Declaring foreign income and assets in Australia — CRS automatic information exchange, tax residency and the FITO

Declaring foreign income and assets as an Australian resident — property and interest back home, and CRS automatic information exchange

Australian tax residents must declare their worldwide income. Based on official information, this guide covers how the CRS automatically reports overseas financial accounts to the ATO, the temporary resident exemption, double taxation relief through the FITO, and the voluntary disclosure process.

Overview — tax residents declare their worldwide income

An Australian resident for tax purposes must declare not only income earned in Australia but their worldwide income in their Australian tax return. Typical examples are rental income from property left in your home country, bank interest, share dividends, some foreign pensions, and gains from selling overseas assets. Failing to declare can attract penalties and interest, and because of the CRS automatic exchange of information explained below, the assumption that "they won't know if I don't declare" does not hold.

Tax residency is separate from your visa

You can be a tax resident even without permanent residency or citizenship. The ATO applies four tests: the resides test (how you actually live), the domicile test (where your permanent home is), the 183-day test (being in Australia for 183 days or more in the financial year), and the Commonwealth superannuation test. Conversely, temporary visa holders may still qualify for the temporary resident exemption (Section 4) even if they are found to be residents. If your position is unclear — for example if you live across two countries — the answer depends on your personal circumstances, so consult a TPB registered tax agent.

How to declare — include it in your tax return and adjust for double taxation

Foreign income is not reported on a separate form — you include it in the foreign income section of your annual Australian income tax return. The Australian financial year runs from 1 July to 30 June, and if you lodge yourself the deadline is usually 31 October (extensions may be available through a registered tax agent). All foreign income, deductions and tax paid must be converted to Australian dollars (AUD).

Preventing double taxation — tax treaties and the FITO

Australia has tax treaties with many countries that allocate taxing rights, and tax already paid overseas can be credited against your Australian tax as a foreign income tax offset (FITO). There is also a simplified rule allowing claims of A$1,000 or less without calculating the offset limit (check the ATO for the latest rules). Because the offset limit and treaty application vary case by case, it is safer to leave the calculation to a TPB registered tax agent.

Convert foreign income and tax to AUD using the ATO's published exchange rates or the actual transaction rate
Obtain proof of foreign tax paid and withholding details — the supporting evidence for a FITO claim
Lodge yourself through myTax (ATO online) or use a TPB registered tax agent

This guide covers your Australian obligations only. Check your reporting and tax obligations under your home country's tax law separately with that country's tax authority and professionals there. Under Australian law (Tax Agent Services Act), only a TPB registered tax agent can provide personal tax advice or lodge returns on your behalf.

Income covered and documents to prepare

The main items to declare are rental income from overseas property (deductions such as loan interest, management fees and depreciation are recalculated under Australian rules), bank interest and share dividends, some foreign pensions, and capital gains (CGT) from selling overseas assets. If you hold interests in foreign companies or trusts, attributed foreign income rules may also apply — the scope is broad, so do not leave out unclear items on your own judgement; check with a tax agent.

Annual statements from overseas banks and brokers — to verify interest, dividends and balances
Rental ledgers — evidence of rent received and expenses (repairs, management fees, loan interest)
Proof of foreign tax paid and withholding receipts — the basis for a FITO claim and double taxation relief

Records must generally be kept for at least 5 years after lodging. It helps to organise foreign-language documents in advance so you can provide them on request.

4 common situations

Here are 4 situations that come up often when declaring foreign income. Check which one applies to you — the actual treatment can vary with your personal circumstances.

Rental income from property back home

Tax residents (other than those covered by the temporary resident exemption) declare rental income from their home country in Australia. Deductions are applied under Australian rules, so you cannot simply carry over the calculation done in your home country. Check details such as how a net loss is treated with a tax agent.

Interest, dividends and other investment income

Overseas bank interest and share dividends are the classic items automatically reported to the ATO under the CRS. They must be declared even in small amounts, and tax withheld overseas can be adjusted through the FITO.

Selling overseas assets (CGT)

If a resident sells overseas property or shares, the sale can be subject to Australian CGT. Special rules apply — such as treating the market value at the time you became an Australian resident as the cost base — so consulting a tax agent before selling is essential.

The temporary resident exemption

Many temporary visa holders who meet the requirements have most foreign income exempt (with some exceptions, such as income from employment performed overseas while a temporary resident). However, being granted permanent residency is the turning point at which this exemption ends, so always review your position before and after the grant.

Step-by-step checklist — 5 things worth doing in advance

Declaring foreign income is ultimately a battle of paperwork. Make these 5 things a habit and tax season will hold no surprises.

Keep a list of your overseas assets as at the time you settled in Australia (or were granted permanent residency), together with evidence of market value (valuations, market price data) — the starting point for future CGT calculations
Complete your bank's and broker's residency self-certification accurately — CRS information flows based on this declaration
Get into the habit of organising foreign income by the Australian financial year (1 July to 30 June) — it may differ from your home country's tax year
Collect foreign tax receipts and withholding details year by year — the basis for FITO claims
If a change of status such as applying for or being granted permanent residency is coming up, review the tax impact with a TPB registered tax agent in advance

Common misconceptions and things to watch

Most foreign income problems arise not from deliberate evasion but from simply not knowing. Here are 5 misconceptions we see often.

"The ATO doesn't know about my overseas accounts" — under the CRS, financial account information is automatically exchanged across more than 100 countries and jurisdictions. If your return does not match information the ATO already holds, they may contact you first.
"I paid tax back home, so I'm done" — your Australian reporting obligation is separate. Tax already paid can be credited through the FITO; you must not skip the declaration itself.
Applying the temporary resident exemption without checking — there are detailed conditions, including requirements relating to your spouse as well as yourself. Confirm the requirements in the ATO's official guidance.
Assuming the exemption continues after you get permanent residency — from the time of the grant you switch to being taxed on worldwide income. Omissions are most common in the first return after the switch.
Leaving past omissions alone — interest and penalties keep building up over time. A voluntary disclosure before the ATO notifies you of a review is the most favourable way out.

Useful official links

Frequently Asked Questions

I have neither permanent residency nor citizenship — do I still have to declare foreign income?▾

Your visa type and your tax residency status are separate questions. Even on a working holiday, student or work visa, you can be an Australian resident for tax purposes depending on how you actually live, and residents must in principle declare their worldwide income. However, many temporary visa holders qualify for the temporary resident exemption, under which most foreign income can be exempt — confirm your own position against the ATO's official tests and with a TPB registered tax agent.

What is the CRS? Can the ATO really see my bank accounts back home?▾

The CRS (Common Reporting Standard) is an international standard for the automatic exchange of financial account information between countries. Australia has applied it since July 2017, made its first exchanges in 2018, and more than 100 countries and jurisdictions participate. Financial institutions in participating countries report the account balances, interest, dividends and other details of Australian tax residents to their own tax authorities, and that information is automatically passed on to the ATO. The assumption that "they won't know about my overseas accounts if I keep quiet" no longer holds.

I've already paid tax in my home country — do I have to pay again in Australia?▾

Regardless of tax paid in your home country, your Australian reporting obligation as an Australian tax resident exists separately. To prevent double taxation, however, tax treaties and the foreign income tax offset (FITO) allow tax already paid overseas to be credited against your Australian tax. The offset limit calculation and treaty application vary case by case, so check with a TPB registered tax agent.

Do working holiday makers and international students have to declare interest and rental income from home?▾

First, work out whether you are an Australian resident for tax purposes. Even if you are, temporary visa holders who meet the temporary resident requirements (including that neither you nor your spouse is an Australian resident within the meaning of the Social Security Act 1991) can have most foreign investment income exempt. However, some income — such as income from employment performed overseas while you are a temporary resident — remains taxable, so always confirm the requirements and exceptions in the ATO's official guidance.

What changes when I get permanent residency?▾

Once your temporary resident status ends — for example when you are granted permanent residency — the foreign income exemption disappears, and from that point your worldwide income, including rental income, interest and dividends from your home country, becomes taxable in Australia. For CGT purposes, there are rules under which your foreign assets are generally taken to have been acquired at their market value at the time of that change, so secure evidence of market value in advance and review the details with a TPB registered tax agent.

I haven't declared my foreign income for the past few years. What should I do?▾

You can correct past returns through the ATO's voluntary disclosure process. If you disclose before the ATO notifies you of a review or audit, shortfall penalties can generally be reduced by up to 80%; once you have been notified, the reduction is much smaller. If several years or large amounts are involved, it is safer to proceed through a TPB registered tax agent.

If I sell property in my home country, will I be taxed in Australia?▾

If an Australian tax resident (other than someone covered by the temporary resident exemption) sells overseas property, the sale can be subject to Australian CGT. Special rules apply — for example, the cost base may be the market value at the time you became an Australian resident — and tax paid in your home country may be adjusted through the FITO. Because the amounts involved are large, always consult a TPB registered tax agent before selling.