Australians investing overseas

Ever dreamt of buying property overseas? While it can provide a good return on investment, all foreign earnings must be declared as extra income to the Australian Taxation Office.

1. Foreign pensions and annuities

Most Australian residents must pay tax on foreign pensions and annuities. You may claim aforeign income tax offset if your foreign pension or annuity is taxed both in Australia and in the country that paid it. If your payment has also been taxed in a country with which Australia has a tax treaty, you may be entitled to a refund of that tax from that country.

 

 

 

2. Foreign employment income

If you remain an Australian resident overseas, you must lodge an Australian tax return and declare all your foreign employment income, including any exempt income. You must declare that income even if tax was taken out in the country where you earned it. You can lodge your return online from overseas.

 

 

 

3. Foreign investment income

You must include rental income from overseas properties in your Australian tax return. This income is the full amount of rent and associated payments you receive or become entitled to when you rent out your property. If you have paid tax in another country on your rental income, you can claim a foreign income tax offset in your Australian tax return.

 

 

 

4. Foreign business income

You must declare all dividends and interest from overseas. If you have interests in a foreign company, trust or life insurance policy, include income you receive from them in your tax return. This income can be attributed to you even if it hasn't yet been distributed.

 

 

 

5. Capital gains on overseas assets

As an Australian resident, you are generally taxed on any capital gains you make on overseas assets – for example, when you sell an overseas property. You must report the gain in your tax return. If the gain is taxable in Australia and you've paid foreign tax on it, you may be entitled to a foreign income tax offset.

 

 

 

For more information on declaring foreign income visit the ATO website.

Austrade website provides helpful explanation on Australia’s taxation rules.

Taxpayers Australia can explain the differences between tax avoidance and tax evasion.

The Department of Human Services provides information on income-tests applied to pensions and the allowed length of overseas stays.