How does Australian Income Tax work for expats?
It is quite possible that you have explored newer and better opportunities outside of Australia. Thus, it makes for you to take the leap of faith and explore them. But while you are admiring the new country or home or even job for that matter, there are a few things that you should not forget. Even though you have left the country and income tax are working in a different country, there are chances that you might have to pay taxes to the ATO.
The taxation for expats remains pretty much similar to that of Australian residents. For starters, the tax year remains the same, starting on the 1st of July and ending on the 30th of June. And the deadline for filing your Australian tax return is 31st of October. Before we get to the tax slabs that are applicable for expats, it is relevant to get through some of the other crucial points.
As is the case with other Australian residents, the calculation of taxes involves reduction of expenses or other loses from the assessable income. Any form of salary, allowance, wage or other forms of compensation is considered as a source of income and must be included in the assessable income. If you are the owner of a business or self-employed, the same is also taxable. If you are in a business partnership, each partner must pay taxes on his/her share.
The taxes are not limited to salary or business income only. If an expat earns money via dividends, the same is also taxable as per the rules and regulations set by the ATO. The tax rate differs a bit depending on whether the taxpayer is a non-resident Australian or Australian tax resident. Whether the dividends are franked or not also impacts the end taxes.
Another form of income that Expats would have to declare in their tax filing is that from royalties, bonuses, rental income and interest. As is the case with other forms of taxation, the resident status plays a crucial role in deciding the tax rates. If an expat has rental property in a different country and pays taxes over there, they can the income tax offset. This ensures that they do not end up paying double taxes on the same income.
Expats are also liable to pay taxes on any capital gains that they make. If a person holds on to a financial asset whose base price increases over time, it accounts as capital gains. Real estate, personal property or shares are the most prominent examples of capital assets.
While expats do need to pay taxes in Australia, they need not worry about double taxation. There are several tax treaties or DTA with most of the major countries across the globe. This is to ensure that Australians do not end up paying taxes twice.
If you are an Australian Tax Resident, you need not pay any taxes on income up to $18,200. For income above this, the following table is helpful to calculate taxes.
|Between $18,201 and $37,000||19 cents per $1 for amount exceeding $18,201|
|Between $37,001 and $87,000||$3572 + 32.5 cents per $1 for amount exceeding $37,001|
|Between $87,001 and $180,000||$19,822 + 37 cents per $1 for amount exceeding $87,001|
|Above $180,001||$52,232 + 45 cents per $1 for amount exceeding $180,001|
The tax rates differ a bit for Foreign Australian residents.
|Up to $87,000||32.5 cents per $1|
|Between $87,001 and $180,000||$28,275 + 37 cents per $1 for amount exceeding $87,001|
|Above $180,001||$62,685 + 45 cents per $1 for amount exceeding $180,001|