How income tax in Australia works for foreigners (UK guide)

Moving to Australia, or working there for a period of time? If you earn money there, whether from work, property or other sources, you’ll need to get to grips with the country’s income tax system.

In this helpful guide for UK expats and digital nomads, we’ll cover how income tax in Australia works for foreigners. This includes who has to pay it, rates and everything else you need to know.

We’ll also show you how to save on fees when making tax or other multi-currency payments abroad - with the Wise account.

Learn more about the Wise account

Tax basics for foreigners living in Australia

Foreign nationals living in Australia must pay tax on certain types of income earned within the country.

This includes income from employment, rental properties, Australian pensions and annuities, and profits (capital gains) from selling Australian assets such as property.¹

You don’t have to declare interest from interest, dividends or royalties from financial products in Australia (as long as tax has already been withheld by the provider). And you don’t need to pay the Medicare levy - you can claim an exemption for this on your tax return.¹

Crucially, as a foreign resident, you don’t have a tax-free threshold.¹

The tax year runs from 1st July to 30th June, and tax returns must be submitted by 31st October. Tax is paid to the Australian Taxation Office (ATO).²

Overview: Income tax for expats living in Australia

Here’s some handy at-a-glance info on income tax for UK expats living in Australia:

Who has to pay income tax in Australia?

Anyone who is a legal resident of Australia needs to pay income tax. But there are differences between permanent foreign or Australian residents, and temporary foreign residents.

We’ll look at this in more detail next.

Income tax for residents vs non-residents

Tax in Australia is slightly different for residents who are Australian citizens, compared to foreign residents and non-residents. For starters, each category has different income bands for tax, and pays different rates.

Both foreign residents and non-residents are exempt from the Medicare Levy, which is set at 2%.²

Temporary residents (such as people in Australia on a working holiday visa or skills in demand visa) only need to pay tax on income derived in Australia - plus, some income from employment during their time spent in the country.¹

For these people, foreign-earned income and capital gains aren’t taxable in Australia.¹

How does income tax work for foreigners in Australia?

For foreigners, income tax is calculated in the same way as for Australian nationals.

Any deductible expenses and losses are deducted from assessable income, which includes salary, wages, allowances and cash compensation. It may also include investment income, depending on whether tax has already been withheld.

From this amount, taxable income is determined and the appropriate rate of tax is applied.

Anyone with a taxable income above $21,884 AUD needs to submit an annual tax return.³ This includes self-employed people, freelancers and businesses.

Income tax for businesses in Australia

All businesses resident in Australia need to pay income tax on worldwide income. Non-resident companies (who are based elsewhere) only pay tax in the country on Australian-sourced income.

Federal tax rates for businesses in Australia are set at 30%, but small and medium size businesses (SMEs) pay a reduced rate of 25%.⁴

Income bands and tax rates in Australia

Now, let’s take a look at income bands and tax rates in Australia for residents in 2024/25. Note that there are different bands and rates for Australian nationals and foreign residents.

Manage your money internationally with the Wise account

After reading this, you should have a better idea of how income tax in Australia works for foreigners. We’ve looked at who pays it, rates, income bands and more. This information should be helpful if you’re moving to Australia, or spending time working there.

If you do have a tax bill or other payment to make between countries, you’ll need a cost-effective way to make the transfer.

Open a Wise account online and you can manage your money in 40+ currencies all in one place.

Securely send money worldwide for low fees* and mid-market exchange rates, and receive it for free with local account details in 8+ currencies including AUD.

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