Australian tax: A guide for foreigners and expats

Australia’s tax system can appear straightforward, but residency status, temporary visas, superannuation and foreign income all affect what you pay and where you file.

Whether you’re planning to work, invest or retire in Australia, it’s essential to understand how the rules apply to you.

Before making financial decisions, confirm how your residency status affects your obligations and which taxes you need to pay.

Disclaimer

The information in this article is for general guidance only and should not be relied upon as tax or financial advice. Australian tax rules change frequently and vary depending on your visa, residency and income type. Always seek independent advice from a registered Australian tax specialist before submitting returns or making financial decisions.

If you need assistance with your Australian tax matters, please request a free introduction to one of our trusted Australian tax partners.

How Australia’s tax system works: the basics

The Australian Taxation Office (ATO) collects income tax, superannuation contributions and other levies.

• Tax year: 1 July to 30 June
• Return due date: 31 October following the end of the tax year (or as late as mid-May if you use a registered tax agent)
• Currency: All figures must be reported in Australian dollars.
• Income tax in Australia is progressive, meaning higher earners pay a higher proportion of their income in tax. Most tax residents also pay a Medicare levy of 2% to help fund the public healthcare system.

Tax residency in Australia

Your tax obligations depend on whether you’re considered an Australian resident for tax purposes. This doesn’t necessarily match your immigration or visa status.

The ATO uses several tests:

• Resides test: whether you live in Australia according to ordinary concepts.
• Domicile test: whether your permanent home is in Australia, unless you can prove a permanent home elsewhere.
• 183-day test: if you’re in Australia for more than half the year, you may be a resident unless your usual home is overseas.
• Commonwealth superannuation test: certain government employees are always treated as residents.

Australian tax residents are taxed on worldwide income. Non-residents are taxed only on Australian-sourced income and cannot claim the tax-free threshold.

Income tax rates 2024–25 and 2025–26

The following rates apply to income earned during the 2024–25 and 2025–26 financial years.

For Australian tax residents

For non-residents

Most Australian residents also pay the Medicare levy of 2%, and high-income earners without adequate Australian registered private hospital cover may face a Medicare Levy Surcharge of 1%–1.5%.

Temporary residents and working holiday makers

Temporary residents (for example, on skilled, student or partner visas) are generally only taxed on Australian-sourced income and gains from taxable Australian property. Most foreign passive investment income is exempt, but foreign employment income may still be taxable.

Working holiday makers (subclass 417 or 462 visas) are taxed at special rates:

• 15% on the first $45,000 of income
• Ordinary marginal rates thereafter

Employers must register with the ATO to apply the correct tax.

Declaring foreign income in Australia

Australian residents must declare all worldwide income, including:

• Salary and self-employment income earned overseas
• Interest, dividends and rental income from foreign assets
• Gains from selling overseas property or shares
• Pensions or annuities from abroad

Any foreign tax paid may be credited against Australian tax through the foreign income tax offset, but only up to the amount of Australian tax payable on that income.

Tax on dividends, interest and royalties

Australia taxes most passive income at source, though the rules differ for residents and non-residents.

For Australian residents:

• Dividends from Australian companies are taxable, but you may receive franking credits for tax already paid at the corporate level. These credits can be used to offset your personal income tax.
• Dividends, interest and royalties received from overseas must be declared on your Australian tax return. You may claim a foreign income tax offset for any overseas tax already paid.

For non-residents:

• Dividends paid by Australian companies are generally subject to withholding tax of up to 30%, but this may be reduced under a tax treaty. Fully franked dividends (those with full franking credits) are usually exempt from withholding tax.
• Interest payments to non-residents are typically subject to 10% withholding tax, unless reduced by treaty.
• Royalties paid to non-residents are usually subject to 30% withholding tax, again potentially reduced under a treaty.

These withholding taxes are considered final and non-residents do not usually need to lodge an Australian tax return if they only receive fully franked dividends, bank interest or royalties and the correct tax has been withheld.

Capital gains tax (CGT)

Capital gains are treated as part of your income and taxed at your marginal rate.

• CGT applies when you sell property, shares or other assets.
• If you’ve held the asset for more than 12 months and are an Australian resident, you may receive a 50% discount on the gain.
• Non-residents cannot claim this discount and generally cannot use the main residence exemption unless specific life-event exceptions apply.
• When you become Australian resident, your assets are treated as acquired at market value on that date, creating a new cost base.

If you later leave Australia, you may be deemed to have disposed of certain assets unless you elect to keep them taxable in Australia.

Property taxes and foreign ownership

Each state and territory applies its own stamp duty and land tax rules. Many now include surcharges for foreign owners.

Examples include:

• New South Wales foreign purchaser surcharge: 9% from 1 January 2025
• Victoria absentee owner surcharge: 4%

Foreign residents who sell Australian property are also subject to the Foreign Resident Capital Gains Withholding (FRCGW) scheme. Buyers must withhold 15% of the sale price unless the seller provides an ATO clearance certificate confirming residency or a variation certificate stipulating a reduced rate.

Superannuation (retirement savings)

Superannuation is Australia’s compulsory retirement savings system.

• Employers must contribute a Superannuation Guarantee of 11.5% for 2024–25, increasing to 12% from 1 July 2025
• Concessional contributions (pre-tax) are capped at $30,000 per year
• Non-concessional contributions (after-tax) are capped at $120,000 per year, or up to $360,000 under the 3-year bring-forward rule
• Investment income inside super is taxed at 15%, or 10% for long-term capital gains
• Withdrawals are generally tax-free after age 60, depending on the fund type and components

Temporary residents who leave Australia can claim their super through a Departing Australia Superannuation Payment (DASP), though this attracts withholding tax of 35%–45%, and 65% for working holiday makers.

Common ATO forms and filing requirements

Foreign nationals and new residents should be familiar with the key ATO forms:

• Tax File Number (TFN) is a unique identifier for tax and super
• Individual tax return (NAT 2541) is the annual return form
• Foreign income schedule (NAT 2541-F) is for overseas income
• Rental property schedule (NAT 2541-R) is for Australian or foreign rental income
• Capital gains schedule (NAT 2541-CG) is for disposals of assets

Returns can be lodged online via myTax or through a registered tax agent.

Late-lodgement penalties start at one penalty unit ($330 in 2025) for each 28 days late (up to five units), plus interest. Repeated non-compliance can trigger audits or higher penalties.

Medicare levy and surcharge

Most Australian residents pay a Medicare levy of 2% of taxable income.
High-income earners without adequate Australian registered private hospital cover may also pay the Medicare Levy Surcharge, between 1% and 1.5%, depending on income.

Non-residents and temporary visa holders who cannot access Medicare may not have to pay the levy, depending on their visa class and exemption status.

How to stay compliant with Australian tax rules

If you live, work or invest in Australia, make sure you:

• Confirm your residency status with the ATO
• Report all Australian-sourced income
• Declare foreign income if required
• Record capital gains and report them in the correct year
• Lodge your tax return by 31 October, or appoint a tax agent early for an extension

Related reading

• British expats in Australia: Understanding UK–Australia tax essentials
  Learn how the UK–Australia double taxation agreement affects pensions, property, investments and residency status for British citizens living in Australia.
• Getting tax compliant in both the UK and Australia
  A practical checklist for British expats covering key forms, deadlines and reporting requirements to stay compliant with both HMRC and the ATO.
• Transferring a UK pension to Australia (ROPS explained)
  Understand how recognised overseas pension schemes (ROPS) work in Australia, the eligibility rules, and when transferring a UK pension may be possible.

Next step: Speak to an Australian tax specialist

It is possible to manage your Australian tax situation yourself, however it isn't straightforward and given the complexities associated with international taxes, the cost of making a mistake will be much greater than seeking help from an experienced Australian tax specialist.

When you request an introduction to one of our trusted Australian tax partners, you will also receive a free discovery call where you will be able to ask basic questions and get an idea of your situation and decide whether you wish to proceed with formal, paid services.

All our partners are fully qualified and experienced in assisting foreigners living in Australia, Australian expats living abroad as well as people who have connections to Australia whether they still live there or not.