Living and working overseas can be an exciting chapter in life — but for Australian expats, it can also bring tax complications. The Australian Taxation Office (ATO) has clear rules about tax residency and overseas income, and failing to understand them could lead to unexpected tax bills or penalties. Here’s a look at some of the most common tax issues faced by Australian expats — and how to avoid them.
1. Determining Your Tax Residency Status
One of the most common challenges is working out whether you’re still considered an Australian resident for tax purposes. Just because you’ve left the country doesn’t mean you’ve ceased residency in the eyes of the ATO. Factors like your ties to Australia, your intended length of stay overseas, and where your assets are located all play a role.
Solution: Get professional advice before you leave or as soon as your circumstances change. The wrong classification could mean being taxed on your worldwide income in Australia — even if you’re earning it overseas.
2. Declaring Foreign Income
If you’re still a tax resident of Australia, you must declare all income earned worldwide — including foreign salaries, rental income, and investment returns. Many expats mistakenly assume that income earned overseas doesn’t need to be reported.
Solution: Keep accurate records of your foreign income and check whether any double tax agreements exist between Australia and your host country. These agreements can help avoid being taxed twice on the same income.
3. Capital Gains Tax (CGT) on Australian Assets
Even if you’ve become a non-resident, you may still be liable for CGT on certain Australian assets, such as property. Timing and tax residency at the point of sale can significantly impact your liability.
Solution: Before disposing of any Australian assets, speak with a tax adviser. In some cases, it may be more beneficial to sell assets while you’re still a resident.
Expert Help for Expats
At Accounting Tax Solutions, we help Australian expats navigate their tax responsibilities with clarity and confidence. Whether you’re planning your move or managing finances from abroad, our team can ensure you’re meeting your obligations — and making the most of any available concessions.
Need tailored expat tax advice? Get in touch with Accounting Tax Solutions today.