Non-Resident, Foreign Income & Double Tax Guide — Residency Test · Temporary Resident Exemption · FITO

Non-Resident, Foreign Income & Double Tax (Residency Test · FITO)

Living in Australia while you have a rental property, pension or savings back home, or earning income overseas? Tax is decided not by your 'visa' but by your 'tax residency'. This guide covers everything from determining residency to declaring foreign income and reducing double taxation, based on official ATO information.

This page is general information for foreign nationals living in Australia and is not tax, legal or migration advice. Residency, foreign income and double taxation outcomes vary considerably depending on your visa, length of stay and home-country situation.

Program names, amounts, deadlines and phone numbers can change, so always confirm the latest details with the Australian Taxation Office (ATO, ato.gov.au), and for complex matters such as home-country rent, overseas businesses, trusts or double taxation we recommend consulting a registered tax agent.

Tax residency is decided by your 'actual life', not your 'visa'

Many people think 'I'm on a temporary visa so I'm a non-resident' or 'I have no PR, so I don't need to declare foreign income'. But the most important concept in Australian tax is residency for tax purposes, and this is completely separate from your visa status under migration law.

An Australian tax resident is taxed on worldwide income, while a foreign resident is taxed only on Australian-source income. Even on the same student, working holiday or temporary skill visa, you may or may not be a tax resident depending on how settled you are in Australia.

Key point: Don't assume your tax residency from your visa type alone. You can be a tax resident even on a temporary visa, and you can have a worldwide income reporting obligation even without PR. At the same time, temporary visa holders may be entitled to the separate 'temporary resident' exemption (Section 3).

The four tests that decide residency

The ATO treats you as an Australian tax resident if you meet any one of the following four statutory tests. The 'resides test' is usually the primary criterion, with the others being supplementary.

① Resides test (the fact of residing — primary criterion)

This looks at whether you actually 'reside' in Australia. It is judged holistically on the purpose and length of your stay, your family and social ties, the location of your work and assets, and how settled your life is. If you meet this test, the other tests do not need to be considered.

② Domicile test (legal domicile · permanent place of abode)

If your legal domicile is in Australia, you are treated as a resident. The exception is if the ATO accepts that your 'permanent place of abode' is outside Australia.

③ 183-day test

If you are in Australia for more than half an income year — that is, more than 183 days, whether continuously or in breaks — you are treated as a resident. The exception is if the ATO accepts that your 'usual place of abode' is outside Australia and you have no intention of taking up residence in Australia.

④ Commonwealth superannuation test

This is a special test that applies to Australian government employees working overseas who contribute to the CSS or PSS schemes, and does not apply to most ordinary foreign nationals.

Check it yourself: The ATO's 'Work out your residency status' online tool can determine your residency in 5–10 minutes. Separate tools are provided depending on whether you have just arrived in Australia or are leaving. If the result is ambiguous or complex, consult a registered tax agent.

If you are a temporary resident, most foreign income and assets are exempt

Even if you are classified as a tax resident, if you meet the 'temporary resident' requirements, then under Subdiv 768-R of the income tax law most foreign-source income and foreign asset capital gains (CGT) are exempt. Many foreigners who come to Australia on student, working holiday or temporary skill visas fall into this category.

Who is a temporary resident? (all 3 requirements met)

You hold a temporary visa issued under the Migration Act 1958
You are not an 'Australian resident' under the Social Security Act 1991 (citizen, permanent resident, or protected SCV holder)
Your spouse is also not an Australian resident under the Social Security Act 1991

In other words, if your spouse is an Australian permanent resident or citizen, you may not receive the temporary resident exemption.

What are the benefits?

Most foreign-source income (home-country interest, dividends, rent, etc.) is exempt from Australian tax
The capital gains (CGT) on foreign assets (assets that are not taxable Australian property) are also generally exempt
This reduces your reporting burden and the risk of double taxation

Note: The exemption is not unconditional. Australian-source income is still taxed, and some foreign income linked to work performed in Australia may not be exempt. Also, once you become a resident who is not a temporary resident, you may not be able to return to temporary resident status even if you later obtain a temporary visa. Check your own situation on the ATO 'Foreign and temporary residents' page.

A tax resident must declare 'worldwide income'

An Australian tax resident who is not eligible for the temporary resident exemption must declare worldwide income regardless of source, converted to Australian dollars. This includes income earned in your home country.

Common foreign income that must be declared:

Rent from a home-country rental property (after deducting related expenses)
Amounts received from overseas pensions or retirement funds
Interest on overseas bank deposits and dividends on shares
Employment income and freelance/business income earned overseas
Capital gains (CGT) from the sale of overseas assets

Even if you have already paid tax in your home country, declare it in Australia first and then adjust for double taxation using a tax treaty and FITO (Section 10).

If you have a HELP, VSL or student loan debt — you may also need to report foreign income

If you have an Australian study debt such as HELP (higher education loan), VET Student Loan or Australian Apprenticeship Support Loan, you may need to report your worldwide income to the ATO even while living overseas. This is because your repayment obligation is calculated from your worldwide income and remaining debt. Check the detailed thresholds with the ATO.

Foreign residents are taxed only on Australian income

If you are assessed as a tax non-resident, the scope of taxation narrows.

You declare and are taxed on Australian-source income only (foreign income is not declarable)
There is no tax-free threshold, so the foreign resident rates apply from the very first dollar — see the FY2025–26 rate table in Section 6 below
Medicare levy exemption (you don't get Medicare benefits, but in exchange you don't pay the levy)
Capital gains on 'taxable Australian property' such as Australian real estate are subject to CGT even for foreign residents

In the year your status changes from resident to non-resident (or vice versa), you must calculate by period, so be especially careful in the year you arrive or depart.

Foreign resident income tax rates — FY2025–26 table

A foreign resident for tax purposes gets no tax-free threshold — Australian-source income is taxed from the very first dollar at the rates below. This is the official ATO rate table for the 2025–26 income year (1 July 2025 – 30 June 2026), and the starting point for understanding tax for foreigners in Australia who are non-residents.

Taxable income (Australian-source)	Tax on this income
$0 – $135,000	30c for each $1 (30%)
$135,001 – $190,000	$40,500 plus 37c for each $1 over $135,000
$190,001 and over	$60,850 plus 45c for each $1 over $190,000

Source: ATO 'Tax rates – foreign residents' (FY2025–26, checked 2026-07). There is no separate 'temporary resident tax rate' — a temporary resident who is a tax resident pays resident rates (including the $18,200 tax-free threshold), a tax non-resident pays the rates above, and only working holiday makers (417/462) have their own 15% scale (Section 8). Foreign residents also do not pay the Medicare levy (Section 11).

Non-resident withholding tax in Australia — interest 10%, dividends 30%, royalties 30%

Australian-source interest, unfranked dividends and royalties paid to a foreign resident are taxed through a final withholding tax deducted by the payer (bank, company, etc.) at the time of payment. If the correct amount has been withheld, you do not declare this income again in an Australian tax return.

Income type	Standard rate (non-treaty)	Tax treaty country
Interest	10%	Treaty cap applies — check your country's DTA
Unfranked dividends	30%	Limited to 15% under most treaties
Royalties	30%	May be reduced by treaty — check your country's DTA

Fully franked dividends (dividends on which Australian company tax has already been paid) are not subject to withholding, and non-residents do not include franked dividends or franking credits in a return. To have the correct amount withheld, tell your bank or investment body that you are a foreign resident and give them your overseas address. Source: ATO 'Interest, unfranked dividends and royalties' (checked 2026-07) — see the ATO/Treasury tax treaty list for country-specific rates.

Working holiday makers (417/462) — 15% on the first $45,000

If you hold a Working Holiday (subclass 417) or Work and Holiday (subclass 462) visa you are a 'working holiday maker' (WHM), and in most cases the separate WHM rates below apply regardless of residency (FY2025–26).

Taxable income	Tax on this income
$0 – $45,000	15c for each $1 (15%)
$45,001 – $135,000	$6,750 plus 30c for each $1 over $45,000
$135,001 – $190,000	$33,750 plus 37c for each $1 over $135,000
$190,001 and over	$54,100 plus 45c for each $1 over $190,000

If your employer is registered with the ATO as a WHM employer, they withhold 15% up to $45,000; an unregistered employer must withhold 30% (reconciled in your year-end tax return). Since the Addy decision (2021), a WHM who is both an Australian tax resident and a national of a country whose tax treaty contains a non-discrimination article (NDA) may be taxed at resident rates instead — check the ATO page 'Taxation of Australian resident WHMs from NDA countries'. Source: ATO 'Tax rates – working holiday maker' (FY2025–26, checked 2026-07).

Non-resident CGT — no 50% discount, no main residence exemption, 15% withholding

A foreign resident pays CGT on gains from 'taxable Australian property' (TAP) — Australian real estate, and interests in entities whose value mainly comes from real property. Compared with residents, three rules work against you in particular.

No 50% CGT discount — for gains accrued after 8 May 2012, foreign and temporary residents generally cannot use the 50% discount for assets held over 12 months. If you were an Australian resident for part of your ownership period, an apportioned discount may be available for that period.
Main residence exemption removed — if you are a foreign resident at the time of the CGT event (sale), you cannot claim the main residence exemption even for a home you actually lived in. The only exception is the 'life events' test: limited to cases where you have been a foreign resident for a continuous period of 6 years or less and a terminal illness, death or family law matter applies.
15% FRCGW withholding — from 1 January 2025, the purchaser withholds 15% of the sale price of real property and pays it to the ATO. The former $750,000 threshold has been removed, so it applies to all property; only vendors who are Australian tax residents can avoid it by providing an ATO clearance certificate (up to 28 days to issue).

Note: If you leave Australia, become a foreign resident and then sell Australian property or shares, your tax outcome can change dramatically. For details — including the deemed disposal choice for non-TAP assets when you depart (CGT event I1) — see the capital gains tax guide under 'Related guides' below, and consult a registered tax agent for large amounts. Source: ATO 'Foreign residents and capital gains tax' (checked 2026-07).

Tax twice on the same income? — How to reduce double taxation

For situations where both your home country and Australia can tax the same income, Australia provides relief through two mechanisms: a tax treaty (DTA) and the Foreign Income Tax Offset (FITO).

① Tax treaty (DTA, Double Tax Agreement)

Australia has tax treaties with many countries that set out which country has the right to tax particular income and what the maximum rate is. You need to check both ATO materials and your home-country tax authority's materials to see whether a treaty exists between your home country and Australia and how your type of income is treated.

② Foreign Income Tax Offset (FITO)

This is a scheme that credits foreign tax you have already paid in your home country against your Australian tax on foreign income declared in Australia.

If your claim is $1,000 or less per year, you only need to record the actual foreign tax you paid (up to $1,000), with no separate limit calculation.
If it exceeds $1,000, you must first calculate the 'offset limit'.
FITO is claimed in your income tax return. If you paid the foreign tax after the relevant income year, you can claim it by amending your return within up to 4 years of the payment date.

Keep your records: Claiming FITO requires written evidence proving you paid the foreign tax (payslips, copies of foreign tax returns, payment confirmations from the tax authority, etc.). You don't attach them to your return, but the ATO may request them, so keep the originals.

Medicare levy 2% — claim the exemption with an Entitlement Statement

Tax residents normally pay a Medicare levy of 2% of taxable income. In two situations you can claim an exemption in your tax return.

Foreign resident for the whole income year — claim a full exemption (category 2) at the Medicare levy question (M1) in your return. No separate certificate is needed.
Not entitled to Medicare benefits (e.g. a temporary visa holder not covered by a reciprocal health care agreement) — obtain a Medicare Entitlement Statement (MES) from Services Australia and claim the exemption. You can apply via myGov from 1 July each year and processing can take up to 8 weeks, so wait until you receive the MES before lodging your return.

Holding an MES does not make you automatically exempt (extra conditions such as dependants apply) — check the details on the ATO 'Medicare levy exemption' page (checked 2026-07).

Lodging a tax return for a non-resident in Australia — 6 steps

Get a TFN — you need a Tax File Number to lodge. If you don't have one yet, see the TFN guide under 'Related guides' below.
Confirm your residency — use the ATO online tool to settle your residency for the income year (resident / foreign resident / changed during the year) (Section 2).
Gather income and deduction records — employer income statements (pre-filled via myGov), rental income and expenses, any FRCGW amounts withheld, and so on. Do not include interest, unfranked dividends or royalties that had the correct final withholding deducted (Section 7).
Choose how to lodge — link the ATO to your myGov account and lodge online with myTax (possible from overseas), or use a registered tax agent (only registered agents may charge a fee to lodge for you).
Meet the deadline — the income year runs 1 July to 30 June, and the self-lodgment deadline is 31 October of the following year. To use a tax agent's extended program, engage the agent before 31 October.
Leaving Australia? — if you are departing permanently before the income year ends, check whether you can lodge early on the ATO page 'Lodge your tax return before leaving Australia'.

If your only Australian income was interest, dividends or royalties with the correct final withholding deducted, you generally do not need to lodge a return. For a year you are not required to lodge, submitting a non-lodgment advice to the ATO helps avoid follow-up letters (checked 2026-07).

Self-check checklist for your situation

Check your situation against the items below. If any one is unclear, it is safer to confirm with the ATO tool or consult a registered tax agent.

☐ I have checked my tax residency with the ATO online tool
☐ If I hold a temporary visa, I have checked the 3 temporary resident requirements (including my and my spouse's status)
☐ I have identified whether my home-country rent, pension, interest, dividends and business income must be declared
☐ If I sold overseas assets, I have checked whether CGT exemption/taxation applies
☐ I have considered whether DTA and FITO can apply to tax I paid in my home country
☐ I am keeping evidence of foreign tax paid
☐ If I have a HELP/student loan debt, I have checked my foreign income reporting obligation
☐ If I am a foreign resident, I have estimated my tax with the FY2025–26 rate table and withholding rates (Sections 6–7)
☐ I have checked whether the Medicare levy exemption (full-year foreign resident or MES) applies to me
☐ I have noted the 31 October lodgment deadline (extensions possible via a tax agent)

Frequently Asked Questions

If I hold a temporary visa (student, working holiday, temporary skill), am I not a tax resident?▾

Not necessarily. The type of visa and tax residency are separate. Even on a temporary visa, if you settle in Australia and meet the 'resides test' you can be a tax resident. That said, temporary visa holders may qualify for the separate 'temporary resident' exemption (Subdiv 768-R), so even if you are taxed as an Australian resident, most of your foreign income may be exempt. Confirm your exact status with the ATO online tool.

If I am a temporary resident, do I not have to declare any foreign income at all?▾

Most foreign-source income and foreign asset capital gains (CGT) are exempt, but not all. Australian-source income is still taxed, and some income for work performed in Australia may not be exempt. You must meet the eligibility (temporary visa + both you and your spouse being non-residents), and if your spouse is an Australian permanent resident/citizen you may not receive the exemption. Check the ATO 'Foreign and temporary residents' page.

Do I have to declare rent from an apartment back home to Australia too?▾

If you are an Australian tax resident (and not eligible for the temporary resident exemption), home-country rent must be declared as part of your worldwide income. Declare it converted to Australian dollars, and if you have already paid rental income tax back home you can reduce double taxation with the Foreign Income Tax Offset (FITO). If you are a temporary resident, that foreign rental income is generally exempt.

If I pay tax in both my home country and Australia, am I paying twice?▾

Australia has tax treaties (DTAs) with many countries that coordinate how the same income is taxed by both nations. If you have already paid foreign tax in your home country, you can claim a Foreign Income Tax Offset (FITO) for that amount when calculating your Australian tax. If it is $1,000 or less per year a simplified basis applies; above that you need a separate limit calculation. Always keep your foreign tax records.

Is there a separate temporary resident tax rate in Australia?▾

No — there is no separate rate scale for temporary residents. A temporary resident who is a tax resident is taxed at resident rates (including the $18,200 tax-free threshold) with most foreign income exempt (Subdiv 768-R), while a tax non-resident pays foreign resident rates (30% up to $135,000 in FY2025–26) from the first dollar. Only working holiday makers (417/462) have their own scale, at 15% on the first $45,000.

How does non-resident withholding tax work in Australia — do I declare bank interest again?▾

If you told your bank you are a foreign resident with an overseas address, 10% final withholding tax applies to your interest and that is the end of it — you do not include it in a return. Unfranked dividends (30%, mostly capped at 15% for treaty countries) and royalties (30%) work the same way. If withholding was not deducted (for example, you never told the bank you are a non-resident), you may need to declare it to the ATO — so keep your residency status up to date with your bank.

Do I need to lodge a tax return for a non-resident in Australia, and by when?▾

Yes — if you have Australian-source income (salary, rent, business income, gains on taxable Australian property, etc.), a foreign resident must lodge. The self-lodgment deadline is 31 October after the income year (1 July – 30 June) ends; a registered tax agent can lodge later under their program if you engage them before 31 October. You can lodge from overseas with myTax. If your only Australian income was interest, dividends or royalties with correct final withholding, you generally do not need to lodge.

Official source links

The links and information above are current as at the time of writing, and programs, amounts and deadlines may change. Always confirm the latest details with the ATO (ato.gov.au) before lodging, and consult a registered tax agent for complex matters such as double taxation or overseas businesses.