Are You Still Taxed by Australia When Working Overseas?
- If you remain an Australian tax resident, you’re taxed on your worldwide income, regardless of where you earn it. If you become a foreign resident (for tax purposes), only Australian-sourced income is taxed. (ato.gov.au)
- Federal rules treat Working Holiday Makers (WHMs) from Non-Discrimination Article (NDA) treaty countries differently if they become Australian residents for tax purposes. In certain circumstances, they can be taxed like residents despite holding a WHM visa. (ato.gov.au)
Key Things to Manage When You're Abroad
| Issue | What to Watch |
|---|---|
| Foreign Earnings | If you're a resident, report foreign income and any taxes paid overseas; credits may apply. |
| Travel Absence | If you leave your home temporarily and rent it, you may still treat it as your main residence for up to 6 years for CGT, under certain conditions. (ato.gov.au) |
| Residency Status | Changing intentions, visa, or linked ties (family, investments) can affect status; claim only once you’ve clearly become foreign resident. |
Withholdings & Pay As You Go (PAYG)
- Employers might use class variation to adjust withholding when resident staff work abroad continuously for 91 days or more. (ato.gov.au)
- If withholding is too high (e.g. treated as resident when taxable income isn’t high), you can apply to vary withholding or claim refund via tax return. (ato.gov.au)
Practical Tips for Digital Nomads
- Keep detailed records of: foreign income, foreign taxes paid, days spent overseas vs in Australia, binding decisions or rulings if possible.
- Sync expenses with travel: If you incur work-related costs overseas (internet, coworking, travel), understand what’s deductible. With foreign earnings, many travel & equipment costs may be claimed if directly tied to income. (ato.gov.au)
- Regularly review treaty benefits—if your home or visas shift, residency status and thus tax obligations may change.
Real-Life Example
Liam lives in Berlin for 10 months and works remotely for an Australian company; he remains an Australian tax resident. He earns €50,000 (~AUD 80,000). He must include:
- Australian salary + non-Australian sourced income
- Foreign tax credit if Germany taxed him on that income
- Check whether BEN (benefit through non-discrimination) provisions help reduce incremental tax.
After accounting for deductions, his Australian tax may still be significant—but benefits like increased Medicare levy thresholds and the tax cuts starting July 2026 can ease the load.
Bottom line
If you’re living and working abroad, stay alert to when your residency for tax changes, what tax treaties apply, and plan your travel & finances with both domestic and international rules in mind. Small mistakes now cost thousands later.