Taxes for Expats Living in Australia
Being an expat in Australia is not all about cuddling koalas and sunny days at the beach. Don’t get me wrong, Australia is a beautiful country, you couldn’t pick a better place to be an expat, but there are parts of being an expat, anywhere, that totally sucks.
Understanding taxes as an expat is one of them. Not only do you have to stay up-to-date on your taxes back home, but you now have a second country that you will be paying taxes to.
Yes, there are tax treaties between Australia and other countries that do help with not paying double tax on the income you earn in Australia, but that doesn’t mean you do not still have to file a tax return back home as well as in Australia.
There is also a new set of tax rules that you will need to be familiar with in Australia. For example, the first major obstacle that you will need to sort out is if you are even a resident for tax purposes in Australia.
This is separate from which Australian visa you have. Meaning, if you have a temporary residence visa, such as a TSS visa, even though it says “temporary residence” right in the description of the visa, you may be a resident for tax purposes.
That’s just one example of the confusion expats have when it comes to filing their tax return in Australia.
Things get far more complicated and way more confusing if you are a US expat living in Australia. You will need to be familiar with a couple of new forms that you might need to file and a whole new set of due dates. Oh, and stay on top of any new tax reforms that happen while you are living in Australia.
Paying taxes as an expat is a big topic and, when that time of year comes around, fills up my inbox with all kinds of questions.
Below is a list of all the posts on Sydney Moving Guide about taxes.
The list starts with posts about taxes in Australia, then several posts on expat taxes for US citizens and green card holders living in Australia.
The last post is a guest post on common UK expatriate tax issues. Since I’m not from the UK, I have no experience with how things work for UK expats. I was thrilled when someone with such knowledge offered to write a guest post for Sydney Moving Guide.
What Expats Need to Know About Filing a Tax Return in Australia
This post is an introduction to Australian taxes for expats. In this post, I cover dates you need to know for filing your taxes in Australia, tax rates for residents in Australia, if you are a resident for tax purposes, Medicare Levy Surcharge income threshold rates, and how to file your tax return in Australia.
A while ago I was contacted by a tax accountant in Sydney offering to do an FAQ for new Australian taxpayers. I jumped on it and sent out an email to all SMG email subscribers asking for any questions about Australian taxes. The response was huge. This post is a list of the top questions asked with answers provided by H&R Block Australia. The questions include:
- Do I need to report that income on my Australian tax return even though I paid tax on that income already back home?
- Do we owe capital gains tax in Australia for selling our house back home, even if we paid it back home?
- I’m renting out my house back home while living in Australia. Do I need to report that income on my Australian tax return?
- Do I owe tax on money I transfer to Australia?
- What work expenses can I claim on my Australian tax return?
- Do I report overseas income on my Australian tax return if I have declared that income on my taxes back home?
Getting an Australian Tax File Number (TFN) is something that everyone moving to Australia needs to do. If you are moving to Australia, and plan on working, you will need a TFN. If you don't have a TFN, you cannot file a tax return. Here's how to get your TFN without having a permanent address in Sydney. Besides needing a TFN for taxes, you will need one for ID purposes when you sign your first lease in Sydney.
In this post, I cover how to get your TFN online and other important points you need to know about, such as letting your bank know what your TFN is or the bank is required by law to deduct tax from any interest earned on your account above a certain threshold at the highest marginal tax rate.
Many expats transfer large sums of money to Australia when they move. Is that money going to be taxed in Australia? How much money can you bring on the plane with you when you arrive in Australia? What about when you transfer money to Australia after you have settled into your new life down under?
In this post, I answer all of these questions and more, plus I cover other things you need to think about when transferring money overseas such as recommended forex brokers and opening your bank account in Australia before you move.
If you do not qualify for Medicare in Australia and you are an Australian taxpayer, you can claim a Medicare Levy Exemption at the end of the year and get any tax you paid back. The percentage of tax back ranges from 1% to 2% of your income tax. Here's how to get that tax back.
What US Expats Need to Know About Filing a Tax Return from Overseas
Did you move to Australia from the US? Then you need to read this post because your yearly tax return just got more complicated. Don’t worry, you can handle it, but if you don’t understand the details, it can result in some very steep fines. In this post, I go over terms you need to be familiar with and cover several misconceptions US expats often have when living abroad. Special Bonus: Exclusive discount just for SMG readers for $75 credit towards tax services.
All US expats living abroad need to know what an FBAR is and if they are required to file one. Chances are, if you have any financial accounts overseas like a bank account or an Australian Superannuation, you will have to file an FBAR depending on the maximum value of your accounts during the year. This post covers what you need to know.
To give you some idea of the importance and how complicated it is, the instructions for FBAR is 22 pages long. The IRS estimates it will take about 2.5 hours to fill out. Oh, the joys of living abroad as a US citizen.
What is FATCA and how does it affect the taxes of US expats living in Australia. This post covers Form 8938 Filing Thresholds Values, the Physical Presence Test, How to Figure the 12-month Period for the Physical Presence Test and the Bona Fide Residence Test.
FATCA is in addition to FBAR. Yes, yet another form you will need to know about when filing your yearly tax return.
If you are employed in Australia, you will have an Australian Superannuation. There is a lot of confusion on how to report your Australian Superannuation when you file your US tax return. Here are the basics to what you need to know. I include links to all the references I used for this post.
It is crucial you report your Australian Superannuation correctly on your tax return as not doing so can result in very high fines.
UK Expatriate Tax Questions
This is a guest post from Oliver Heslop, the director at Global Expatriate Tax Services in the UK.
Common UK expatriate tax questions and answers for UK expats living in Australia. He includes dates to remember, residence rules, claiming UK state pension and more.