Australian Income Tax

Australian resident individuals are subject to tax on worldwide income. Non-resident individuals are subject to tax on Australian source income. A resident is defined as an individual who “resides” in Australia and is either domiciled in Australia or is actually present in Australia continuously or intermittently for more than half of the tax year, unless the tax authorities are satisfied that the individual’s usual place of abode is outside Australia and that the individual does not intend to reside in Australia.

Individuals are taxed on salary and most allowances. The employer is responsible for paying fringe benefits tax on any non-cash benefits given to employees, but expenses fully reimbursed by the employer are not taxable and not deductible by the employee. The deduction is allowed for expenses directly or solely related to employment, such as travel between places of work, but expenses of a private nature such as commuting to and from work, moving costs, etc. are not deductible.

For expatriates resident in Australia, there are tax exemptions for certain foreign-source income, maintenance payments, fringe benefits, certain pensions, scholarships, etc. Foreign dividends, interest and royalties are generally subject to tax. Income from foreign employment during a continuous period of at least 91 days is exempt from tax, but is taken into account in calculating the tax liability.

The first AUD 6’000 is free of tax for residents. Thereafter, income tax rates for residents range from 15% up to 45% on income over AUD 180’000. Income tax returns are generally due by the 31st October, however extensions are available if filed by a registered tax agent. Married couples file separate tax returns.