As an Australian resident working overseas you must report all your foreign employment income in your Australian tax return. This include salary, wages, commissions, bonuses and allowances, paid by an overseas or an Australian employer.

You must report both assessable income and exempt income, even if tax was taken out in the country where you earned the income.  

Note that the foreign employment income you declare must be the amount you have earned before tax was withheld. This helps to determine your total assessable foreign employment income and is called “gossing up”.

Am I exempt from paying tax on foreign income?

You may be exempt from paying tax on your foreign employment income if you are a member of an:

  • Australian defence or police force
  • Organisation engaged in overseas aid work

You must still report this exempt income in your tax return.

Tax withheld from foreign employment income

Your Australian employer must withhold tax from non-exempt foreign employment income if they continue to pay while you are overseas.

If your foreign employer is not registered for Australian PAYG withholding, it is unlikely that they will withhold any amounts for Australian tax purposes from payments to you. You will have to report your total earnings in your Australian tax return.

Foreign income tax offset

If you have paid foreign tax in another country, you may be entitled to an Australian foreign income tax offset, which provides relief from double taxation. Special rules apply for the foreign income tax offset.

More information

This information is a general guide for our clients. Foreign employment income can be a difficult section of your tax return. We can help you to report your foreign employment income and determine if your are or not entitled to a foreign income tax offset. We have a professional team specialized in this area. Please contact us at [email protected], or call us to (+ 61) 2 8317 1281.