Who is an Australian resident for tax purposes?
Are You Living and Working Abroad?
Every year thousands of people travel abroad for either an adventure filled working holiday or for the chance to further their careers, however questions around Australian tax laws and what applies to people are often unknown.
Australian resident for tax purposes? How To Find Out If You Are
There are four different tests under Australian tax law to determine if you come under the heading ‘Australian resident for tax purposes’ and only one of those tests needs to be passed to qualify as an Australian resident. It’s important to know where you sit within the law, as non-residents for tax purposes pay tax differently. Generally if you’ve earned an income from Australia at any stage in the financial year, then you will be required to lodge a return.
Australian Taxes and living overseas?
One question frequently asked by Australians living overseas is ‘Do I have to pay taxes to the country I’m currently living in? If you’ve done the test and been deemed a non-resident for tax purposes then you will need to abide by the laws of that country. If however you are an Australian resident for tax purposes you will still be subject to their laws but you will need to speak with your accountant to ensure you are not being taxed in both countries for the same income. The government has a number of agreements with many nations to prevent this occurring.
What is considered foreign income?
Salary, wages, commissions, bonuses and allowances, any income earned from working outside of Australia is regarded as foreign income and if you already paid tax within that country, you should be eligible to claim some or all of the tax as a credit towards your next Australian tax return. Foreign income needs to be converted to Australian dollars. (some regulations apply)
If you cease to be an Australian resident for tax purposes, you will no longer be required to disclose your foreign income from that date onwards and will only need to lodge an Australian tax return if you’ve received income from a connected Australian asset(s).
Australian tax returns for
There are many factors to be taken into consideration, when it comes to an Australian tax return, for Australian resident for tax purposes. Each case will be different. Especially since the Australian government is continuously reviewing international tax arrangements and updating tax laws.
Therefore we highly recommend seeking advice from TJD Accounting Services prior to relocating overseas.
TJD Accounting Services
319 Keilor Road