If you’ve earned foreign employment income this year, find out how to report it correctly on your 2019 tax return.
Are you an Australian resident for tax purposes and work overseas? If yes, you must report all your foreign income in your Australian tax return. This includes both your assessable and exempt income – even if tax has been taken out in the country you earned it.
What is foreign employment income?
Foreign employment income is income earned by an Australian resident working overseas as an employee. It includes salary, wages, commissions, bonuses and allowances and may be paid by an overseas or an Australian employer.
Am I exempt from paying tax on foreign income?
There are a few exceptions where your foreign employment income may be tax exempt or tax free:
- You’re a member of the Australian defence or police force
- You’re involved in overseas aid work
However, the ATO still requires MOST income earned overseas to be reported on your tax return. It can be difficult to determine if your income falls within the exception areas. It is always best to contact a top-rated tax agent for advice on what needs to go on your return.
Reporting your income
It’s important to note the amount of foreign employment income you declare on your tax return should be the amount you earned before tax was with withheld. This is called “grossing up” and helps determine your total assessable foreign employment income.
Jennifer lived in Canada from 2nd October 2017 to 1st March 2019 and worked for a ski season at a mountain resort. Jennifer earned $12,500 after tax. She also paid $3,500 worth of tax. Jennifer would therefore have foreign employment income to declare of $16,000.
Getting it right on your tax return
Foreign employment income can be a tricky section of your tax return to get right. It’s important you declare the right amount on your return as well as any tax offsets to ensure you’re in the best position financially.