working outside Australia

Any employee working abroad will still be subject to Australian tax and superannuation, unless they are no longer a resident for tax purposes.

An employee can notify the ATO of any change in residency status during the income year by answering ‘yes’ to the question ‘Are you an Australian resident?’ on their tax return. This ensures they’re taxed at resident rates for the tax year. The non-residency part of the year is taken into account by a reduction in their tax-free threshold. Employees are entitled to a pro-rata tax-free threshold for the number of months they are an Australian resident.

Employees who cease to be an Australian resident for tax purposes generally have no need to disclose foreign sourced income in their tax return and don’t have to pay the Medicare levy. If employers continue to pay an employee while they are overseas, tax must be withheld from their foreign employment income (unless it’s exempt foreign income). Employees can claim a foreign income tax offset on any foreign income tax they have paid.

If the employee has a Higher Education Loan Program (HELP) or Trade Support Loan (TSL) debt and they are a non-resident for tax purposes, the employee will need to declare their worldwide income or lodge a non-lodgement advice. The employee can do this using the ATO’s online services via myGov, or through a registered Australian tax agent.

There are special rules for people engaged in continuous service overseas in the delivery of official development assistance, or as a member of a disciplined force for 91 days or more. This may be relevant to employers who facilitate charitable service programs for their staff in overseas locations or not-for-profit groups that deploy staff to overseas territories. Information on foreign income exemptions can be found at www.ato.gov.au > Individuals > Tax topics A–Z > International tax obligations.


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