Tax implications of working overseas
Thursday, April 13th, 2006For those of you who are interested in working overseas for a while.
Working holidays don’t count. Residence is important. That is, you live and work overseas.
The time period must be over 90 days consecutively, and pay tax in the country you are working.
Less than 90 days and you need to count the money as foreign income in your Australian tax return, at the Australian rates. If you have paid tax OS, then the tax credit can be used to help with your Australian return, but you may still end up paying tax here, also.
Over 90 consecutive days in the one job and having paid tax OS. Did you earn any Australian income?
No. Then no tax is payable in Australia.
Yes. Then you pay on the Australian income at the marginal rate of the TOTAL income (Australian and OS added together).
An example to make it clearer.
You earn $5000 in Australia. Normally tax free under the Australian resident rules.
You earn $40,000AUD from working overseas, and have paid tax on this overseas.
Total income earned is $45,000.
The Australian tax rate is $0.30c plus Medicare ($0.315c). Therefore, on your Australian tax return, you pay tax on $5000 at a rate of $0.30c plus Medicare. You don’t pay tax again on the $40,000.
Clear as mud.