An ATO Notice of Assessment is the tax office’s formal, line-by-line response to your lodged return: it confirms your taxable income, the tax and Medicare levy applied, any credits or offsets, and the final refund or amount owing. For non-residents specifically, that document reads differently to a resident’s notice: no tax-free threshold applies, foreign income treatment shows up in specific fields, and the numbers can look alarming if you don’t know what to expect before you open it. Reading it correctly, rather than just skimming for the dollar figure, is the difference between confirming your return went in as intended and missing an error that costs you later.
TL;DR
- A Notice of Assessment (NOA) is the ATO’s official confirmation of how your refund or bill was calculated, not just the final number.
- Non-residents don’t get the tax-free threshold that applies to most Australian residents, so taxable income and tax payable lines will look different to what you might expect from a “normal” Australian payslip year.
- Key lines to check: taxable income, tax on taxable income, Medicare levy status, offsets (including Foreign Income Tax Offset), and any credit for tax already withheld.
- Property sales trigger a separate mechanism, Foreign Resident Capital Gains Withholding, which shows up as a credit against tax payable rather than as income tax itself.
- Errors or mismatches on a Notice of Assessment are fixable, but only if you catch them within the ATO’s amendment window and understand which line is wrong.
What Is an ATO Notice of Assessment?
A Notice of Assessment is the ATO’s formal written outcome of a lodged tax return, issued after the return has been processed, setting out taxable income, tax payable, offsets applied, and the resulting refund or debt. It is not a bill in the everyday sense and not a refund confirmation on its own; it’s closer to a receipt that shows the ATO’s math, so you can check it against what you expected when you lodged. Every field on the notice corresponds to a specific calculation, and reading it line by line rather than jumping straight to the bottom figure is how you catch an error in your favor or against it.
For a non-resident, this document carries extra weight because most calculations that residents take for granted, like the tax-free threshold, simply don’t apply. That means the notice format is the same for everyone, but the numbers behind each line reflect a different set of rules depending on your residency status for the year.
How Does a Non-Resident’s Notice of Assessment Differ From a Resident’s?
The single biggest difference is the tax-free threshold. Foreign residents are not entitled to a tax-free threshold and must pay tax on every dollar of income earned in Australia, whereas most Australian residents can claim the threshold on their first $18,200 of income. On a Notice of Assessment, this shows up as tax being calculated from the first dollar of taxable income rather than starting at zero, which is often the reason a non-resident’s tax payable line looks higher than a friend’s who is still living in Australia on similar income.
A second structural difference sits in how income sources are treated. Non-residents filing a non-resident tax return in Australia are generally only assessed on Australian-sourced income, such as rental income from an Australian property or Australian-sourced capital gains, rather than worldwide income. The notice itself won’t spell out “this is non-resident income” in plain language, so understanding what should and shouldn’t be in your taxable income figure before you lodge is what makes the assessment easy to check afterward.
Which Lines on the Notice Actually Matter?
Building on the differences above, the practical task is knowing which specific fields to check rather than treating the notice as one number. A useful analogy: reading a Notice of Assessment line by line is like reconciling a bank statement rather than just checking your balance. The balance alone tells you nothing about whether a transaction was miscoded; the individual lines tell you exactly where a number came from and whether it belongs there.
- Taxable income: the total assessable income after allowable deductions. For a non-resident, this should generally reflect only Australian-sourced income, not income earned overseas.
- Tax on taxable income: calculated using non-resident tax rates, which apply from the first dollar since there’s no tax-free threshold for foreign residents.
- Medicare levy: non-residents are typically exempt from the Medicare levy for the period they were a foreign resident, so this line should usually show as nil or reduced for that period.
- Offsets applied: this is where a Foreign Income Tax Offset (FITO) claim, if applicable, reduces tax payable. The FITO is capped at the lesser of the foreign tax actually paid or the Australian tax payable on that same income, so it won’t necessarily match the full amount of foreign tax paid.
- PAYG withholding credit or FRCGW credit: tax already withheld during the year, including any Foreign Resident Capital Gains Withholding withheld on a property sale, is credited against the final tax bill here.
- Refund or amount payable: the net result once every line above has been applied.
How Does a Property Sale Show Up on the Notice?
A related but distinct question, once the core lines are understood, is what happens when the return includes a capital gain from selling Australian property. Foreign residents pay Capital Gains Tax at standard foreign resident marginal tax rates on Australian property gains, and there is no 50% CGT discount available to non-residents on gains accrued after the relevant residency change, which is a common surprise for expats who assume the discount they’d get as a resident still applies. From 1 July 2027, new legislation replaces the 50% CGT discount with cost-base indexation; residents can still use the discount for gains accrued before that date, and foreign residents generally cannot access it.
Separately, Australia applies a Foreign Resident Capital Gains Withholding rate at settlement, currently 15% for contracts signed from 1 January 2025 onward, up from the earlier 12.5% rate. This amount is withheld by the purchaser at settlement and paid to the ATO in advance, then shows up on the Notice of Assessment as a credit against the final CGT liability, not as a separate tax. If the withheld amount exceeds the actual tax owed on the gain, the difference comes back as part of the refund; if it’s less, the notice will show additional tax payable.
What Does It Mean If the Notice Shows a Debt Instead of a Refund?
Stepping back from the mechanics of individual lines, a genuinely common concern is opening a Notice of Assessment expecting a refund and finding a bill instead. This is usually explained by one of the differences above rather than an error: no tax-free threshold, a capital gain taxed without the resident discount, or withholding that didn’t fully cover the eventual liability. It is not, in most cases, a sign that something has gone wrong with the return.
Where a debt is genuinely the result of overdue lodgement rather than a single year’s outcome, it’s worth knowing the ATO’s standard penalty structure applies here as it does to any taxpayer: a Failure to Lodge penalty of one penalty unit for every 28 days a return is overdue, up to a maximum of five penalty units, plus shortfall interest charges on underreported amounts. None of this is specific to non-residents, and in the ODIN Tax team’s experience, penalties on backlog lodgements are commonly remitted once returns are brought up to date, particularly for taxpayers lodging voluntarily rather than after ATO contact.
What Should You Check on a Notice of Assessment Before Accepting It?
Given everything above, the practical step is a short checklist rather than a full re-audit of the return. Confirm that taxable income only reflects Australian-sourced amounts if you were a non-resident for the full year; check that the Medicare levy exemption has been correctly applied for your non-resident period; verify any FITO claimed matches what was actually available against foreign tax paid; and confirm any FRCGW or PAYG withholding credited matches what you know was withheld during the year.
If any of these don’t reconcile, an amendment request is the standard mechanism to correct it, and timing matters, since the ATO’s amendment window is limited. This is general information only and does not constitute personal tax advice. Where a Notice of Assessment shows an unexpected outcome, a Registered Australian Tax Agent can check the underlying calculation against ATO guidance for your specific circumstances.
Frequently Asked Questions
What is a Notice of Assessment in Australia?
It is the ATO’s official written confirmation of a lodged tax return’s outcome, showing taxable income, tax payable, offsets, and the final refund or debt.
Why does my Notice of Assessment show tax owed even though I had no income until I sold my property?
This is typically the capital gain from the sale being taxed without the resident CGT discount, combined with no tax-free threshold applying to foreign residents.
Where do I see a notice of assessment sample to compare against my own?
The ATO publishes the standard format online, and the same fields (taxable income, tax on taxable income, offsets, Medicare levy, credits) appear on every notice, resident or non-resident; what changes is the calculation behind each figure.
Do non-residents pay the Medicare levy?
Generally no, for the period assessed as a foreign resident, and this should be reflected as an exemption on the notice.
How does the Foreign Income Tax Offset appear on the notice?
It appears as an offset reducing tax payable, capped at the lesser of the foreign tax actually paid or the Australian tax payable on the same income.
Can I lodge a non-resident tax return in Australia if I haven’t lodged in several years?
Yes. Backlog lodgement is common among expats, and the ATO’s standard penalty and interest framework applies, though penalties are often remitted on voluntary catch-up lodgements.
What if I think a line on my Notice of Assessment is wrong?
An amendment can be requested with the ATO within the applicable time limit; the specific line in question determines what evidence is needed to support the correction.
About ODIN Tax
ODIN Tax is a Registered Australian Tax Agent and the specialist tax practice within ODIN, focused exclusively on Australian expats and non-residents rather than general accounting clients. Headquartered in Hong Kong and built around the realities of filing from overseas, ODIN Tax has prepared returns for 2,300+ expats across 40+ countries, with particular depth in non-resident CGT, Foreign Resident Capital Gains Withholding, tax residency determinations, and Foreign Income Tax Offset claims across 40+ Double Tax Agreement countries. This content is general information only and does not constitute personal tax advice; individual circumstances vary and outcomes on any Notice of Assessment depend on the specific facts of each return.
If your Notice of Assessment doesn’t match what you expected, or you’re behind on lodgements and unsure where to start, get in touch with ODIN Tax at https://www.odintax.com/ to have your return reviewed by a Registered Australian Tax Agent.
