as a resident or a foreign resident for a given financial year.

For most Australian expats in Japan or South Korea, the Domicile Test is the critical one. The ATO will ask whether your permanent place of abode is genuinely outside Australia. Simply being in Tokyo for two years is not sufficient on its own – the ATO looks at factors like where your spouse and dependents live, whether you maintain an Australian home, and what your intentions are. Getting this wrong in either direction creates real consequences: claim residency incorrectly and you may owe tax on worldwide income; claim non-residency incorrectly and you may miss the CGT discount you were entitled to.

What Is Foreign Resident CGT Withholding and Why Does It Catch Expats Off Guard?

Building on the residency question above, the harder consequence comes when a non-resident sells Australian property. Foreign resident CGT withholding (FRCGW) is a mechanism where the buyer is legally required to withhold a percentage of the purchase price and pay it directly to the ATO at settlement – before the seller sees a cent. For the 2025-26 financial year, the FRCGW rate applies to taxable Australian real property sold by foreign residents.

This catches expats off guard for one specific reason: the withholding is calculated on the gross sale price, not the capital gain. If your property sells for $1 million and you originally paid $850,000, the withholding is not calculated on your $150,000 gain – it is calculated on the full $1 million. You then claim a credit when you lodge your Australian tax return and reconcile the actual tax owed against the withholding already paid.

This mechanism also interacts with the loss of the 50% CGT discount. An Australian resident who held a property for more than 12 months would ordinarily reduce their taxable capital gain by half before applying their marginal rate. As a foreign resident, that discount is not available at the time of the CGT event. The tax bill on the same sale can be materially higher as a result.

How Do Japan and South Korea’s Tax Systems Interact With Australian Obligations?

A related but distinct question is whether what you pay in Japan or South Korea reduces what you owe in Australia. The answer is: sometimes, through a Foreign Income Tax Offset (FITO). Australia has a Double Tax Agreement (DTA) with Japan and with South Korea, which means income taxed in one country may qualify for an offset against the Australian tax bill – but the mechanics differ depending on the income type and which country has primary taxing rights under the treaty.

Key points for expats in both countries:

• Japanese residents pay Japanese income tax on worldwide income. Australian non-residents pay Australian tax only on Australian-sourced income. The DTA determines which country has primary taxing rights over specific income streams.
• South Korea similarly taxes residents on worldwide income, and its registration system (the Alien Registration Card for long-term residents) is one of the administrative steps that formally establishes local residency.
• The FITO is not automatic – it must be claimed correctly in your Australian tax return, with supporting documentation of the foreign tax paid.
• FITO claims cannot exceed the Australian tax that would otherwise be payable on the same income, so the offset does not create a refund beyond your Australian liability.

Why Can’t a Local Accountant in Tokyo or Seoul Handle This?

Stepping back from the technical detail, a separate concern is a practical one. Most Australians in Japan or South Korea initially try to manage their Australian obligations through a local accountant, a generalist firm back in Australia, or not at all. None of these reliably work.

A local Japanese or Korean accountant has no training in ATO compliance, no knowledge of non-resident CGT rules or FRCGW, and no access to the ATO portal to lodge your Australian return. A generalist Australian accountant who “also handles expat returns” typically lacks the specific pattern recognition to apply the Domicile Test correctly, calculate FRCGW precisely, or structure a FITO claim across a DTA properly. These are genuinely specialist areas – the ATO’s own guidance runs to thousands of words for each of these topics, and the case law history behind residency determinations alone spans decades.

Frequently Asked Questions

Do I need to lodge an Australian tax return if I live in Japan or South Korea?

Yes, if you have Australian-sourced income such as rental income, capital gains on Australian assets, or certain investment income, you are required to lodge an Australian tax return as a non-resident with the ATO, regardless of your local tax obligations. This is general information only and is not personal tax advice.

Can I use my Korean or Japanese tax payments to reduce my Australian tax bill?

Potentially, through a Foreign Income Tax Offset, but only for income that is also subject to Australian tax. The applicable DTA governs which income streams qualify, and a Registered Australian Tax Agent can advise on your specific circumstances.

What happens if I have not lodged Australian tax returns for several years?

Overdue lodgments can attract ATO penalties and general interest charges. A Registered Australian Tax Agent can engage the ATO on your behalf to manage penalty exposure and lodge outstanding returns in the correct sequence. ODIN Tax handles multi-year overdue lodgments as a standard service.

Do I still owe HECS/HELP repayments while living overseas?

Yes. The ATO requires overseas residents with HELP debts to report their worldwide income and make compulsory repayments once income exceeds the relevant repayment threshold. Non-compliance can attract penalties.

Do Australians need a visa or special authorisation to live in Japan or South Korea?

For short visits, Australian passport holders can enter South Korea visa-free for up to 90 days without a K-ETA for the duration of 2026 [korea.net]. Japan has its own visa framework for short-term visits and work purposes. Long-term residency in either country requires an appropriate visa and registration with local authorities.

Is foreign resident CGT withholding the same as my final CGT liability?

No. FRCGW is a withholding mechanism collected at settlement, not a final tax assessment. Your actual CGT liability is calculated when you lodge your Australian tax return, and any overpayment through FRCGW is refunded or any shortfall is payable at that point.

What makes ODIN Tax different from a general accounting firm for expats?

ODIN Tax serves only Australian expats and non-residents. The entire practice is structured around non-resident tax scenarios, with specialist expertise in tax residency determinations, CGT for foreign residents, FRCGW, and double tax agreement applications. This is not a general practice that adds expat returns to its workload.

References

1. A Comprehensive Guide on Moving to South Korea (internations.org)
2. Moving to Japan from Australia. The lowdown – Wise (wise.com)
3. Complete Guide to Moving to South Korea: Visas, Housing, Cost of Living & Integration (jarniascyril.com)
4. (Local News) South Korea Eases Entry Rules for Australians Until End of 2026: Korea.net: The official website of the Republic of Korea (korea.net)