Residency for tax purpose – Part 17
Absences that do not count as foreign service
Longer term absences during a period of foreign service will affect your continuity of the service and not count as foreign service. An example of this is maternity leave.
Taxpayers who die while on foreign service
A taxpayer who dies while on foreign service is taken to have been engaged in that foreign service for a continuous period of 91 days or more if the period of service would have been at least that long had they not died.
What if your foreign employment income is not exempt from tax?
Australian resident individuals are taxed on their worldwide income. This means you must include all foreign-source income in your income tax return. If you have paid foreign tax on this income, you may be entitled to a non-refundable foreign income tax offset for the foreign tax you paid.
If your Australian employer is still paying you while you are working overseas, they must withhold tax from any non-exempt foreign employment income. This also applies to any foreign employer that is registered for Australian pay as you go (PAYG) withholding.
If you were employed by a foreign employer that is not registered for Australian PAYG withholding, it is unlikely that any amount will be withheld for Australian tax purposes. If the income is assessable, the foreign income will form part of your PAYG instalment income and you may be entitled to a non-refundable foreign income tax offset for the foreign tax that you paid.
Completing the tax return
Generally, you must declare foreign employment income you earn that is exempt from Australian tax as it is taken into account to work out the amount of tax you have to pay on your assessable income. In other words, whilst your exempt foreign employment income is not taxed in Australia, it will affect the tax you are liable to pay on any other income you earn.
You are not entitled to a foreign income tax offset for any foreign tax you pay on your exempt foreign employment income.
Foreign resident tax rates 2019–20
- Taxable income is or under $90,000, tax rate 32.5%
- Taxable income from $90,001 to $180,000, tax equals to $29,250 plus 37% for each over $90,000
- Taxable income is or over $180,001, tax equals to $62,550 plus 45% for each over $180,000
If you are under the age of 18, and receive unearned income (for example, investment income), special rates apply.
Working holiday maker tax rates 2019–20
- Taxable income is or under $37,000, tax rate 15%
- Taxable income from $37,001 to $90,000, tax is $5,550 plus 32.5% rate for each over $37,000
- Taxable income from $90,001 to $180,000, tax is $22,775 plus 37% for each over $90,000
- Taxable income is or over $180,001, tax is $56,075 plus 45% for each over $180,000