The Government has recently changed the tax exemption in relation to Australian Tax residents working overseas for a period during the year.  Previously if you worked overseas for a period of 91 days continuously, you could rely on a tax exemption in Australia and only pay tax in the overseas country.  From 1/7/09 this exemption ceases for most taxpayers (some exemptions for Australian Government, relief workers defense staff) and they will now have to include that income derived overseas in their Australian taxable income and pay tax on it again, but will get a credit for tax paid overseas.  This is a major impact considering Australia has one of the highest tax rates in the world.

 

The only way around this is to become a non resident for Australian tax purposes, as non residents only pay tax on their Australian source income.  However, it is not as simple as selecting to become a non resident; you need to pass some tests to prove you are a non resident.  Rule of thumb is that if you are working overseas for a period of greater than 2 years, then you will probably be considered to be a non resident for Australian Tax purposes.

 

If you are planning on working overseas in the near future, we recommend that you speak to Simon Flowers of our office to discuss the options available to you.