Understanding Taxes While Working Abroad


If you've decided that you want to work abroad, it is vital that you carefully consider how this could impact your tax status. This article explores the benefits of establishing non-residency in Australia for tax purposes.

1. How residency impacts tax liability

If you are resident in Australia for tax purposes and you work in another country, you could find yourself paying tax twice on the foreign income. Firstly, you will be taxed in the country you are working in. However, because you are still legally a tax resident in Australia, you may also be expected to pay tax to the Australian government.

Thankfully, the Australian government has negotiated a number of double tax agreements with countries around the world. These agreements help to minimise or eliminate the need to pay tax twice on money earnt abroad. If you are planning to work in a country which does not have a double tax agreement in place for a substantial length of time, it may be beneficial to apply to become a non-resident of Australia for tax purposes. This means you will only have to pay tax to the Australian authorities on income earned from within the country.

2. How to establish non-residency

To become a non-resident of Australia for tax purposes, you must establish that you are able to live and work in a foreign country without relying on any financial support from there. If you work in another country and have plans to travel back and forth to Australia often, it may be advantageous to establish that you do not require any financial support from the country you live in.

For example, many ex-pats return to Australia for short visits, typically to attend weddings or holidays. The details of how to establish non-residency for tax purposes will depend on the country you plan to work in. If you have decided to settle in another country, it is important that you work closely with your Australian tax adviser to ensure that your status will remain valid.

Wherever you live, it is vital that you obtain tax clearance from both the Australian Taxation Office and any other government department which is involved in collecting your tax, such as immigration authorities. You should also liaise with your Australian employer to establish whether your overseas tax arrangements will affect your Australian tax responsibilities.

For further advice or insight, contact a local tax agent today.


17 February 2021

Tax Doesn't Have to Be Taxing

Hi, my name is Robert. For many years I worked for a large corporation, and my employer paid tax on my behalf. I knew that my tax money helped to keep the streets clean and roads repaired, but beyond that, I never gave it a second thought. However, a few years ago, I started work as a freelance graphic artist. I really enjoyed the freedom of being my own boss and setting my own hours, but I didn't like having to fill out my tax returns. I spent many hours learning about how the tax system works and the correct way of filing my tax returns and applying for rebates. I decided to start this blog so I could pass on my knowledge to other self-employed people who are confused by the tax system.