Filing an Australian Tax Return while Living Overseas

If you're an Australian Expat living abroad, you may be wondering whether you still need to file an Australian tax return. The answer isn’t always straightforward. It depends on several factors, including your residency status for tax purposes, the type of income you earn, and whether that income is sourced from Australia.

In this blog post, we’ll take a look at filing an Australian Tax Return while living overseas and what you need to know.

Australian Residency for Tax Purposes

The Australian Taxation Office (ATO) has several tests and criteria to determine your tax residency status, which do not necessarily align with your visa or citizenship status.

If you are classified as an Australian resident for tax purposes, you are taxed on your worldwide income, and you generally must file a tax return.

If you're a non-resident for tax purposes, you are only taxed on your Australian-sourced income (like rental income, dividends, or Australian employment income), and you may still need to lodge a return.

Australian-Sourced Income

Even if you live overseas and are not considered a resident for tax purposes, you may still have to file a return if you receive income from Australian sources. This includes:

• Rental income from Australian property;

• Capital gains from the sale of Australian property;

• Capital gains from the sale of shares, which you did not apply deemed disposal;

• Australian employment income.

If any of these apply, you'll generally need to report them to the ATO, even if you're living overseas.

As a non-resident for tax purposes, income sources such as dividends from shares, distributions from Exchange-Traded fund (ETFs) or managed funds, and Interest from Australian banks are subject to withholding tax rules. If your financial institution does not withhold the correct amount of tax on these income sources, this income may also need to be reported in an Australian tax return.

When you might not need to File an Australian Tax Return while Living Overseas

You might not need to file an Australian tax return while living overseas if:

• You are a non-resident and did not earn any Australian-sourced income during the financial year;

• You are an Australian resident who earned below the tax-free threshold and had no tax withheld;

• You qualify for an exemption due to working for an international organisation covered by the International Organisations (Privileges and Immunities) Act 1963, such as the United Nations, and have no obligations to the ATO.

However, even if you don’t need to lodge a full return, you might still need to notify the ATO using a "non-lodgement advice" form to let them know you're not required to file.

Outstanding Student HECS/HELP debts

Since 1 July 2017, the Australian government requires Australian Expats with a student loan to report their worldwide income each year and make a mandatory repayment if they earn above the income thresholds.

For those Australian Expats who are non-residents for tax purposes, depending on your worldwide income, you will need to lodge either a “non-lodgement advice” form or “report your worldwide income” using one of the ATO’s assessment methods.

In recent years, the ATO has ramped up efforts to ensure compliance with HECS/HELP repayment obligations for Australian Expats. Failing to report your income or make repayments can lead to penalties, interest charges, and future issues if you return to Australia or deal with Australian government services.

Double Tax Agreements

Australia has tax treaties with many countries to avoid double taxation. These agreements can affect your tax obligations both in Australia and your country of residence, so it’s important to understand how the treaty applies to your specific situation.

If you earn income in several countries within a tax year, it is likely you will not have to pay double tax as a result of these treaties. However, its not impossible. You should always seek professional tax advice.

Can I use Tax Offsets and Exemptions as an Australian Expat

Australian tax residents usually have various tax offsets and exemptions available to them. This includes the Capital Gains Tax Exemption, Tax-Free threshold, Franking Credits and more.

However, for Australian Expats who are classified as non-residents for tax purposes, these tax offsets and exemptions are typically unavailable.

Key Takeaways

• Living overseas doesn't automatically mean you stop filing an Australian tax return.

• Your tax residency status is critical in determining your obligations.

• If you earn any Australian-sourced income, you may still need to file an Australian tax return while living overseas.

• Always check with a professional tax adviser if you're unsure, especially if your situation is complex or changing.

Need Help?

Navigating your financial situation while overseas can be complicated. If you're unsure about your residency status or whether you need to file, it's wise to seek advice from a professional tax adviser.

Runway Wealth Management is the trusted Financial Adviser to the Australian Expat community. Our tailored advice is backed by expertise, education and experience, which allows us to be at the forefront of Australian Expat Financial Planning.

If you would like to speak to one of our Expat Financial Advisers about this blog or if you have other queries, we would be more than happy to speak with you. Feel free to send us an enquiry through the ‘Contact Us’ tab provided in the below link:

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General Advice Disclaimer: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.